1 00:00:02,000 --> 00:00:04,920 And welcome everyone, to another Smart Money Circle episode. 2 00:00:04,960 --> 00:00:07,440 I'm Adam Sarhan. With me today is Chad Maggard, 3 00:00:07,440 --> 00:00:10,840 who's a managing director at Johnson Investment Council with 4 00:00:11,200 --> 00:00:14,480 approximately 20 billion in assets under management. 5 00:00:14,760 --> 00:00:17,000 Chad, thank you so much for taking the time and welcome to 6 00:00:17,000 --> 00:00:18,720 the Smart Money Circle. Thank you, Adam. 7 00:00:18,840 --> 00:00:20,680 Happy to be here. So, Chad, I always like to 8 00:00:20,680 --> 00:00:21,840 begin. Can you please tell us your 9 00:00:21,840 --> 00:00:23,600 story and how you got to where you are today? 10 00:00:24,200 --> 00:00:27,240 Yeah, happy to. I'll, I'll go all the way back 11 00:00:27,240 --> 00:00:32,360 to age 10, which is when my dad started taking me with him to 12 00:00:32,360 --> 00:00:34,800 meetings with his financial advisor. 13 00:00:35,120 --> 00:00:39,480 Grew up in a small town and we had probably 2 small investment 14 00:00:39,480 --> 00:00:42,480 shops in our, in our little town at that point. 15 00:00:42,480 --> 00:00:46,280 And he thought it was important to begin instilling financial 16 00:00:46,440 --> 00:00:50,400 planning expertise or, or education rather from an early 17 00:00:50,400 --> 00:00:52,600 age. And I just kind of clung to it 18 00:00:52,600 --> 00:00:55,520 from that first meeting. I liked looking at the colorful 19 00:00:55,520 --> 00:00:59,720 charts and I was always kind of into numbers and just slowly 20 00:00:59,720 --> 00:01:04,200 overtime gained more and more education around financial 21 00:01:04,200 --> 00:01:07,920 planning and investment topics and knew at a pretty early age 22 00:01:08,240 --> 00:01:11,400 that I wanted to get into the financial advisory or investment 23 00:01:11,680 --> 00:01:14,400 business. So out of high school went to 24 00:01:14,480 --> 00:01:17,840 Miami of Ohio for my undergrad. Majored in finance and 25 00:01:17,840 --> 00:01:20,080 accounting. Had a business owner neighbor 26 00:01:20,080 --> 00:01:23,840 that had recommended that I add accounting to my finance degree 27 00:01:23,840 --> 00:01:26,240 just because of all the foundational important business 28 00:01:26,240 --> 00:01:29,880 principles associated with that. So is that when I got out of 29 00:01:29,880 --> 00:01:33,240 Miami, I worked at an insurance company for a couple of years 30 00:01:33,240 --> 00:01:35,480 thinking it was more focused on financial planning and 31 00:01:35,480 --> 00:01:39,680 investments than it was, but knew pretty quickly that the 32 00:01:39,680 --> 00:01:42,680 depth of financial planning and investment advice wasn't exactly 33 00:01:42,680 --> 00:01:47,040 where I wanted it to be. So in October of 2009 on the 34 00:01:47,040 --> 00:01:51,120 back of the financial crisis was fortunate enough to have an 35 00:01:51,120 --> 00:01:55,960 opportunity to join Johnson Investment Council in our date 36 00:01:55,960 --> 00:01:58,960 and location and that was an entry level role within our 37 00:01:58,960 --> 00:02:02,520 private client group. And since that time went through 38 00:02:02,520 --> 00:02:04,840 the charter financial analysts program. 39 00:02:04,840 --> 00:02:08,400 So essentially a somewhat of a master's degree equivalent 40 00:02:08,400 --> 00:02:12,440 that's laser focused on investment management got 41 00:02:12,440 --> 00:02:16,040 promoted into an advisor role where I started to build my own 42 00:02:16,040 --> 00:02:20,960 book of clients that started around 20/13/2014 and then in 43 00:02:20,960 --> 00:02:26,000 2016 was invited to join our family office group in our main 44 00:02:26,000 --> 00:02:31,280 location in Cincinnati. So shifted my book of clients or 45 00:02:31,280 --> 00:02:34,960 were the newer clients I was taking to be more in that at the 46 00:02:34,960 --> 00:02:38,480 time 10 million plus and assets under management was where we 47 00:02:38,480 --> 00:02:41,800 define family office services that since has evolved to be 48 00:02:41,800 --> 00:02:45,720 more of a $20 million threshold. Just as wealth has grown, 49 00:02:45,720 --> 00:02:48,640 markets have grown, estate exemptions have grown over time 50 00:02:49,400 --> 00:02:53,600 and then was was asked to join our leadership team a few years 51 00:02:53,600 --> 00:02:56,360 back. So help oversee the strategic 52 00:02:56,360 --> 00:02:59,320 planning and management within our private client group. 53 00:02:59,800 --> 00:03:01,600 Wow, I love that. What a remarkable story. 54 00:03:01,640 --> 00:03:04,880 So a few questions here. What was what was your father's 55 00:03:04,880 --> 00:03:06,880 profession? Yeah. 56 00:03:06,880 --> 00:03:12,640 So from a service standpoint and and and relationship standpoint, 57 00:03:12,640 --> 00:03:16,200 I was fortunate to have both of my parents kind of geared toward 58 00:03:16,200 --> 00:03:18,120 that in their careers. My mom worked in customer 59 00:03:18,120 --> 00:03:23,000 service and my dad was in sales for the majority of his career. 60 00:03:23,000 --> 00:03:25,040 And then for a manufacturing company. 61 00:03:25,680 --> 00:03:29,000 Yeah, for manufacturing company based in the town where I grew 62 00:03:29,000 --> 00:03:31,360 up. And then the last, I would say 63 00:03:31,360 --> 00:03:34,360 4-5 years of his career actually became president of that 64 00:03:34,360 --> 00:03:37,320 company, I believe it was in January of 2020. 65 00:03:38,160 --> 00:03:41,160 So you can imagine the challenges right away that he 66 00:03:41,160 --> 00:03:42,960 went through. So it's been invaluable both 67 00:03:42,960 --> 00:03:47,560 from a relationship standpoint to have their influence and also 68 00:03:47,560 --> 00:03:50,320 to be able to talk through things with my dad given his 69 00:03:50,320 --> 00:03:52,840 leadership experience. Wow, that is absolutely 70 00:03:52,840 --> 00:03:54,680 remarkable. What a great time to take over 71 00:03:55,640 --> 00:03:57,200 Action Company. Wow. 72 00:03:57,200 --> 00:03:59,520 All right. I mean, you must be very proud 73 00:03:59,520 --> 00:04:00,840 of him and he must be very proud of you. 74 00:04:00,960 --> 00:04:02,600 So Congrats on that that. Is that 1? 75 00:04:03,120 --> 00:04:04,680 Yeah. So let's talk about the 76 00:04:04,680 --> 00:04:06,080 business. It's a perfect Segway. 77 00:04:06,080 --> 00:04:08,320 So I like the ultra high net worth focus and the family 78 00:04:08,320 --> 00:04:10,920 office and all that. Please let us know what your 79 00:04:11,120 --> 00:04:13,840 business is, what you do, and your investment strategy. 80 00:04:14,080 --> 00:04:17,560 Sure. So we are an independent RIA. 81 00:04:17,920 --> 00:04:23,760 We were started in 1965. Our founder Tim Johnson says he 82 00:04:23,760 --> 00:04:26,440 can started the business accidentally or was a chicken 83 00:04:26,440 --> 00:04:30,080 entrepreneur because he was a finance professor, ended up at 84 00:04:30,080 --> 00:04:36,040 the University of Cincinnati and people whether were faculty or 85 00:04:36,040 --> 00:04:38,600 former students or folks in the community that he got to know, 86 00:04:38,920 --> 00:04:41,800 asked him to start managing their finances or help their 87 00:04:41,800 --> 00:04:45,400 finances on the side in addition to his teaching role. 88 00:04:46,000 --> 00:04:50,080 So I would say it was really a visionary because from day one 89 00:04:50,080 --> 00:04:53,240 in 1965, we we were a fee only firm. 90 00:04:53,280 --> 00:04:57,560 So back then I think most of financial advice was more 91 00:04:57,560 --> 00:05:02,120 transactional in nature, Commission based, but he was 92 00:05:02,120 --> 00:05:06,680 charging fees based on assets under management from day one 93 00:05:08,000 --> 00:05:11,560 that grew overtime slowly, finally got kicked out of his 94 00:05:11,640 --> 00:05:15,640 kitchen by his wife who said you need to move into an office. 95 00:05:15,640 --> 00:05:19,680 And he hired his first portfolio manager to help take on 96 00:05:19,680 --> 00:05:21,720 additional clients in the early 80s. 97 00:05:21,720 --> 00:05:26,480 And since then we've just slowly grown and innovative. 98 00:05:26,880 --> 00:05:31,560 We started our own Trust Company in the late 90s. 99 00:05:31,600 --> 00:05:35,520 We have our own charitable gift fund or donor advised fund. 100 00:05:37,200 --> 00:05:41,560 We've we've got our own asset management group, which is is 101 00:05:41,560 --> 00:05:44,040 somewhat unique. And just to give you a sense, 102 00:05:44,040 --> 00:05:48,800 when I started in 2009, we had just under 4 billion in assets 103 00:05:48,800 --> 00:05:51,360 under management. And as I mentioned earlier, 104 00:05:51,360 --> 00:05:55,680 we've recently across the 20 billion threshold that has been 105 00:05:55,680 --> 00:06:00,120 mostly organic growth from client referrals and referrals 106 00:06:00,120 --> 00:06:05,680 from professionals and the community accountants, attorneys 107 00:06:05,680 --> 00:06:08,040 that we've gotten to know over time. 108 00:06:08,040 --> 00:06:11,440 We've done a a handful of small acquisitions, but it really has 109 00:06:11,440 --> 00:06:14,760 been mostly organic growth. Wow, congratulations. 110 00:06:14,760 --> 00:06:17,640 That's fantastic. So for the audience that that 111 00:06:17,960 --> 00:06:20,240 don't know what, please let us know what you said. 112 00:06:20,240 --> 00:06:22,560 Family office services, what does that mean? 113 00:06:22,560 --> 00:06:25,040 And then the trust services, what does that mean? 114 00:06:25,400 --> 00:06:27,200 Yeah, Yeah. So I think it'd be helpful to 115 00:06:27,680 --> 00:06:30,520 break down kind of the divisions of our of our firm. 116 00:06:30,520 --> 00:06:34,120 So the asset management group, which is where our research 117 00:06:34,600 --> 00:06:38,760 staff is focused, we're managing funds for endowments, 118 00:06:38,760 --> 00:06:42,320 universities, foundations, pension plans. 119 00:06:43,840 --> 00:06:47,520 That group also is is made of about made-up of about 30 120 00:06:47,520 --> 00:06:50,320 people. That group also provides a lot 121 00:06:50,320 --> 00:06:53,800 of research and investment resources for our private client 122 00:06:53,800 --> 00:06:56,080 group. So if one of round numbers, a 123 00:06:56,080 --> 00:06:59,720 third of our assets are in our institutional group, the 124 00:06:59,720 --> 00:07:03,840 remaining 2/3 are in are overarching private client 125 00:07:03,840 --> 00:07:07,840 group, which is traditional wealth management and family 126 00:07:07,840 --> 00:07:10,680 office services. And I would divide that 127 00:07:10,680 --> 00:07:14,240 essentially into 7 billion in assets in that wealth advisory 128 00:07:14,240 --> 00:07:17,760 group and 7 billion in family office services. 129 00:07:19,400 --> 00:07:22,880 When you think about defining family office and how is that 130 00:07:22,880 --> 00:07:25,920 different than traditional wealth management, I would say 131 00:07:25,920 --> 00:07:29,560 it's, it encompasses all of the, the traditional wealth 132 00:07:29,560 --> 00:07:31,280 management services that you think of. 133 00:07:31,280 --> 00:07:34,400 So investment management looking at income tax planning, estate 134 00:07:34,400 --> 00:07:38,360 planning, gift planning, looking at clients insurance budgeting, 135 00:07:38,360 --> 00:07:41,840 cash flow needs. But as wealth increases, 136 00:07:41,840 --> 00:07:46,520 complexity increases and I would say from a family office 137 00:07:46,920 --> 00:07:49,560 standpoint, what are those enhanced services? 138 00:07:49,840 --> 00:07:54,440 1 is a higher usage of alternative and private 139 00:07:54,920 --> 00:07:59,120 investments just given higher net worth for or liquid asset 140 00:07:59,120 --> 00:08:02,520 requirements and the ability for clients to build out or us to 141 00:08:02,520 --> 00:08:04,520 build out those portfolios on clients behalf. 142 00:08:04,520 --> 00:08:08,360 As part of the the overall mix integration with our Trust 143 00:08:08,360 --> 00:08:12,920 Company, we've got several attorneys on staff that provide 144 00:08:12,920 --> 00:08:17,760 counsel in in concert with clients, attorneys that they've 145 00:08:17,760 --> 00:08:21,240 worked with for years, but providing advice and counsel. 146 00:08:21,240 --> 00:08:25,200 They are also the ability to act as corporate trustee or agent 147 00:08:25,200 --> 00:08:30,200 for trustee for estate planning that clients pursue an 148 00:08:30,400 --> 00:08:34,520 additional service would be more advanced charitable planning 149 00:08:34,520 --> 00:08:37,880 because we've got our own gift fund, we have the ability to 150 00:08:38,240 --> 00:08:43,679 customize plans for clients. So setting up endowments for 151 00:08:43,679 --> 00:08:47,920 helping administer foundations so that wealth that's earmarked 152 00:08:47,920 --> 00:08:52,480 for charity can, can continue for generations and incorporate 153 00:08:52,640 --> 00:08:55,840 in a board of trustees for foundation or family members or 154 00:08:55,840 --> 00:08:58,800 a combination of the two. And helping administer those 155 00:08:58,800 --> 00:09:02,360 types of things with, with having your own gift fund. 156 00:09:02,440 --> 00:09:06,680 The other benefit is we have the ability to proactively plan with 157 00:09:06,720 --> 00:09:10,200 clients who have illiquid assets, maybe with large 158 00:09:10,200 --> 00:09:13,200 embedded capital gains where we can actually receive those 159 00:09:13,200 --> 00:09:16,680 unique or or illiquid assets as charitable donations, which 160 00:09:17,080 --> 00:09:19,680 really provides a lot of flexibility and planning that 161 00:09:19,880 --> 00:09:23,360 you might not find elsewhere. If you if we didn't have our own 162 00:09:23,880 --> 00:09:28,400 gift fund. Additional service, additional 163 00:09:28,400 --> 00:09:33,920 service lines within the family office group is more day-to-day 164 00:09:34,200 --> 00:09:37,240 management of cash flow needs. So whether that's paying bills 165 00:09:37,240 --> 00:09:43,760 for clients, managing capital calls, helping with lending, all 166 00:09:43,760 --> 00:09:47,120 things that, that and reporting on those things are all, all 167 00:09:47,120 --> 00:09:50,160 part of what we do for clients on a on a regular basis. 168 00:09:50,160 --> 00:09:54,080 And then they're every day is unique with the complexity that 169 00:09:54,080 --> 00:09:55,960 comes with ultra high net worth clients. 170 00:09:55,960 --> 00:10:00,960 So having the ability, if we don't have the answer in house, 171 00:10:01,440 --> 00:10:04,240 having a trusted partner where we can solve problems for 172 00:10:04,240 --> 00:10:07,600 clients and be that, you know, single point of contact to help 173 00:10:07,600 --> 00:10:11,160 coordinate things. So if a client's exploring 174 00:10:11,320 --> 00:10:14,760 whether or not to do private air travel and how best to do that 175 00:10:14,760 --> 00:10:18,400 based on their situation, having a trusted partner, if they need 176 00:10:18,600 --> 00:10:23,880 really high end in home care for a family member that's having a 177 00:10:23,880 --> 00:10:26,320 health issue, having a trusted partner there. 178 00:10:26,320 --> 00:10:29,640 And the list goes on and on in terms of things that we run into 179 00:10:29,640 --> 00:10:33,000 on a regular basis that are that are unique where we where we 180 00:10:33,000 --> 00:10:34,880 need to find those trusted partnerships. 181 00:10:35,400 --> 00:10:36,520 Got it. No, makes perfect sense. 182 00:10:36,520 --> 00:10:40,480 Thank you for clarifying. So let's talk about before I ask 183 00:10:40,480 --> 00:10:43,240 you about risk, when I ask you about difference between ultra 184 00:10:43,240 --> 00:10:46,520 high net worth families and everyday investors, what are 185 00:10:46,520 --> 00:10:50,720 some mistakes that investors make everyday investors that 186 00:10:51,080 --> 00:10:54,200 you've learned that ultra high net worth investors don't make 187 00:10:54,200 --> 00:10:56,640 or what's? How can we learn some lessons? 188 00:10:56,640 --> 00:10:58,320 How about that? Let's do some timeless lessons 189 00:10:58,560 --> 00:11:01,520 from ultra high net worth, the planning, the asset management, 190 00:11:01,520 --> 00:11:04,760 the foundations, all of the holistic view that everyday 191 00:11:04,760 --> 00:11:07,240 investors can learn from. Yeah. 192 00:11:07,240 --> 00:11:11,840 I think looking at things holistically, which is an 193 00:11:11,840 --> 00:11:16,920 overused term and wealth management, but really either 194 00:11:16,920 --> 00:11:21,600 themselves or having an advisor that looks at the whole picture. 195 00:11:22,640 --> 00:11:28,920 We've found within the last couple of years, clients are 196 00:11:28,920 --> 00:11:33,880 looking for clarity and a lot of cases and it's hard when you're 197 00:11:33,880 --> 00:11:38,320 doing planning if you don't have actual modeling and and the 198 00:11:38,320 --> 00:11:42,240 ability to run through deep scenario analysis with clients. 199 00:11:42,720 --> 00:11:46,000 So having an advisor that is good at coordination and looks 200 00:11:46,000 --> 00:11:47,600 at the whole picture is really important. 201 00:11:47,600 --> 00:11:50,600 I'll give you an example. We've had several instances the 202 00:11:50,600 --> 00:11:54,880 last 6 to 12 months where clients in the high, ultra high 203 00:11:54,880 --> 00:11:58,960 net worth space have had some type of liquidity event, whether 204 00:11:58,960 --> 00:12:02,040 that's an inheritance or selling a business. 205 00:12:02,080 --> 00:12:06,880 And they've gone from essentially zero to 100 miles an 206 00:12:06,880 --> 00:12:09,680 hour. And it's, it's a very murky 207 00:12:09,760 --> 00:12:11,760 picture for them. They know they want to do some 208 00:12:11,760 --> 00:12:15,400 planning, but they don't know how much in the way of assets 209 00:12:15,400 --> 00:12:17,240 they need to retain for their lifetime. 210 00:12:17,240 --> 00:12:19,640 They don't need to. They don't know what they want 211 00:12:19,640 --> 00:12:22,040 to want to contribute to charity. 212 00:12:22,480 --> 00:12:24,840 They don't fully understand their tax picture. 213 00:12:24,840 --> 00:12:28,200 They don't fully understand what it means to earmark some of the 214 00:12:28,200 --> 00:12:32,160 funds with within their estate plan to take advantage of 215 00:12:32,160 --> 00:12:36,320 current estate tax laws. So the ability to coordinate all 216 00:12:36,320 --> 00:12:40,000 that information and then model out different scenarios is 217 00:12:40,000 --> 00:12:44,360 really, really key and go deep in planning, understand income 218 00:12:44,360 --> 00:12:49,600 tax implications, understand, OK, 50 years from now, what are 219 00:12:49,600 --> 00:12:53,160 the impacts of the planning I'm looking at today? 220 00:12:53,640 --> 00:12:58,400 And providing that clarity helps them with taking action. 221 00:12:58,400 --> 00:13:05,600 So I think that's, that's 1/2. I I think there's more of a 222 00:13:05,600 --> 00:13:13,280 focus on long term planning and not getting focused on the 223 00:13:13,280 --> 00:13:16,480 day-to-day movement in the market, the OR shorter term 224 00:13:16,480 --> 00:13:21,960 movements in the market. Now part of that is the fact 225 00:13:21,960 --> 00:13:25,320 that maybe there's the ultra high net worth of spending needs 226 00:13:25,320 --> 00:13:28,000 that are very small percentage of the overall assets. 227 00:13:28,000 --> 00:13:31,560 So their appetite for risk is a little higher. 228 00:13:31,560 --> 00:13:36,480 And in most cases our family office clients, there's the, the 229 00:13:36,480 --> 00:13:41,400 root of the wealth has been from some type of business or running 230 00:13:41,400 --> 00:13:46,360 a business or owning a, a, a private business that's been 231 00:13:46,360 --> 00:13:50,520 within the family. So they understand risk and 232 00:13:50,520 --> 00:13:53,040 single asset risk in a lot of cases. 233 00:13:53,040 --> 00:13:57,160 So tend to take a little longer term approach. 234 00:13:57,960 --> 00:14:00,040 That's been my, that's been my experience. 235 00:14:00,880 --> 00:14:09,120 They're also, they're also very, I would say skeptical around 236 00:14:09,200 --> 00:14:13,160 private investments, one, because they, like I said, in a 237 00:14:13,160 --> 00:14:16,160 lot of cases have a single private investment that is 238 00:14:16,160 --> 00:14:19,040 generating the wealth or maybe a handful of companies that they 239 00:14:19,040 --> 00:14:21,880 own. I think the the private 240 00:14:21,880 --> 00:14:25,880 investment or alternatives landscape has has branched out 241 00:14:25,880 --> 00:14:31,760 into that sub 10 million or sub 5 million asset threshold. 242 00:14:31,760 --> 00:14:37,440 So being really critical over what those opportunities look 243 00:14:37,440 --> 00:14:41,080 like, they promise higher returns and diversification. 244 00:14:41,080 --> 00:14:44,640 But in a lot of cases you're you're trading a lot of 245 00:14:44,640 --> 00:14:49,040 illiquidity for that and you may not even get that enhanced 246 00:14:49,040 --> 00:14:53,200 return, especially as alternative investments have 247 00:14:53,400 --> 00:14:56,000 have gotten more more popular among the masses. 248 00:14:56,880 --> 00:14:58,240 Got it. No, that makes perfect sense. 249 00:14:58,240 --> 00:15:01,360 Thank you for for sharing. Next question, let's talk about 250 00:15:01,360 --> 00:15:03,400 risk management. How do you handle risk and what 251 00:15:03,400 --> 00:15:05,600 are some mistakes you see people make with respect to risk 252 00:15:05,600 --> 00:15:09,480 management? So our our overarching 253 00:15:09,480 --> 00:15:13,240 philosophy with and Johnson and with our asset management group 254 00:15:13,880 --> 00:15:18,000 is focusing on quality, which relates to quality investments, 255 00:15:18,000 --> 00:15:20,440 which relates to risk management. 256 00:15:21,160 --> 00:15:25,000 So when we say quality, that would apply to our stock 257 00:15:25,000 --> 00:15:29,200 selection and we also manage bond portfolios as well 258 00:15:29,200 --> 00:15:30,560 investment grade bond portfolios. 259 00:15:30,560 --> 00:15:34,480 So ensuring that the companies we invest in meet the quality 260 00:15:34,480 --> 00:15:39,480 profile that that we require. So making sure that companies, 261 00:15:39,480 --> 00:15:42,320 whether it's stocks or bonds have healthy balance sheets. 262 00:15:42,600 --> 00:15:47,040 Management team has a good track record of returning value to 263 00:15:47,040 --> 00:15:51,080 shareholders through dividend growth, stock repurchases, debt 264 00:15:51,080 --> 00:15:54,640 reduction. They've have a proven ability to 265 00:15:54,640 --> 00:15:59,440 manage through recessions. We always look at valuation as 266 00:15:59,440 --> 00:16:00,760 well to make sure that's reasonable. 267 00:16:00,760 --> 00:16:04,600 It's not the only factor. We also look at earnings 268 00:16:04,600 --> 00:16:07,480 volatility and what that track record has been over time. 269 00:16:07,480 --> 00:16:12,080 So focusing on that quality metric is, is really important 270 00:16:12,080 --> 00:16:16,400 to us and tends to help mitigate risk on the downside during 271 00:16:16,400 --> 00:16:19,400 turbulent markets, which our clients appreciate. 272 00:16:20,000 --> 00:16:24,720 From a from a risk standpoint, mistakes I've seen it's it's 273 00:16:25,120 --> 00:16:30,520 chasing returns and not sticking to a strategy that you lay out 274 00:16:30,800 --> 00:16:33,280 upfront. I mean that over and over again 275 00:16:33,280 --> 00:16:40,080 has been has been the mistake I see people make clients make, 276 00:16:40,080 --> 00:16:43,640 not necessarily clients. We have the the good fortune of 277 00:16:43,640 --> 00:16:46,080 being able to you know, counsel them through periods where 278 00:16:46,080 --> 00:16:49,280 they're where they're concerned about risk and trying to get 279 00:16:49,280 --> 00:16:52,800 that right up front. But inevitably there are choppy 280 00:16:52,800 --> 00:16:54,960 periods where there's uncertainty. 281 00:16:54,960 --> 00:16:58,520 And we have to provide that counsel and remind folks that 282 00:16:58,600 --> 00:17:02,280 this is a long term plan. We've built the portfolio with 283 00:17:02,280 --> 00:17:04,680 this in mind that we will experience turbulence and 284 00:17:04,680 --> 00:17:09,400 markets and a lot of times clients just need that reminder 285 00:17:09,400 --> 00:17:11,680 and reassurance. Wait, you mean it's not a good 286 00:17:11,680 --> 00:17:14,119 idea to chase the next shiny object that shows up and Ding 287 00:17:14,119 --> 00:17:17,000 Ding Ding Ding Ding Ding Yeah. Yeah, we, we have to remind 288 00:17:17,240 --> 00:17:19,079 people of that sometimes. Yeah, I love that. 289 00:17:19,079 --> 00:17:20,839 OK. So you said quality metrics, 290 00:17:20,960 --> 00:17:22,079 earnings, you mentioned earnings. 291 00:17:22,359 --> 00:17:25,760 Let's say here's a stock XYZ specifically, how do you 292 00:17:25,760 --> 00:17:28,720 determine or just to educate the audience, whether that's a quote 293 00:17:28,720 --> 00:17:31,560 UN quote quality or good company or bad company to invest in? 294 00:17:31,720 --> 00:17:34,080 What are you looking for? Is it evaluations, earnings 295 00:17:34,080 --> 00:17:36,160 growth, revenue growth, you know, other metrics? 296 00:17:36,280 --> 00:17:38,080 Please expand. Sure. 297 00:17:38,320 --> 00:17:43,680 So the we're, we're certainly looking at the fundamentals and 298 00:17:43,800 --> 00:17:49,320 earnings revenue expectations, doing modeling to determine our 299 00:17:49,320 --> 00:17:54,240 own price targets or what we feel is a reasonable value for 300 00:17:54,240 --> 00:18:00,680 the stock, stress testing those assumptions and and making sure 301 00:18:00,680 --> 00:18:04,120 that we're paying a reasonable price that the stock is not 302 00:18:04,120 --> 00:18:07,600 priced to perfection. So as an example, at the end of 303 00:18:08,040 --> 00:18:11,600 at the end of last year, a lot of the tech stocks that we're 304 00:18:11,600 --> 00:18:16,080 all familiar with as part of the Magnificent 7, we either didn't 305 00:18:16,080 --> 00:18:20,080 own those or didn't own those to the weight that they were in the 306 00:18:20,080 --> 00:18:24,360 S&P 500. So just looking at the implied 307 00:18:24,360 --> 00:18:27,960 growth rates that those valuations would require and the 308 00:18:27,960 --> 00:18:32,000 risk that a company like NVIDIA not meeting those earnings 309 00:18:32,000 --> 00:18:36,400 expectations could really present risks to the portfolio. 310 00:18:37,280 --> 00:18:41,640 So looking at the fundamental picture, looking at those 311 00:18:41,640 --> 00:18:45,960 quality metrics, making sure that the business is positioned 312 00:18:45,960 --> 00:18:51,240 in a somewhat of a defensive posture if we do reach a a 313 00:18:51,240 --> 00:18:54,160 challenging market environment. So like I said, have reasonable 314 00:18:54,160 --> 00:18:57,720 levels of debt, a track record of managing through those tough 315 00:18:57,720 --> 00:19:02,080 situations historically and returning value to to 316 00:19:02,080 --> 00:19:05,520 shareholders through various in various ways. 317 00:19:05,760 --> 00:19:09,320 In addition to the modeling piece, looking at valuation, 318 00:19:09,320 --> 00:19:13,240 it's it's what our analysts spend all day doing and we've 319 00:19:13,240 --> 00:19:16,920 got analysts that specialize in specific industries and sectors. 320 00:19:16,920 --> 00:19:20,320 So they know, they know their sectors and they know the 321 00:19:20,320 --> 00:19:22,320 companies inside those sectors inside and out. 322 00:19:22,800 --> 00:19:23,680 Makes sense. Perfect. 323 00:19:23,680 --> 00:19:25,520 Thank you for that. So next question. 324 00:19:25,520 --> 00:19:27,560 What are some timeless lessons you've learned along the way 325 00:19:27,560 --> 00:19:29,160 that you'd like to share with the audience? 326 00:19:29,560 --> 00:19:32,120 Anywhere you want to go? Markets, relationships, health, 327 00:19:32,120 --> 00:19:34,120 longevity. The doors wide open. 328 00:19:35,240 --> 00:19:44,320 OK, from a thinking through the ultra high net worth piece, you 329 00:19:44,320 --> 00:19:49,480 know the right now we're in an environment where the tax law is 330 00:19:49,640 --> 00:19:53,760 uncertain, particularly from an estate planning standpoint. 331 00:19:53,760 --> 00:19:58,640 The amount that an individual can pass to the next generation, 332 00:19:58,640 --> 00:20:03,800 either at death or as a lifetime gift is 13.99 million, almost 28 333 00:20:03,800 --> 00:20:07,640 million for a couple that if nothing changes with the tax 334 00:20:07,640 --> 00:20:12,240 law, is going to be cut to 14,000,000 likely for a couple 335 00:20:12,240 --> 00:20:16,920 or 7,000,000 for an individual starting January 1 of 2026. 336 00:20:17,600 --> 00:20:23,600 So the sooner that clients can start thinking about this 337 00:20:23,600 --> 00:20:28,240 planning, especially when there's an illiquid portfolio or 338 00:20:28,520 --> 00:20:31,640 private business interest, family business, the sooner that 339 00:20:31,640 --> 00:20:34,480 they can get ahead of that planning, the better. 340 00:20:34,560 --> 00:20:39,640 And the more thoughtful the planning, the less rushed, the 341 00:20:39,640 --> 00:20:44,520 more they can think through the what we call internally, what we 342 00:20:44,520 --> 00:20:47,600 call the three questions, thinking through what do I need 343 00:20:47,600 --> 00:20:53,440 to retain and have access to asset wise to make me feel 344 00:20:53,440 --> 00:20:55,680 financially secure during my lifetime. 345 00:20:56,280 --> 00:21:00,240 Second question, what do I want to pass to family members, 346 00:21:00,240 --> 00:21:02,880 future generations and how do I want to do that? 347 00:21:03,280 --> 00:21:06,040 And 3rd, what do I want to do with the rest. 348 00:21:06,040 --> 00:21:10,040 And those are very simple, high level questions, but they take a 349 00:21:10,040 --> 00:21:16,240 lot of conversation, a lot of analysis to help clients answer 350 00:21:16,760 --> 00:21:19,920 those questions. I would also say in tandem with 351 00:21:19,920 --> 00:21:25,720 that, the more clients can articulate, and we oftentimes 352 00:21:25,720 --> 00:21:29,280 ask them to do this in writing, articulate their values as it 353 00:21:29,280 --> 00:21:34,640 comes to the family's wealth, what their vision for that 354 00:21:34,640 --> 00:21:38,960 wealth is and how they feel or what they feel is a responsible 355 00:21:39,240 --> 00:21:43,280 use of those funds. If they can articulate that and 356 00:21:43,280 --> 00:21:46,920 still that in their family members. 357 00:21:46,920 --> 00:21:50,600 And we, we help along the way as we're educating them and often 358 00:21:50,600 --> 00:21:53,680 times kind of slowly revealing the picture of the family's 359 00:21:53,680 --> 00:21:57,160 wealth in the next generations. We found that's a really helpful 360 00:21:57,160 --> 00:22:00,240 exercise. And the same thing goes for 361 00:22:00,600 --> 00:22:03,120 charitable planning, articulating what your values 362 00:22:03,120 --> 00:22:04,440 are from a charitable standpoint. 363 00:22:04,440 --> 00:22:08,880 And we found that the that charitable piece is oftentimes a 364 00:22:08,880 --> 00:22:14,000 really good way for that next generation to be introduced to 365 00:22:14,000 --> 00:22:19,240 us, but also just start with it's kind of like practicing 366 00:22:19,720 --> 00:22:22,800 management of the wealth. So we put together a family 367 00:22:22,800 --> 00:22:26,160 committee that helps direct maybe annual grants that are 368 00:22:26,160 --> 00:22:29,600 coming from their donor advised funds so they can talk through 369 00:22:29,600 --> 00:22:32,280 what are their shared values, what are their individual values 370 00:22:32,280 --> 00:22:35,520 and interests as it relates to charities. 371 00:22:35,520 --> 00:22:38,400 And it's, it's a good way to collaborate and start to get 372 00:22:38,400 --> 00:22:42,640 educated on the wealth. So that looking at that overall 373 00:22:42,640 --> 00:22:45,320 picture, asking those questions, starting to think through those 374 00:22:45,320 --> 00:22:51,440 questions and then finding ways to fold in fold in the family as 375 00:22:51,440 --> 00:22:54,400 part of that process is really important. 376 00:22:55,920 --> 00:23:00,800 The other, the other thing I've come to realize, I mentioned 377 00:23:00,800 --> 00:23:04,360 that you know, we've had several instances where clients have had 378 00:23:04,360 --> 00:23:07,880 a sudden liquidity event where maybe they haven't had liquid 379 00:23:07,880 --> 00:23:12,200 assets up until this point and then all of a sudden $30 million 380 00:23:12,200 --> 00:23:16,560 of cash lands in their portfolio as a result of sale of a 381 00:23:16,560 --> 00:23:21,720 business. As an example, they've managed 382 00:23:21,720 --> 00:23:26,200 or run an individual company, which they don't view to be as 383 00:23:26,520 --> 00:23:30,040 risky as putting their money into the stock market where they 384 00:23:30,040 --> 00:23:31,960 have no control. Even though it's a diversified 385 00:23:31,960 --> 00:23:35,840 portfolio of quality companies, they they feel that they don't 386 00:23:35,840 --> 00:23:37,920 have control over. It makes them very uncomfortable 387 00:23:38,080 --> 00:23:40,760 in a lot of cases. So spending the time to kind of 388 00:23:40,760 --> 00:23:44,480 start from Square 1 educating them on what to expect. 389 00:23:44,520 --> 00:23:47,120 And a lot of clients have been more comfortable just kind of 390 00:23:47,120 --> 00:23:51,760 with slow walking the investment of that cash and maybe even 391 00:23:51,760 --> 00:23:56,320 starting off more conservatively than they otherwise could just 392 00:23:56,320 --> 00:24:00,400 based on what their cash flow needs are related to the overall 393 00:24:00,400 --> 00:24:02,480 asset pool. Because and I which I think is a 394 00:24:02,800 --> 00:24:06,040 a very reasonable approach because I think the worst thing 395 00:24:06,040 --> 00:24:11,280 that could happen is $30 million gets invested day one and we see 396 00:24:11,280 --> 00:24:15,320 a 20 or 30% market correction that can really be damaging 397 00:24:15,320 --> 00:24:17,840 psychologically. And I think can interrupt the 398 00:24:18,040 --> 00:24:22,000 the long term plan or have that plan be less than optimal versus 399 00:24:22,000 --> 00:24:23,600 kind of slow walking it like I said. 400 00:24:23,600 --> 00:24:27,240 And taking a, a measured approach to how much risk we 401 00:24:27,240 --> 00:24:29,400 include in the portfolio at least at the outset. 402 00:24:29,400 --> 00:24:33,000 And then maybe we shift that to a little more aggressive posture 403 00:24:33,000 --> 00:24:36,320 overtime depending on the client's comfort level. 404 00:24:36,760 --> 00:24:39,600 Yeah, I love that. And then next question for you, 405 00:24:39,920 --> 00:24:43,760 what about timeless mistakes? I'm assuming not doing what you 406 00:24:43,760 --> 00:24:46,280 just said, but any other timeless mistakes come to mind. 407 00:24:49,960 --> 00:24:58,560 I think it goes back to having having family get involved in a 408 00:24:58,560 --> 00:25:04,320 really thoughtful way. I would say some of the, the, 409 00:25:04,320 --> 00:25:08,520 the mistakes that stand out are where that wealth wasn't 410 00:25:08,520 --> 00:25:13,800 transferred in a measured way There, there wasn't a lot of 411 00:25:13,800 --> 00:25:18,600 education involved maybe prior to parents passing away and and 412 00:25:18,600 --> 00:25:21,520 they're being, you know, a $20 million portfolio for the 413 00:25:21,960 --> 00:25:25,440 benefit of their child or children. 414 00:25:25,440 --> 00:25:30,720 I think some of the which which in my experience has led to to 415 00:25:32,280 --> 00:25:35,920 clients who maybe have never had to work or just don't have a 416 00:25:35,920 --> 00:25:39,760 healthy relationship with, with the money because they were 417 00:25:39,760 --> 00:25:43,560 never educated upfront on what it means, what the vision for 418 00:25:43,560 --> 00:25:46,600 the funds are over multiple generations. 419 00:25:46,600 --> 00:25:53,200 So revealing that picture with a, with a basis of education 420 00:25:53,200 --> 00:25:56,800 just around your basics of financial planning alongside 421 00:25:56,800 --> 00:26:00,880 that, you know, family wealth and a legacy plan, as we call 422 00:26:00,880 --> 00:26:03,560 it. So there's, there's more context 423 00:26:03,560 --> 00:26:06,680 around how it was generated, how much risk was taken to generate 424 00:26:06,680 --> 00:26:11,440 it and what the vision is for, for that wealth overtime versus, 425 00:26:11,600 --> 00:26:13,000 you know, kind of going in blind. 426 00:26:14,240 --> 00:26:18,240 That's, that's been a pretty unhealthy approach that is going 427 00:26:18,240 --> 00:26:22,080 to lead to some, you know, I would say adverse outcomes as a 428 00:26:22,080 --> 00:26:22,960 result. OK. 429 00:26:23,000 --> 00:26:24,640 Thank you for that. OK, final question for you 430 00:26:24,640 --> 00:26:27,320 today, Chad. What is the best piece of advice 431 00:26:27,320 --> 00:26:29,760 you'd like to give the audience or your 30 year old self? 432 00:26:35,120 --> 00:26:47,040 That's a good question, Adam. I would just emphasize the 433 00:26:47,040 --> 00:26:50,320 importance of relationships. I mean, my, my dad from from 434 00:26:50,640 --> 00:26:52,960 when I was a kid, I mean, it was a it was kind of a joke. 435 00:26:52,960 --> 00:26:57,760 He would always say, you know, people are just people and you 436 00:26:57,760 --> 00:27:01,160 know, I've I've come to learn that more and more and just 437 00:27:01,160 --> 00:27:04,680 really the relationships, whether it's with my clients, my 438 00:27:04,680 --> 00:27:09,320 family, my colleagues, just as the most important thing in life 439 00:27:09,320 --> 00:27:12,760 and is really, really enriched my life. 440 00:27:12,760 --> 00:27:16,200 And, you know, we deal with a lot of wealthy, very wealthy 441 00:27:16,280 --> 00:27:19,680 people. And my 30 year old self, which 442 00:27:19,680 --> 00:27:22,240 is right around the time that I joined our family office group 443 00:27:22,240 --> 00:27:26,880 or or younger, I would emphasize that that is so true. 444 00:27:27,040 --> 00:27:30,120 And they have, you know, regardless of how much money you 445 00:27:30,120 --> 00:27:34,040 have, the, the wants and desires and concerns are all the same. 446 00:27:34,040 --> 00:27:36,320 They just come in, you know, slightly different flavors. 447 00:27:36,320 --> 00:27:39,800 So approach it with confidence and and appreciate the 448 00:27:39,800 --> 00:27:42,000 relationships you have that. Is really powerful. 449 00:27:42,000 --> 00:27:44,840 Well, thank you so much Chad for coming on the show and hopefully 450 00:27:44,840 --> 00:27:46,160 we'll have you on again soon. Congrats all. 451 00:27:46,160 --> 00:27:48,120 This all right. Thanks a lot, Adam. 452 00:27:48,120 --> 00:27:48,640 I appreciate it.