Wealth Actually

For many wealthy families, concentrated liquid investment positions present special types of issues. More often than not, a diversification plan for a position that has been built up over decades, is relegated to a 5 minute discussion.  And it shouldn’t.   From low-cost basis issues, income requirements, family executive involvement and even other factors like emotional attachment, the decision to buy and sell liquid positions can be more complicated than it looks.   To help us understand the best practices in the area and some of the tools at a family’s disposal, were going to talk to STEPHEN DAVENPORT CFA from DECATUR CAPITAL MANAGEMENT in Atlanta, Georgia.   Based in Atlanta, Steve is the Director of Alternative Investments for Decatur and advises clients on a wide array of issues including concentrated position management. Steve received a BS degree in Industrial Engineering at Columbia University, a BS degree in Math/Computer Science at Providence College, and a MS degree in Finance from Boston College. STEVE'S BACKGROUND Engineering and quantitative skills applied to finance Lots of questions around “risk vs return” turned into “emotion vs. reason” Kahneman and Taversky – Risk avoiders instead of return enhancers 2000 a time of excitement and wealth creation in Boston/Silicon Valley 2005 Moved to ATL and worked w Wilmington Trust on DuPont heirs 2015 Moved to STI and worked on Coke heirs 2020 Moved to Decatur to help RIAs/family offices & institutions to manage risk STEVE’S APPROACH TO INVESTING – PERFORMANCE, GOALS, EMOTIONAL COMPONENTS Aligning clients to all goals and not just financial (work in chip space or health care so…) Incorporating all factors including emotion in the investment process ESG is about values and aligning your resources with things you believe in MSCI/TruValue measure companies and companies write CSR Like accounting standards, no global measures UNPRI for three years Indexing – Good, bad and UGLY, so inclusive to be “complete” 1: People want more so they can stay invested in tough times (sell at bottom – 1.5%) 2: Lengthen horizon and 3: Lower fees are three legs to the stool of investment success Investing in ideas/companies who you agree with, ESG may hold the key to better returns Holding on may be more important than what you hold CONCENTRATED POSITIONS- (Blackrock buying Spiderworks, there is a limit to ETFs . . . ) 1 – Customize more holistic solution 2 - Use tools of options market to enhance the transition 3 – Always adjust as the playing field changes ETFs are a one solution fits all solution but client risk and return parameters are unique  BRK- example - FINDING INCOME in the OPTIONS (W/ NO DIVIDEND STREAMS) Recently created wealth by IPO - UBER Familial wealth, sitting versus actively managing Coke – not selling is value added? Complex situations require a sophisticated approach! Took a while to acquire so disposition…. INVESTING THEMES TO DEFEND AGAINST (OR TAKE ADVANTAGE OF) . . . Inflation – Fact or Fiction? Present across the spectrum of risk: Crypto, NFT, SPAC, Meme, IPO, Real Estate, FANG  Fiscal and monetary coming together like never before Is it Temporary or is a CB (central bank- not just US) Put option forever? TAX AND POLICY CHANGES Target the top 1% …., Cap gains from 23% to 35-40%, planning for lifetime step up, dividends at OI rates Ambitious plans need funding, never let a good crisis go to waste, $4 trillion and counting on COVID Stimulus to get economy through 2022 election and beyond Market reacts environment and creates solutions Option overlays will be the beta adjuster "Diversification sometimes fails when you need it most . . ." Research paper Universal for the masses, Black Swans becoming more common so should solutions for them!

Divorce in the Ultra-High Net Worth Space is a little bit different.  Gates, Bezos, Kardashian . . . You don't have to look too far into the headlines to see how important this space has become for wealth families. While the emotional pain is the same, the stakes are higher and the process can be more complicated.  OLIVIA SUMMERHILL joins us to help us think through the issues. In her practice, Olivia has seen the devastating effects of divorce on stay-at-home mothers in ultra-high-net-worth families. She is the founder of SUMMERHILL WEALTH MANAGEMENT and helps to protect their lifestyle when they are going through a high-stakes divorce. Having developed her financial career at JP Morgan, Olivia broke out on her own and started her own firm focusing on the space. Olivia's practices focuses on affluent women.  She is one of few financial professionals to hold Certified Financial Planner, Certified Divorce Financial Analyst, Certified Divorce Specialist, and Behavioral Financial Advising credentials. I spoke with Olivia on the ins-and-outs of team-building around a divorce, her unique business model focusing on UNHW women and her advice for people going through the process. Describe your background- -How did you get to that point to making the leap to starting your own practice? -Any specific challenges? -You focus on a few specific niches- larger situations and women coming out of divorce. How did you come to specialize in that area? -How do you define UNHW? ($50mm) Engaging With The Client: Information Asymmetry- -How do you get past the initial client's shock? -How do you get clients through that education process? Teamwork with the Advisors -Divorce is complicated and involves many different experts besides the divorce lawyer- what does a good team look like?  (Legal, Tax, Investment, Estate, Psych, Administrative/scheduling) -How do you integrate with the team / issue spot / decide who the quarterback is? -Any examples where that has worked well (and where it hasn’t?) What does your process look like? -How do you know when to step in or step away from the emotional and psychological repair that needs to happen- when do you call in the experts?  Do you get involved in the child custody issues? -A big challenge is understanding cash flow needs and dividing illiquid wealth – how do you help clients think through that – how does that work with a divorce lawyer’s strategy?  Pre/Post nuptial planning? -If going through the internal questioning, what should someone thinking about a divorce be thinking about?  What information should they be thinking of collecting?  What happens when you don’t think in these “business” terms? Practice Notes -You have a unique (and cool / aligned) business model- you consult but don’t manage money- help us think through that.  How do you get paid for your value (I will be listening intently to this- I struggle with it myself)!!! -What do you do to “get out there” given your business model? -Is there anything idiosyncratic about doing business the Pacific Northwest? Do you clients come from all over? Staying in Touch -How do we keep track of you? OLIVIA'S LINKEDIN PROFILE: https://www.linkedin.com/in/oliviasummerhill/ OLIVIA'S PODCAST: https://podcasts.apple.com/us/podcast/divorce-for-wealthy-women/id1546130936?i=1000503911523 OLIVIA'S IG: https://www.instagram.com/summerhillwealth/?hl=en

"Shirtsleeves to shirtsleeves in three generations" is as old as commerce itself. Family enterprises rarely make it beyond three generations for many reasons. Today, we hear the story of the Grossman family from BEN GROSSMAN who co-operates the family business with his brother, David. They are fighting that "Shirtsleeves" phenomenon with an interesting set of tools and intention. In this podcast, we listen to their story of building the family business, managing transition and creating the conditions for success in future generations.GROSSMAN MARKETING GROUP was founded as the Massachusetts Envelope Company back in 1910. Ben Grossman and his brother, David, are the 4th generation of family leadership 111 years later. The company has evolved into a full-service traditional and digital marketing firm.Ben Grossman went to Princeton University. After college, Ben worked as a strategy consultant to Fortune 500 clients, as well as started and sold a sportswear and marketing firm. He went on to receive an MBA from Columbia Business School before taking the reins of the business with his brother. Ben's Background The Business “Then”: The Nature of Grossman Marketing Group- -What does GMG do? -A Brief History and who are the players? -What was important to your father and other family members? -How were you and your brother “developed” and integrated in the business? The Next Generation-  The Business “Now” -What processes do you and your brother use to run and evolve the business? **“Start Stop, Continue” Review -How does a marketing company survive and thrive in this day and age? -How was your succession process different from other businesses that you see? -What did succession look like for you father? -Establishing credibility and not taking success for granted -What hasn’t worked?  What are the frictions?  Anything you would have done differently? -Outside Boards? The Business “Next” How are you thinking about ownership and operational succession? What do you think your kids’ involvement will look like?  Will it be with the firm? How do you think about the impact to other constituencies? (I.e. community, employees, customers, vendors) GMG's Strategy for the future "The Letter" - Examples of Communication within and outside the family. This is a treasure trove for families looking for good examples of value communication. They articulate an ethos that has served the family for four generations (plus!). Link to Ben's great grandfather’s dollar-a-year check from the US Government: https://uploads-ssl.webflow.com/6037c57f7424b4ea01ef8e45/60515ae13f381f3f1ef1ca37_Dollar%20a%20year%20man%20check.jpgLetter the Grossman Marketing Group sent out when Ben's great-grandfather left to serve FDR and when Ben's grandfather left to serve in the Army: https://uploads-ssl.webflow.com/6037c57f7424b4ea01ef8e45/60515a91e1e851084c30e394_1941%20Letter.pdfLetter Ben and David sent out when their father left the company to serve as Treasurer of Massachusetts 70 years after our great grandfather left for public service: https://uploads-ssl.webflow.com/6037c57f7424b4ea01ef8e45/60515a913f381fee04f1c956_2011%20Letter.pdf How do we keep in touch with Ben? Ben's Blog: BEN GROSSMAN'S BLOG GMG's acquisitions page summary here: GMG ACQUISITION SUMMARY Grossman Marketing Group: WWW.GROSSMANMARKETING.COM Personal website: WWW.BENGROSSMAN.INFO LinkedIn: BEN GROSSMAN Twitter: @BIGROSSMAN

With interest in alternative asset classes at an all-time high, the focus of family offices and other investors has been to investigate more "liquid assets." We're not talking about cash or oil . . . the spirits world has produced scores of profit stories at the asset class and business level. Bourbon is a niche that has been on fire recently. With a low interest rate environment, private capital's huge appetite for "uncorrelated" asset classes, and a theme that is a haven for entrepreneurs in Kentucky and beyond, this is a good time to investigate the bourbon space. It is more than just Jim Beam, Maker's Mark and Wild Turkey. (FYI- Jack Daniel's is technically a Tennessee Whiskey and not a bourbon). To get our arms around the subject, I spoke with MARK GARBIN and centered the discussion around bourbon. MARK is an investment management executive focusing on fiduciary duties issues in investment vehicles for public and private funds.  He is a CFA charter holder and professional risk manager.  More importantly, he is an expert on bourbon and whiskey both from a quality and taste perspective and as an asset class. He is the author of many books including his new book “Whiskey Glory” – about the rise of the Dewars famous lineup. We take a deep dive into bourbon as an asset class- actually owning the liquid inputs and deriving yield from them- to investing in a bourbon company. Finally, we get into some of the fun stuff around the great tasting bourbons and terrific whiskey bar experiences that Mark knows well. This podcast is so chock full of information that I'm having a transcript done (which will be coming soon). in the meantime, the outline is below. Enjoy! A little background on Mark How did you get involved in Bourbon? Becoming a sommelier and writing about "Whiskey and Romance" in NYC https://www.amazon.com/Whisky-Romance-Manhattan-Neighborhood-Restaurants-ebook/dp/B07565P833/ Different classifications and ways to learn about the bourbon subject – rex videos Bourbon as an asset class Why is Maccallan 18yr whiskey at $350 vs the 25yr $3500 How does a barrel program work? Expected returns? Fixed Income attributes (and risks)? How do warrants factor into a barrel program? Bourbon as a Business What makes for a good whiskey company and brand? A brief discussion of the antiquated 3 tier system (manufacturing, marketing, 3rd party distribution) reduces profit for the producer- and why a direct link to consumers is vital now. The legal and distribution landscape is changing. Digitialization of marketing (and the rise of direct distribution) Experience of Bourbon at Source- great bourbon at the experience level- Good to visit, bad to distribute- lots of “limited release” The rise of goodwill, the mailing list and the repeat buyer Brand is vital and important to the exit strategy The Bourbon Experience Favorite Places Favorite tastes How do we stay in touch?  MARK GARBIN Twitter: @CoherentCapital Where do we find the book? https://www.amazon.com/Whisky-Glory-Tasters-Stories-Compendium-ebook/dp/B096PMS7FG/ https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

With the Biden proposals comes the potential for tax increases at the income, capital gains and estate tax level. Life insurance is becoming interesting again to a lot of families looking to expand on their functions of income replacement, business succession and tax planning. Using trusts and other structures to amplify their effectiveness is shifting back into focus. The ongoing maintenance of these structures is usually underestimated and the resulting liability could be a nasty surprise for many families. To help understand the emerging tax environment and the best practices around life insurance and the under-appreciated task (and risk) of administering life insurance trusts, I spoke to ANDREAS STUERMANN. Born and raised in Bremen, Germany, Andreas moved to California in 1987. He began his financial services career with John Hancock in the San Francisco Bay Area as their technical resource in sophisticated life insurance and benefit transactions. In 1998, he joined Winged Keel in New York City for which he managed design, implementation, and administration services of substantial life insurance, non-qualified benefit, and wealth transfer programs.  In 2003, he founded Stuermann Consulting, Inc., an independent insurance and benefit advisory firm. Background What is the function of life insurance? Replace income, Fund Business Succession, Income Capital Gains, Estate taxes, Insurance as an Investment? Asset Protection? Executive compensation? What is the benefit of having insurance owned in a trust?   Proceeds pay outside of the insured's estate, asset protection, structure around distributions, liquidity at major life transition, others . . . Many individuals are tasked with acting as trustees of these trusts- why might that be a bad idea?  Are Individuals qualified to understand the legal requirements of a trustee and the vagaries of the insurance industry? Making sure all Crummey letters are sent and the trust complies with all other formalities- Making sure all timely premium payments are made- Making sure the policy continues to make sense for the trusts' beneficiaries and is performing- What is the best practice for reviewing insurance policies?   Confirm who actually owns the policies and whom the beneficiaries are- you'd be surprised at the mistakes! Where does the policy stand? Is it funded? Are there any loans against it? Are there useful in-force projections to analyze the policy? Has it been stress tested? How is the performance of the Insurance Company? Any issues with capitalization to be considered? How often should policies be reviewed? Every year? Every few years? How does the trustee make sure the approach around insurance is handled in a consultative manner (as opposed to being designed to generate another sale?) How does one stay in touch? STUERMANN CONSULTING ANDREAS STUERMANN on LINKEDIN https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

Puerto Rico is a jurisdiction that excites the imaginations of wealth planners. It has interesting attributes for American citizens that other non-U.S. jurisdictions don't. For instance it is the one place that American citizens can greatly reduce their Federal Income tax liability without having to renounce their citizenship. This has generated an enormous amount of interest. There is good reason for that interest. 2020 and 2021 have thrown a lot of uncertainty at wealthy families trying to arrange their affairs. A worldwide pandemic, relative electoral chaos, an explosion of wealth in some sectors of the economy, the targeting taxation of the wealthiest families and all sorts of legislative uncertainty have foretold increasing tax and compliance burdens for most people. With the chatter of Puerto Rico as a magic pill, I thought it was necessary to find out more about the benefits, the requirements, the traps for the unwary, and the best practices in using Puerto Rico as a jurisdiction for wealth planning. Enter MARIA DE LOS ANGELES RIVERA, Tax Partner in Grant Thornton's Puerto Rico office. In her role as tax partner, Maria engages in the design and development of tax planning and consulting strategies. This includes tax services in the area of mergers and acquisitions,business reorganizations, partnership transactions, tax incentives and exemptions, individual and corporate tax issues, personal financial matters, and others. Mrs. Rivera is a summa cum laude graduate and holds a bachelors degree in business administration from Catholic University of Puerto Rico and holds a Masters degree in publicaccountancy from the University of Texas at Austin. She is an expert in the ins and outs of Puerto Rico and a terrific resource as we dive into this topic. Below is an outline of our discussion. Of particular use to those who want to dive into the details is a link to GRANT THORNTON'S 2021 PUERTO RICO TAX AND INCENTIVES GUIDE. This is extremely helpful in starting a Puerto Rico relocation analysis. (As with any tax planning, an analysis of an individual situation with the requisite legal, accounting, investment and business advice is mandatory- this podcast is for educational purposes.) INTRODUCTION Maria's background and tax training. OUTLINE Puerto Rico is getting a lot of attention as a planning situs for US Citizens- why? Expatriation "lite"?  For U.S. Citizens that are willing to give up citizenship for tax or other reasons, they usually have to pay a hefty exit tax. In Puerto Rico, with the right structuring, you can maintain U.S. citizenship with reduced federal tax liability (with no expatriation tax). It's not as easy as just renting a place and "moving down there". What kind of analysis should prospective "re-locators" go through? What are the family implications? What about thoughtfully leaving your previous state of residence? Benefits Personal Taxes- What are the benefits?  Tax Savings at the Income, Capital Gains, and Estate Level. Business Taxes- What are the benefits for people locating their businesses there? What are the parameters? Geography and Business features of Puerto Rico Personal Tax Benefits What is required?  The Presence Requirement- -Physical presence (Annual proof of living in P.R. for 183 Days +, what is the home purchase requirement?) -Tax home presence - where you work from? -Closer connection - where do you "live"? How do you prove it? -Is there planning to think about during the year of the move? Forms?) -What are the requirements for those who are anticipating a significant capital gains event? Business Tax Benefits ? What is the general rule for whom this could work for? What are the traps for the unwary? -Recordkeeping -Audit risk -What actually qualifies? -Best practices- what should someone do if they are thinking about this route? OUTRO

https://www.amazon.com/Soundbite-Admissions-Secret-College-Beyond/dp/0306874830/ Sara Harberson, America's College Counselor, is a nationally recognized authority on college admissions with formidable credentials: former Associate Dean of Admissions at the University of Pennsylvania, Dean of Admissions at Franklin & Marshall College, and Director of College Counseling at the Baldwin School. Sara is one of the only private college counselors who has led both an admissions office at a highly selective college and a college counseling office at an elite high school. She shares her expertise with a wider audience as the founder and CEO of ADMISSIONSREVOLUTION.COM, a free website available to all, SARAHARBERSON.COM, for personalized college counseling and free resources, and APPLICATION NATION, a private subscription-based Facebook group. She lives in Lancaster, PA. Sara has appeared as a college admissions expert on HBO's Vice News, CBS Evening News, CBS This Morning, TODAY, and CNBC. She was most recently interviewed as an expert on the effects of COVID-19 on college admissions by POLITICO, Higher Ed Dive, Good Day Philadelphia, and KYW, among others. Her op-eds have also appeared in USA Today, LA Times, Chicago Tribune, and various other national publications. https://www.youtube.com/watch?v=0v5yHnWCiLE&t=322s Outline A snapshot of the current college enrollment environment. What are kids facing? How do you help kids (and their parents) not get overwhelmed by the process? The concept of the Soundbite What is different now than what I (graduating from college in the mid 90's) was used to? Increased exclusivity, social media, kids more mature now than before, broader experiences? What are Admissions Officers looking for?          Surprise! Officers probably only look at an application for 4-6 minutes- there are just too many applications to get through. Diversity is important – and at many levels- racial, geographic, socio-economic, first generation, rural among others. Academic programs- Admissions directors have to meet targets and needs of individual programs Sports, extracurricular activities - the well-rounded individual? Admissions committees want what they don’t have or what they don't have a lot of Show me the evidence that backs up a candidate's “major” preference What role do finances play in the college's decision-making process? Colleges are expensive right away just in terms of research and visiting schools! How do they handle scholarships? Holistic admissions Need Aware- will factor in ability to pay. Need blind – don’t care about pay Merit scholarships Has anything changed since Operation Varsity Blues? Rick Singer - he had the game figured out and identified the holes in the admissions process Sports were the key to get in non-standard applicants What about Standardized Testing? The trend: getting away from standardized tests- Back door way to get increase in diverse numbers in applicants How do we keep up with you and where can listeners buy your book? SaraHarberson.com https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

*(5/30/21 UPDATE: A FULL TRANSCRIPT IS UNDERNEATH THE OUTLINE). In this podcast, I spend some time speaking with wealth management industry expert, Brittain Prigge, about the role of communication and expectations with wealthy families. We both agree that broadening communication within wealthy families is the surest way to reduce the risk of wealth destruction across generations. Brittain brings many real world examples and wisdom to this important topic. She has unique insight into the art of getting these (often difficult) conversations started and how to keep them productive. BRITTAIN PRIGGE, CFA is BALENTINE'S President and Head of Relationship Management. Balentine is the Atlanta-based RIA with over $4B in AUM. A founding partner, Brittain also sits on the Management Committee, helping steer the strategic direction of the firm. In 2014, Brittain was named one of the Top 100 Women Financial Advisers by the Financial Times in its inaugural list, and in 2020 Atlanta Business Chronicle honored Brittain as a Women Who Mean Business honoree. As a reminder this conversation is for educational purposes and is not investment advice- enjoy the conversation- there are lots of useful points here. Your Background What are the misconceptions around discussing Wealth in the Family? Is this a one-time event or more of a culture that needs to be built? Importance of Alignment at the Head of The Family- The Danger of Assumptions The Importance of Historical Context Immigrants / or Natives? Birth order / Blended Families? How Do You Start the Conversation? Example Questions:  Defining wealthy Legacy: Who are you beyond your wealth? How do you wish to be remembered? Defining Legacy: Who are we beyond wealth? What features/values do we want to persist? Other Questions- Documenting Legacy:  There is no ONE way to do it Letter of Wishes Personal Histories Creativity- Video, Social Media tools Include Detail Timing?  Family meetings? How Often?  Where?  Who has input?  Who is moderating? Education- how do you make sure everyone starts out from the same place? Preparing for Asymmetries of Knowledge, Interest, Attention Dealing with Conflict Complex Family Systems Siblings- dealing with baggage, galvanizing for the future Blended Families- Unique Issues In-Laws- Bringing together Diverse Backgrounds, Making them Involved Ultimately the most difficult question: Fair vs Equal How do we stay in touch with you and follow what Balentine is doing in the space? BALENTINE.COM BRITTAIN PRIGGE INTRO: Welcome back to the “Wealth Actually” podcast, the show that features artists, entrepreneurs, experts and commentators that will give you the right knowledge, planning and guidance so you can preserve your assets and enjoy your wealth, learn more and subscribe today at weatlhactually.com. And now here's your host, Frazer Rice. FRAZER RICE: Welcome back to the “Wealth Actually” podcast, I'm Frazer Rice. Today, we're going to be talking about having difficult conversations with wealthy families and we have a noted expert in the field. Britain is a CFA and the president and head of relationship management for Balentine. In 2014, Britain was named one of the top 100 women financial advisers by the Financial Times in its inaugural list. And in 2020, the Atlanta Business Chronicle honored Britain as one of the women who mean business honorees. As a reminder, this conversation is for educational purposes and is not investment advice. Brittain, welcome aboard. BRITTAIN PRIGGE: Thank you so much, Frazer.  I'm honored to be part of your podcast. I've listened to you a lot. FR: Well, we're thrilled to have you and it's terrific to have your viewpoint on. What I would describe is really tricky discussions that wealthy families are having. Maybe to start, though, could you take us through your background a little bit and how yo...

This was an opportunity to speak with an amazingly accomplished portfolio manager and entrepreneur. Right now, the specter of interest rate volatility, market volatility and inflation risk have investors' full attention. Nancy Davis's fund, IVOL, was built on her experience dealing with these issues and has received a lot of positive recent notice. Nancy began her career at Goldman Sachs where she became the Head of Credit, Derivatives and OTC Trading. She went on to be a portfolio manager at HighBridge and taking on management responsibilities at Alliance Bernstein before taking the leap and founding her firm, QUADRATIC CAPITAL LLC in 2013. It is there that she has built a unique business around her expertise. In this episode, we talk about her background, what problems her strategies try to solve and how she does it, and the decision to structure her fund as an ETF. Outline Describe your background and what led to the founding of Quadratic- The experience at Goldman Sachs, HighBridge, Alliance Bernstein Getting back to being a Portfolio Manager and forming your own firm What Investment Issues does IVOL try to address?  Interest Rate Volatility Increased Inflation Investment expectations and market volatility; Where would IVOL normally fit in an asset allocation? Dealing with Interest Rate Volatility  Generationally low interest rates vs the Federal Reserve with its foot on the interest rates  Interest rate jumps that are big on a percentage basis but not that big in terms of actual BPS Financial industrial complex where expertise in dealing with rising interest rates is retired or dead What is the difference between interest rate volatility and equity volatility- how do you exploit this? Recent examples What is the difference between CPI and "actual inflation"? How does your strategy try to address that? The fund is made up substantially with TIPS, but also with other securities and options- Why are TIPS not fully adequate?  How does being invested in OTC rates improve upon other methods? How does the IVOL implement its investment strategy (TIPS + other options/FI)- Why is this preferable? Enhancing other allocations  Traditional Fixed Income - IVOL holds TIPs and is long-volatility, which can act as a potential diversifier to a fixed income portfolio centered on the Barclays Agg. Real Estate- IVOL may help hedge the risk of falling real estate prices brought on by rising long term interest rates. Equities- IVOL owns fixed income volatility and may act as a market hedge since volatility has historically increased during large equity sell-offs.  IVOL is potentially defensive for an equity portfolio given its use of US Treasuries. Further, its options potentially benefit from a steepening of the yield curve, which historically has often occurred during equity market declines. TIPS- IVOL owns TIPS, but they are enhanced using TIPS with options. These options function as options on inflation expectations, because the yield curve is largely a result of inflation expectations. Floating Rate Notes- IVOL has the potential to appreciate when the interest rate curve steepens and long dated inflation expectations move higher, giving investors a similar benefit to the one they are expecting from their FRN without the credit risk. Short Duration Bonds- IVOL may help hedge during bond market sell-offs should the yield curve steepen and volatility increase while providing potentially enhanced distributions. Factors that impact IVOL TIPS Bond Price- Rising prices are usually good for the fund Volatility- Rising volatility is usually good for the fund Expectations for rate cuts- Increased Expectations are usually good for the fund Long Dated Yields - Rising yields are usually good for the fund What are the couple of pieces of news that you are following intently that many investors aren't focused on?

I think direct indexing is going to be a major innovation in the world of wealth and asset management. It will help the RIA and wealth management world deliver on the promise of financial planning. It will also help rationalize the business model of many advisors as clients request more specialization around their affairs. The impacts could be enormous and many players are entering the space. To help us understand the concept of "Direct Indexing", I spoke with LISA GOLDBERG, PhD. Lisa is the Head of Research at APERIO- a $41B asset manager with 21 years of experience in the space. Aperio was recently acquired by Blackrock. Lisa is the Professor of the Practice of Economics at the University of California, Berkeley, where she directs the Consortium for Data Analytics in Risk (CDAR). We talk about what "Direct Indexing" is, how it works and why it will be important for investors. (DISCLOSURE: This podcast is meant to educate around the topic of "Direct Indexing" and is not specific investment advice.) The Framework of Direct Indexing In your experience, how are portfolios typically implemented in the wealth management industry and what could be improved? Describe the concept of Direct Indexing- (1.0 Beta portfolios with fewer positions than the index. This allows buy/sell customization around other metrics like tax lost harvesting, ESG considerations or concentration management)  Why is this important? While this isn't a new concept, why is this a step forward and what allows this powerful tool to be available for more investors?  Direct Indexing vs Index Funds, ETFs, Mutual Funds How does this work? (Without revealing the secret recipe!) What goes into the investment process for your direct indexing solutions? How do your programs systematize prudent tax loss harvesting? What factors do you focus on? Issues: Certain sectors and securities often make up the lion's share of out-performance- what is the process to ensure proper sector representation?  How do you make sure that the portfolio does not fall too far out of whack?   What happens when a clients' preferences or situation doesn't intersect well with your process? Benefits Focusing on tax alpha (and knowing that each person's tax situation is different)- Is there a consensus on how much return on a tax-loss harvested portfolio can add?  Or put another way, how much do investors leave on the table with "non-tax aware" investing? How does this help deliver on the promises of financial and tax planning? How does this help clients?   Are there any long-term projections you can share on how much clients could benefit? How does this help client advisor's that implements asset allocations?   What is the best way for people to find out more? How does APERIO work with advisors and clients?  At what asset sizes does it make sense? Links to Useful Articles Here is the mentioned "Active Management Tax Insult to Injury" link : https://www.aperiogroup.com/Resources/Papers/Adding%20Insult%20to%20Injury%20-%202015%20Tax%20Penalty%20for%20Active%20Mgmt.pdf Why loss-harvesting has worked so well: https://www.aperiogroup.com/blogs/highfliers-drive-market-returns-losers-drive-tax-alpha Ken Lassner writes about optimal gifting from a direct indexing account: https://www.aperiogroup.com/blogs/optimal-gifting-for-financial-and-philanthropic-return Here’s a user’s guide to separately managed accounts: https://www.aperiogroup.com/Resources/Papers/ETFs%20vs%20SMAs-A%20Users%20Guide.Paper.pdf Fun question: Lisa- what do you like to do in your spare time? https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/