Wealth Actually

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 you ended up at Ballantine and working with some of these higher level families? BP: If you want to go all the way back, I am from Alabama. I grew up playing tennis. I went to Vanderbilt on a tennis scholarship and ended up in Atlanta solely because of friends, but started getting interested in the stock market and got a job just to get a job, but ultimately decided dealing with the institutional-type wealth was what I wanted to do. And it got more and more interested in families and adding value in ways beyond investments. Pretty early on, I would say I’ve been a relationship manager for about 30 years and that’s the core of who I am and what I do.  Though I also manage a four billion dollar firm! FR: As we start to horn in a little bit on the difficulties that families have in discussing money within and among themselves. What are some of those first major misconceptions around wealth discussions that you’ve seen in your experience? BP: I think the assumption that you understand how the patriarch matriarch, whom we also call G one feels as well as how G1 to G3 feel, I think there’s so many different types of feelings about wealth and the expectation to be a good steward of wealth and often G1 to G3 are insecure and sometimes there is some guilt there being what we call the trust fund child.  And sometimes there’s an assumption that people feel a certain way. So I think not assuming that any situation is like the other, especially when you’re on our side of the table, is a mistake. FR: One of the things that I’ve seen, too, is that many families, patriarchs, matriarchs in particular, sort of think the wealth discussion is a one time event, not unlike some misconceptions around estate planning. I built this structure. I’m good to go. Don’t have to think about it anymore. Do you see that a lot where families come in and say, I want to check the box, I will impart information to the next generation and then we’re off and running? BP: What I see is two things. One is often these entrepreneurs that we deal with that often have a net worth that is and could be in the hundreds of millions, tens of millions is very different when it’s on paper or in the company as opposed to when it becomes more liquid. So I think there’s an assumption sometimes that you don’t need to do any of this planning unless you have liquidity, which I think is wrong. And there’s also an assumption, as you said, we’re going to have this discussion. We’re going to go in with his day planning attorney. We’re going to make all these decisions and have these solutions in a one time deal. And often that is a difficult process and B, don’t necessarily come out with the solutions that are the right ones. I think what I found over time is estate planning, wealth and legacy. Any kind of governance is a process. And if you try to go to a solution too quickly, you’re probably not going to come out with the best outcome when you get to that sort of solution. FR: A quick issue, where do you see problems when maybe the matriarch and patriarch, the generators of the wealth or the sort of stewards of the family wealth currently when they aren’t aligned? What happens if one message from one side is a little bit different from the other? You see that causing lots of issues as it steps down generations. BP: Absolutely. And I actually won’t have a conversation, a full family conversation until I feel real comfortable that the patriarch and matriarch are on the same page I will find in our business. It still is a male dominated industry and often the male. The patriarch has more of the decision making power always has, which is often a mistake. And a lot of times the matriarch has not even been talked to about it. How do you feel? And often if you do it right, you could have a year’s conversation with the patriarch matriarch or maybe just one or the other to really understand how willing they are in order to give up some of this decision making power.  And if there are two people, there has to be compromise. So is the assumption that everybody feels the same way. It’s just not right. FR: And you talk about the danger of assumptions. What do you do to kind of break that down and to get everyone on the same page? I mean, there’s sort of the assumptions around how people feel, which is by no means a small component of it. But there’s also the assumptions as to what people know and what they’re educated about regarding wealth and even how members of the family think or interact with each other. BP: I have probably the greatest coach, I would say, in the world on the whole aspect of wealth and legacy and how you talk to clients. And that’s a man named Dr. Jim Grubman. And the first several sessions we had, he would stop me and say, you’re doing it again, you’re doing it. So if you make assumptions, the family is going to make assumptions. You must take the time to go through the process and not try to get there too quickly. And that is I find that most of these people, a lot of them have built businesses and they’re used to making decisions. And you just find it is a process that takes a lot of questions and asking the questions and then actively listening is imperative for someone on our side of the table. FR: If you are going to try to consult in this way, how do you think about building mutual context among family members, whether it’s historical or, you know, the idea of whether the family is first generation American or whether they’ve been here for six or seven generations or, you know, issues around birth order or blended families or even just the history of how the wealth was built. How do you think about that in terms of getting everyone on the same page knowledge wise so that people break down those assumptions? BP: All those different aspects are important culture. Is hugely important, understanding and acknowledging the difference in the different generations, just one to two to three where they come from, they could be very, very different. They’re in the same family, but the way they grew up is vastly different. And we talk often about Jim Webb and where this in his book about natives and immigrants to wealth and the immigrants to wealth often could be the first generation who grew up and made the wealth and have a very different thought process about it. Then third generation who grew up with NetJets, and you cannot pretend that they didn’t go to a private school and they didn’t have everything that they needed. They didn’t have to scrap or that it’s just you come at it differently. So I think the acknowledgment of that and what people have not done for so long is, gee, three from an early age, how do you feel? What is your relationship to money? And I have a lot of questions we can ask to open up these conversations, but I think parents, grandparents are astounded when they actually stop on their side to actively listen to three about how they might feel if across the board you can’t assume based on culture or where you come from or where you grow up, it’s all based on the individual. So asking the questions and I’ll tell you another thing, having the right to have the conversation is huge. I think you have to earn the right. And I think people in my position often are looked at as just one or two, two person. So if you don’t earn the right with G three to form that bond or trust or they don’t think you’re on their side of the table as well, that can cause distrust and distrust in this process as a killer. FR: That, to me, is one of the problems with the whole wealth management industry that they’re facing is how do you reach the next generation? How do you become their person? How do you earn that? Right. And maybe a better way to ask it is how do you start that conversation with a segment of the family that is either suspicious or unknowing or just maybe curious, but not equipped necessarily to engage in the discussions? And how do you bring them along at the correct pace so that they’re involved and at the same time you’re able to make progress with the overarching structure? BP: I’ll tell you this through a story. I have two young clients who have recently turned thirty five twins. Their mother, father and aunt died all within three months. And twenty twenty nine of them are an interesting lot. And they went from needing to work, know seventy five thousand dollar jobs to never needing to work again. I was one of the first calls they made to help with just trying to understand everything that was happening. I think that comes from the fact that 10 years ago I sat with one of them before she was getting married out on the porch downstairs here at a restaurant and tried to talk to her about why we needed a prenup when she was going to get married. And she said, why are you trying to ruin my marriage? Brittain Prigge, you’re trying to ruin my marriage. And it was interesting because we formed a relationship based on that conversation and my understanding of how she looked at all of it that lasted. And so I think the fact that over the past year, we she and her twin sister and I have literally talked weekly trying to help them get through what is the horror of having to settle three estates and lose three of the most important people in your life. But being able to be the go to person again, you have to earn that right. And sometimes you have to go through some tough conversations. So I think that is really, really important. And assuming that you can earn that trust without some time is a mistake. FR: You’re getting involved with wealthy families. Often times, that comes from the patriarch or patriarch, the wealth generators or maybe the people who are the decision makers around the wealth. What are some of the discussions you have with them to get them to be thinking beyond their generation and to be thinking from a legacy perspective, from a next generation perspective? What is their wealth going to be from a stamp on the world type of perspective? And ultimately, I guess, sort of how do they define their legacy?  How do you get them to think about that in the same way that you had that discussion with the two twins? BP: Again, it takes some time. They have to be ready. What I often talk about when I start this conversation and a lot of times people think my kids are too young, I don’t need to have that thought yet. I don’t need to have that conversation yet. People also say, why does anybody care? Do I really think my grandkids are going to care about any of this? What I start with now is to say you have in my mind a responsibility. And the family goal often is to create good decision makers in all the various roles and responsibilities. These next generation will have an adult life and saying it’s doing them a disservice if you don’t do this, if you don’t teach them how to be a good steward of the wealth, if you don’t teach them how to deal with a trust, if you don’t teach them what your expectations are with income from a trust, educating them about the values, it’s so fun to watch the light go on. I have a client who has been a client for over 20 years and he has Parkinson’s and he has started thinking more and more. Fortunately, two years ago we went through the process where he took one year to get comfortable enough to let me have a family meeting and have these discussions with due to and by the way, to are in their 40s. You’ve got to recognize that the patriarch has to be ready to transfer that decision making power, because that’s really what it is. And you also have to let them understand, A, they’re different than you are. They didn’t build it. They’re probably more native. The interesting thing is when you got some natives that are children and children that are immigrants, literally different because of how they grew up and maybe their ages. So it’s a lot. FR: So one of the important things to me, it seems in sort of transferring these values and the ethos to the next generation is writing it down and getting it into a tangible form. What are some of the tactics that you see that work? And I noted somewhere in my reading what you did, that it can be as simple as a letter. It can be as involved as a book. It can be a series of videos. It can be all sorts of things. What have you seen from an example perspective that has been effective? BP: I think what I’ve seen a couple of times is I’ll encourage people to write what they call a philosophy of wealth. And it’s funny, I talked to one guy about it for literally two years and he runs a lot and he started saying on my runs, I started thinking about what they might be interested in and it would go home and write down bullets that he thought about his career and also lives that he had made over time. So I think just that understanding of what is important, what was meaningful, what happened in your life that made you either change, I mean, stories about the business and how many businesses do you hear? The stories that they almost went something big happened, some big decision that made a difference or some risk or some fear or something, and then going forward about the business. But after that, the expectations, what gives you pleasure? What do you think is important with regard to being a. Steward of the wealth, and I’ll tell you, there are people who don’t care as much and I might push it and then I realize they don’t care. If they don’t care, I can make them care. It’s the different constituencies of wealth in the family business world. I mean, it’s beyond just the family in the wealth. You’ve got employees, you’ve got vendors, you’ve got communities that have been built around family businesses. And sometimes I’ve seen it with the next generations. There’s some passing understanding of that. But to write that down and to talk about why those components were important to the first generation and the wealth creation, sometimes that can be a real eye opener. I’ve seen it multiple times in meetings where something that went beyond the piece of paper sort of brought into a deeper understanding of where people came from. Again, I go back to how often I think it’s interesting that people don’t necessarily think, gee, three, well, they don’t think that father will care. I think they often clamor for information, you know, tell me your story. And what I found is that it doesn’t have to be with wealthy people. It’s all people. Tell me your story. Tell me what happened in your life to make you believe the things you believe and how what made you teach me what you taught me as your heir to believe? And ultimately, it’s the value. The money is important. The money as big as money is what we all talk about. But what’s behind the money? And often there is a lot and there is often heartache and there’s often tragedy and there’s often sadness that’s really important to the make up of ultimately the family. The family is, let’s call it, as ready as they will be to have a family meeting and to have sort of this joint endeavor to understand the direction not only of the wealth, but of the family generally. FR: How do you think about that in terms of the tactics around family meetings and how often where who has input those types of things? There are tripwires all along that where if you forget to get somebody’s input or you have them too often that people get bored or not often enough that people forget, how do you try to balance the cadence and the input and the general structure of these meetings? Now, a year ago, I would not have said, you better figure out how to connect with people over Zoom because that’s a new thing. BP: I am such a face to face and personal person. You’ve got to go to dinner. You got to meet him. You got to understand what they’re thinking about. Well, that’s not as possible anymore. So we have to figure out something new, another story that I think is really, really telling. I have a client who we’ve had for a little over 10 years, recently sold his business and started a foundation and wanted to bring in all his children and their spouses and stepchildren and everything. The core was around. He had a child that died, mental health, substance abuse. And so the family meeting was to discuss the foundation, to discuss what is going to be the mission of the foundation, understanding this might take us six months to get there, but with the absolute conviction that the patriarch and matriarch really wanted all of these children to feel ownership in that mission and therefore understanding there had to be some discussion. So for two months, we had discussions with the patriarch and matriarch, just like you were talking about, making sure they’re on the same page, kind of getting for things around this mental health understanding. But what was so rewarding to me and where I found it a privilege is sitting on this Zoome call and facilitating the conversation, but then stepping back and having these two who are all in their 20s and related in a certain way, but not blood related, talk about taking that core of the mission and taking it even further. So each of them, there’s six of them have a say, had an understanding. All of them fortunately did have that core because of the tragedy that happened. But how they took that one of them with women and single women and children, one with education, same mental health starts these days in kindergarten where the divide starts. I literally had to ask three questions and the conversation just flowed. And so that was the first. And we don’t expect to get this mission drawn up until probably November, December. But that is just so rewarding to watch. And you’ve got to give credit to the patriarch and matriarch for allowing that conversation to happen and people feeling comfortable enough to participate. Well, one of the cool things about that is the whole family. It sounds like it’s gotten to see how the rest of the family thinks and what’s important to them. And that’s some of that context that I think many situations are missing. And ultimately, without that shared context, that’s where shirtsleeves to shirtsleeves really does happen. And people go their own way and the liabilities increase a lot faster than the assets do. And ultimately, that’s how things devolve when people are able to communicate closely together and have that shared context. You have a better chance of extending things. You know, there’s so much that goes into that. But I do think understanding three years down the road, I remember that Sonja really did have a passion for this. So it makes sense that she wants to increase the giving amount to this type of organization. I remember that I was there when we first heard that. I also think having those discussions while the patriarch and matriarch is alive again, if they are willing to allow this type of discussion because it’s going to be different than it would be if it were just few is really important. What I find is when people leave in their will, here’s the expectations or have people, three siblings who might like each other a lot in the house in Nantucket when one just can’t afford it. Trying to put that on them is really, really difficult when the context is positive, lots of great things can happen. FR: What happens when the context is negative? There’s baggage between the siblings. There’s misunderstanding or distrust among the generations. Ultimately, there’s conflict. Have you been in situations where that’s the case and how do you handle that? I will find it often is people say third generation. A lot of times it is their generation, but it could be second generation. It’s just when a lot of times people do things for estate planning purposes, put trust together, put siblings together, and all of a sudden you realize 20 years later, they just don’t have the same values. They don’t think the same way. They don’t want to invest the same way. They don’t want to buy things the same way. They don’t want to vacation in the same places. So often in a situation now where we had this fantastic process where all the forty two entities of the companies couldn’t invest together and ultimately it’s fallen apart because of problems with the family business. And they are literally distributing everything and the whole family is divided. It is really, really hard to watch. I’ll say on our side what we can do is facilitate the fairness, if you will, and have conversations. But sometimes it’s better to say it’s better if we’re not all tied together. Maybe the family discord comes from being together and if you do split things up, you can come back together as different entities with your own thoughts, ideas, family, entities that aren’t just combined because the grandfather decided it. I will say that does happen a lot and it’s devastating. With other devastating is when money tears you apart, when certain siblings are part of the business and other siblings are not. They say you shouldn’t be part of this. You shouldn’t be getting the fruits of my labor. It happens a lot and I think it happens a lot when there’s not planning done early on. And just assuming here’s what could go wrong, let’s try to alleviate that. So one of the ways that I see that that context can be challenged is when other people, outsiders, interlopers, whatever funny thing we can call it, marry into the family. And you have people who come from completely different backgrounds no matter what happens. And they’re joining this family, let’s call it a family enterprise, but it’s certainly a structure. FR: How do you help integrate those people in a way that’s comfortable for the matriarch patriarch family structure and at the same time provides the safety and comfort for both sides as they enter into these types of situations. And I can see it ultimately when you’re around a family business that can get complicated, does the spouse participate or not participate? That integration is an issue. And I do think around that. BP: My view on that is and this is really practical, is you’ve got to be real clear with what is the decision maker going to allow? And if, in fact, you know that the decision maker is not going to allow the new in law a seat at the table for a time certain, be honest about that. And if they will never allow it to be honest about that, too. And I think that that often provides conflict. But I think being real clear about what the rules are is helpful. I can’t help but think about Meghan Markle and their little family and saying I would assume you kind of knew what the proposal is for her. But I think what happens is you get in there and I’ve had another situation where a child was getting married to somebody who was older and she knew he had a trust. And he came to me and said, I’d like my trust money. And I said, that’s unfortunately not how it happens. So try to facilitate a conversation. The outside the new in-law was say, and my parents would never, ever, ever do that. You know, they would give me anything that I was on my name. And I said, this family just doesn’t work that way. And they are very specific about what goes when. Based on that, they’re actually G3. And ultimately there’s a split in the family because of this in-law who comes in and says, I come from. A different place, this is wrong and pulls the child away, I mean, devastating, they don’t see their grandchild and it comes and that is specifically because of money, those kind of situations when I can’t facilitate some sort of help. It really bothers me. Now, some things just aren’t necessarily fixable. And you do your best. You try to educate people. You try to impart information and have that shared context of the people, understand the why behind the decision making. And sometimes that’s not enough. And it’s also really, really important. And this is one thing my mom always taught me. You got to try to look out of the everybody looks out of their eyes, the way they look out of their eyes. And so trying to understand, how did you come to the thought process you’re going through right now is really helpful. But there’s often sometimes a mistrust that comes from having money and comes from somebody say and make sure you protect. And assuming that everybody feels about the money like you feel, I’ll tell you, I’ve said it before. There’s a certain level of wealth where I think it becomes more of a burden. And to recognize that and acknowledge especially two to three to four, that that is difficult. It’s hard. The decisions that come with great wealth are more difficult as opposed to poor little rich kid. But literally it is more difficult. FR: Just because the problems are around money doesn’t mean that they aren’t problems and that they don’t have emotional impact and that they don’t need solving. Sometimes it’s tough to have different optics around that for the rest of the world, but at the same time, you have to fix it and you have to try to deal with it. So that points well taken. I think as we start to wind down here, one issue that I think is an overarching component in a lot of this sort of planning and structuring and trying to have these conversations with families is the concept of fair versus equal. Equally dividing assets is sometimes simple shorthand for being fair, but at other times it doesn’t take into account the different contexts around different branches of the family. Huge question and sort of probably overly broad. But when you’re thinking about that, how does that figure into the building of context around these wealth discussions for you? BP: I think it comes back to understanding how is it? That the patriarch or matriarch thinks, and that will be very much determined by how they grew up and not as the facilitator making any assumptions or putting my bias on anything. I think that comes back to that active listening, active listening, really understanding what is it that that they want. And I’ll tell you, people are very different. There are people that say, absolutely, I want everything. My four children. Twenty five percent of everything. I mean, if I could split up jewelry, I’d do it that way. And I think sometimes they feel like that’s the easiest way. I’ll tell you what’s interesting and what’s a big part of what I’ve learned from listening to to G3 is often they feel differently than parents might think. Say you have a special needs child that is absolutely getting more of the. Well, absolutely. At death will have a different type of trust. I find that most of the time due to G3 is so OK with that. Wants it to be that way. Or you’ve got three kids. One is struggling with money to have very successful businesses. They say absolutely. Give more to Sarah, who is a teacher and had a bad divorce and is single and is raising two kids by herself. Help her more than that. Again, if that communication there’s the other side where where the expectation that you will be given something is great. And I think often people struggle with that. It’s just like, how good a parent have you been? What do you believe? How have you conveyed your values? I’m a parent of an 18 and a 16 year old, and I don’t make judgments anymore because I know they’ll come back to haunt me. So I do think fair versus equal is again, you got to communicate, you’ve got to understand and you’ve got to ultimately listen to the client and understand what they want and then try to help facilitate that discussion with the next generation based on their feelings. FR: Well, this has been a terrific conversation. Britain, thanks so much. How do we keep track of you and what you do at Valentine? BP Mainly our website and also if you are interested in getting any of our marketing. We said something about once a month with blogs and things that we think that people will be interested in that go far beyond investments. So in any conversation, I’d love to have this. I think it’s really, really, really important. And I think more and more people are understanding the importance of this wealth and legacy discussion and how difficult it can be. FR: So it’s been a pleasure and a great and I’ll have that information in the show. Notes for our listeners Britain, thanks so much for being on. This is great. OUTRO: Thank you for listening to this episode of Wealth, Actually hosted by Fraser Reiss, author of the book Wealth Actually, and a leading private wealth manager. Head on over to wealth, actually, Dotcom, where you can subscribe to this podcast, get your own copy of the Wealth actually book and connect with Fraser directly. We’ll see you next time on Wealth, Actually. https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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? The decision to go ETF vs a traditional hedge fund partnership- What went into that choice? Were there drawbacks? The benefits of transparency, tax efficiency, lower costs for investors Finally, how best do we follow IVOL and Quadratic?  Materials: https://www.ivoletf.com/ivol-materials/ Presentation: https://www.ivoletf.com/wp-content/uploads/2021/01/IVOL-Presentation.pdf Fact Sheet: https://www.ivoletf.com/wp-content/uploads/2021/01/2020_12_31_ivol_factsheet.pdf https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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/

This podcast is off the beaten path from the usual wealth topics, but it’s no less a story of perseverance and vision. It’s a thrill to talk to my friends about their successes. In this case, it has been a long time and a lot of hard work in the making. Born and raised in Watertown, NY, JIM HARBERSON (TWITTER, INSTAGRAM) has a Masters in Religion and was a lawyer before embarking on his writing career. He has published many horror and sci-fi stories including podcast projects for “Chilling Tales for Dark Nights” and the co-writer of the graphic novel, Stay Alive. Against that backdrop, his new horror compendium is out now via MARKOSIA and can be found on Amazon and Barnes and Noble. https://www.amazon.com/Disgusting-Supermarket-Death-James-Harberson/dp/1913802248/ (Cover by STEPHEN BASKERVILLE– his work is here: https://baskervillecomics.carbonmade.com/) We catch up on a variety of topics surrounding the book, his writing and growing up in the Horror/Sci Fi genre. We also talk about his foray into graphic novels. His co-authored (with me!) “Stay Alive” was nominated for the prestigious Rondo Hatton Classic Horror Awards (Category 22:  Best Graphic Novels or Collections)   You can vote for it here: https://rondoaward.com/rondoaward.com/blog/ https://www.amazon.com/gp/product/B082H3S64D Art by STEPHEN BASKERVILLE Jim was also nice enough to furnish a list of his favorites in the HORROR MOVIE/BOOK space. Here they are: Horror Movies Freaks (1932) The Bride of Frankenstein (1935) Vertigo (1958) Psycho (1960) Night of the Living Dead (1968) Salem’s Lot (1979) An American Werewolf in London (1981) Creepshow (1981) Halloween II (1981) The Thing (1981) Basket Case (1982) A Nightmare on Elm Street (1984) Fright Night (1985) Lifeforce (1985) Night of the Creeps (1985) Re-Animator (1985) Return of the Living Dead (1985) Aliens (1986) Manhunter (1986) Evil Dead II (1987) The Lair of the White Worm (1987) The Hidden (1987) Robocop (1987) Beetlejuice (1988) Dead Heat (1988) Hellraiser II (1988) Phantasm II (1988) Bride of Re-Animator (1990) Robocop II (1990) The Silence of the Lambs (1991) Army of Darkness (1992) Basic Instinct (1992) Dead Alive (1992) Natural Born Killers (1994) From Dusk Till Dawn (1995) Lord of Illusions (1995) John Carpenter’s Vampires (1998) Drop Dead Gorgeous (1999) From Dusk Till Dawn II:  Texas Blood Money (1999) Hannibal (2001) Resident Evil (2002) Darkness Falls (2003) House of 1000 Corpses (2003) Fido (2006) Halloween (2007) Planet Terror (2007) Nurse 3D (2013) Halloween (2018) Horror Books Fiction (H.P. Lovecraft, 1908-1935) Cartoons (Charles Addams 1942-1988) Animal Farm (George Orwell, 1945) 1984 (George Orwell, 1948) The Haunt of Fear (EC Comics, 1950-1955) Shock Suspenstories (EC Comics, 1952-1955) Tales from the Crypt (EC Comics, 1950-1955) The Vault of Horror (EC Comics, 1950-1955) Amphigorey, Amphigorey Too, Amphigorey Also, Amphigorey Again (Edward Gorey, 1972-2006) Creepshow (Stephen King, Bernie Wrightson, 1981) Batman: The Dark Knight Returns (Frank Miller, Klaus Janson, Lynn Varley, 1986) Arkham Asylum: A Serious House on Serious Earth (Grant Morrison, Dave McKean, 1988) Batman: The Cult (Jim Starlin, Bernie Wrightson, 1988) Batman: The Killing Joke (Alan Moore, Brian Bolland, 1988) Judge Dredd: Necropolis (John Wagner, Carlos Ezquerra, 2000 AD, 1990) Contact Information You can find Jim on Twitter: @NovelStay and IG: @stayalivegn Markosia pages: A Disgusting Supermarket of Death:  https://markosia.com/a-disgusting-supermarket-of-death-2/ Stay Alive: https://markosia.com/books/worlds-of-horror/stay-alive/ B&N:  https://bit.ly/ADSODBN Chilling Tales Podcasts: https://www.simplyscarypodcast.com/podcasts/chilling-tales-for-dark-nights/3×05/ https://www.kickstarter.com/projects/craiggroshek/chilling-tales-for-dark-nights-a-scary-stories-col/posts/3129712 https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

On the referral of a colleague, I interviewed the Nashville-based, LEONORA WILLIAMSON. She is an expert in family business dynamics, corporate citizenship and executive coaching and she has unique insights into the world of family business succession. Aside from advising families on the myriad issues, she has lived them herself with her family’s own business. She is the founder of PLATINUM RULE ADVISORS and a Lecturer at Vanderbilt University on the topics of Negotiation and Corporate Social Responsibility for their undergraduate business program. She is also a board member of Sabre Yachts and has uniques insights into the running and transition of this family business. This was another episode where we scratched the surface of the issues we have seen and the lessons to be learned. I’ll have to have her on again! Introduction What were some of the lessons you took from this when forming Platinum Rule? Getting the “Human” part of Human Resources right Using assessments and analytics to get a hold of the full family picture The Three Big Parts of the Venn Diagram Frameworks for getting one’s arms around a big and complicated situation The Business – Is it healthy? Where is it Going? The Governance – How are decisions made in terms of ownership and operation? Who is in charge of strategy and who implements that strategy? The Family – How are decisions made at the family level? How does this intersect with the business? Intersection of “Family Wealth” and “Executive Coaching” In family enterprises, the “Human” component can be complicated by family dynamics. What issues do families need to be aware of ? Are there warning signs? How do you counsel families and businesses on information asymmetry (need to know vs want to know) when transparency is a goal, but some won’t have the tools/discretion to deal with the important information? What happens when wealth and ownership structure doesn’t interact well with operational structure?  Developing Human Capital How do you help executives that work in family organizations deal with change when it’s clear that there is a personality clash or obvious performance problem? What happens if geography limits the talent pool? What if you have a leader that has the “raw material”, but is new to being an executive or comes with a different leadership style?  Human Capital Trends? How do family businesses think about the important benefits of diversity and inclusion? Where do you think “Work From Home” fits in? Are relationships even more important in this landscape- how do you foster them in this new world?  How do you identify / develop talent via zoom? Contact Information www.platinumruleadvisors.com https://www.linkedin.com/company/platinum-rule-advisors/ https://www.linkedin.com/in/leonora-zilkha-williamson/ https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

I’m thrilled to have Ted Seides on the show to discuss his new BOOK, his wildly successful PODCAST, his FIRM’S media and coaching focus and the world of capital allocation. Ted has a unique perspective in the asset management world, having worked for the legendary David Swensen at the Yale Endowment, having conducted thousands of interviews with portfolio and investment managers and having capital allocation responsibility both for others (at Protege Partners) as well as himself. He takes a look back at what he learned and peers into the future of a space that has many challenges. https://www.amazon.com/Capital-Allocators-worlds-managers-invest-ebook/dp/B08N56SPN6/ Introduction Ted’s Background- His experience at the Yale Endowment with David Swensen and lessons learned. What does your BUSINESS do today?  Any particular lessons going strictly from the allocation industry into more of a media focus? How have you taken the amazing access you have to the capital allocation system and used it to build your media focus? With this being your second book (the first is “So You Want to Start a Hedge Fund”), take us through the book writing process- how did you use the podcast to source material and whom were you writing the book for? (As an aside, David is famous for having a [losing] bet with Warren Buffett that his allocation to hedge funds would beat an S&P 500 Index- he has talked about that frequently in other venues and WROTE ABOUT IT HERE.) More specific questions on the Asset Allocation Space- In synthesizing lessons from your interviews and balancing against your own experience, what was the most surprising common theme that resonated through them?  Overcoming adversity (Pulling the plane out of the death spiral) . . . in the interviews and your experiences, how do allocators stop negative momentum?  Does career risk act as a natural stabilizer?  How big a threat is career risk for the asset manager and the allocator and how do you minimize that in the decision-making? Manager selection as “predicting evolution” . . . how do you diagnose skill in a snapshot of time vs a culture of process evolution that will continue to persist? The job description of CIO . . . (A question I didn’t ask, but should have was “Have you ever had anyone from the search industry on?” . . . how do they navigate this insular world where neutrality and discretion is often pried?) The Impact of ESG, not on investments necessarily, but the managers themselves?  What percentage of asset managers are people of color?  Women?   It is six times more difficult for a manager to get a face-to-face meeting with an institutional allocator than a high school senior to gain acceptance at Yale or Harvard.  What is the future for new and emerging managers in this environment?  Who is doing good work on manager inclusiveness? How does politics impact decision-making at the Board Level, Allocator Level, Portfolio Manager level? Is there a study on the impact of life events on investment performance / process?  Is there a correlation?  Character- What percentage of CIO’s / managers are divorced/getting divorced?  Death in the family?  Have you hired private investigators to “peer under the hood”?  How prevalent are questionable practices / fraud?  How does that information get whispered? Do you have a couple of trends in the allocator/asset management space that we should watch out for? I thought your end section compared well with Jon Winokur’s book “The Portable Curmudgeon” on famous quotes (I loved it- particularly Greg Fleming’s “Optimism is Moral Courage”) . . . What were your favorite quotes from experts on various topics? How to find Ted: www.capitalallocators.com TWITTER: @tseides https://capitalallocatorspodcast.com/ https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

I see the concept of locating wealth and assets at the state level all the time for a variety of reasons . . . There has been only occasional talk of U.S. citizens exploring other citizenships. At the federal level, US citizens are taxed on worldwide income no matter where they live. However, with a new regime in Washington (and wealth tax initiatives) , there seems to be more interest in foreign citizenship options. To help make sense of the myths and the current climate, I spoke with David Lesperance. He is a top International Tax and Immigration Advisor with his Gadanz, Poland based firm, LESPERANCE AND ASSOCIATES. Citizenship Diversification -Who should be interested in this and why? -How prevalent is it?  6045 in 2020 (How many estate tax returns were there?) Jurisdictional Arbitrage -Why would you do it?  Taxes, ideology, other reasons? -If you are a US citizen, what’s the process?  -How much does it cost? (Including the calculation of exit tax of 40 pc of net worth) -What are the usual places to “go”? -What are the rules of engagement once you’re “out”? -What is the concept of “back-up citizenship?” Future legislation- -Are you putting yourself on “Bad Lists”? -The Dangers of a Wealth Tax for wealthy people . . . -Step Up in basis removal? -The increasing cost of “Citizenship Insurance” https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

The 75th “Wealth Actually” Podcast . . . Wow . . . it seems like I just started this project a few months ago. It has been 4 and a half years since the first one . . . it’s alarming how fast time flies. Hopefully, I have improved over time! This 75th recording is an industry specific interview, but it has wide ramifications. In getting up to speed on a different project, I stumbled across the book “Ethics for Trustees 2.0” by MARGUERITE LORENZ. Based in California, Marguerite is a Master Trustee and the Managing Partner of LORENZ PRIVATE TRUSTEES. https://www.amazon.com/Ethics-Trustees-2-0-Guide-Trustee/dp/172837278X/ Ethic for Trustees 2.0 is a quick and extremely informative read on the roles and responsibilities of a trustee and the establishment of good practices around decision-making that involves judgment and discretion. It also went into some detail about the California licensing component of individual trustees- something I knew little about. So in typical “me” fashion, I called up Marguerite to find out more about the book and her firm’s unique practice. That led to her gracious appearance on the latest “Wealth, Actually” podcast. We covered: -Her unique background and the formation of her private trustee business. (It has its own unique succession story too!) -Marguerite’s rationale and experience in writing the book -The Definitions of a Trust, their uses and some of the nomenclature -The Duties of a Trustee/Fiduciary- (many of which trustees aren’t aware of)! -What makes a good trustee?  How does one deal with arguing beneficiaries? Tricky assets? -The Origin of CALIFORNIA LICENSING FOR PROFESSIONAL TRUSTEES (and why it may be important for normally exempted attorneys and CPAs to get licensed. -When does advice graduate from being to transactional to ongoing and how does it relate to administration of structures and discretionary decision-making? -Traps for the unwary trustee  -What functions or areas of trustee responsibility are good to ask for help? When do you bring in outside experts? -Useful Resources and Groups: INDEPENDENT TRUSTEE ALLIANCE ESTATE PLANNING GROUP NETWORK -How do we stay in touch? MARGUERITE LORENZ LINKEDIN LORENZ PRIVATE TRUSTEES (WEBSITE) MARGUERITE LORENZ TWITTER https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

EUAN RELLIE is on the podcast today. We went around the world in half an hour and probably could have solved the worlds problems over drinks if we had the time. Alas, we only get a taste of Euan’s informed worldview and his story of building a business and advising clients as they solve the puzzle of doing business in Asia and around the world successfully. We do get a hear a bit about of his love for Arsenal Football at the end. For those who want to hear more from Euan, he is an excellent twitter follow . . . @EUANRELLIE. He is quoted often on matters of finance, fashion and culture- recently in the New York Times and the South China Morning Post. In his day job, Euan is an investment banker with the firm he founded, BDA Partners. Since founding BDA in 1996, he has lived in New York and London, and Singapore, and has worked in China, Taiwan, Korea, Japan, India and across the Middle East. 1990-1996, he worked for Schroders, the UK investment bank now part of Citigroup, in New York, London and Singapore. He was Head of SE Asia Execution for Schroders Asia-Pacific Regional Advisory Group. Our discussion covered a wide range of topics- I wish we had longer! Economic Outlook What are some of the good and difficult data points that you are focussing on? Background- How did you get into the world? How did your London background prepare you for New York? BDA’s Function Focus on Asia and helping firms on the sell side. Helping firms access the capital and expertise in Asia and around the world Prospects for Asia- What does the U.S./China dynamic look like long term? What do American businesses get wrong doing business far from home? United States Politics- What should we take away from this tumultuous last few months? What can we expect in the post-Trump world? What should we feel optimistic about? Arsenal Football How do the prospects for this season look? What does the future look like? BDA Partners Website: https://www.bdapartners.com/ https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/