Building the team for the business owner: Picking your first partner

Coyne_HeadshotJohn Coyne, Vice Chairman

Last week, we hosted a terrific webinar with Andrew Haas, a senior estate planning partner at Blank Rome, a major Philadelphia-based national law firm. Over 100 financial advisors throughout the country signed on to participate.

It dawned on me as I listened to Andrew that when building a team for a business owner client, financial advisors should align first with an estate planning attorney. Why? Because together, not only can you help business owners understand how their life will be after the sale of the business, advisors can help business owners recognize their own mortality.

My friend, Dan Prisciotta of Lincoln Financial, has a line in his excellent book, One Way Out, which is about helping business owners exit their business for the highest possible value. In the book, Dan says, “Your exit is 100% guaranteed whether you go out vertically or horizontally.”

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The role of the partnership is to help business owners maximize the value of their business so they can enjoy the fruits of their labor and secure their legacy after they are gone. The estate planning lawyer is the bucket of ice water that can wake the business owner up to the reality that poor preparation of the exit plan will have a direct impact on how their family and heirs will live their lives after they are gone.

An estate plan coupled with a financial plan prepared by you reflects an exciting and reasonably predictable future after exit. You have helped them take the first step in letting you build their team. The key to a great partnership is transparency. By having both the financial plan and estate plan fully understood by all parties, as these are both living documents and will evolve over time, you can keep everyone’s eyes on the target of a successful exit.

We want to help advisors help their business owner clients live the life they’ve worked for. The way to begin the process may lie with helping them understand life after they’re gone.

To help decide which estate planning attorney is appropriate, you may consider engaging in some of the services that are offered through investment management firms such as Brinker Capital that have relationships with a wide array of organizations. Brinker Capital Wealth Advisory works with business owners, individual investors and institutions with assets of at least $2 million and has partnerships with firms that can assist with the estate needs of business owners.

To learn more about Brinker Capital, a 30-year old firm following a disciplined, multi-asset class approach to building portfolios, and an overview of the services available through Wealth Advisory, click here.

Have a safe and enjoyable Independence Day weekend!

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a Registered Investment Advisor.

Being Okay Can Help You Reach Your Goals

Dan WilliamsDan Williams, CFA, CFP, Investment Analyst

Simply being “okay” is often considered to be somewhat unsatisfying. Most companies aim for a consumer regard that’s higher than “okay” and the win-at-all-costs mindset is encouraged beginning at an early age. As Will Ferrell so aptly put it in Talladega Nights: The Ballad Of Ricky Bobby, “If you ain’t first, you’re last.”

It goes without saying that the efforts of financial advisors should always be of the highest standards and putting the needs of investors first and foremost. The aggressive pursuit of playing to win at the cost of finishing the race can be highly detrimental in the world of investments. Blindly seeking out the highest returns for the assets of an investor saving for retirement can wreak havoc and have potentially disastrous consequences.

The value of a financial advisor is not getting his/her clients to their goals in an exciting manner; but rather to get them there through reliable methods. For example, more often than not, making sure clients have insurance proves to be an unnecessary task, but in rare cases it can prevent financial catastrophe. Similarly, having 3-6 months of living expenses in liquid cash equivalent assets is often a performance drag, but it can prevent figurative flat tires from causing havoc on a clients’ life journey. The practice of dollar-cost averaging typically lags the performance of putting all of one’s money into the market immediately, but it ensures that investors are buffered from bad timing impacting their lump-sum purchase.Being Okay

This idea of spreading out risk translates well into an investment portfolio that is diversified across multiple asset classes. A meaningfully diversified portfolio may rarely hit performance homeruns, but it has the potential to get investors to their savings goals with less market volatility. At Brinker Capital, all of our investment portfolios are built on this idea of diversification. While an investors’ hindsight bias may cause them to regret not being 100 percent in the “right” asset class and frustrate the financial advisor who’s kept their clients on track, the reward for the proper long-term asset allocation is a successful completion of the race. Much like the tortoise of The Tortoise and the Hare, the journey may not be as quick as some would like, but continuous progress is made overtime to compound wealth and achieve a savings goal. Meaningfully diversified multi-asset class portfolios will fare better than all-equity portfolios in bear markets and better than all-fixed income portfolios in bull markets. In years when domestic equity and fixed income lag global market and alternative asset classes, diversified multi-asset class portfolios will bolster performance.

While most of us strive to achieve wins in life, at Brinker Capital, we believe that our diversified multi-asset portfolios leave investors okay. And, this is something of which we are truly proud of.

Memorial Day: A time to remember

Noreen D. BeamanNoreen D. Beaman, Chief Executive Officer

Did you know? The original meaning behind Memorial Day, which was officially proclaimed on May 5, 1868 by General John Logan, was to set aside time to remember the brave men and women who gave the ultimate sacrifice while serving the United States of America. We encourage all of you to take a moment over the weekend to remember the true meaning of the holiday and honor the men and women who sacrificed their lives for our freedom.

In observance of Memorial Day, Brinker Capital will be closed on Monday, May 29.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a Registered Investment Advisor.

 

Individual or corporate trustee: Five things to consider before committing

John_SolomonJohn SolomonExecutive Vice President, Wealth Advisory

When establishing a trust, many people name a family member or friend to serve as trustee instead of appointing a corporate trustee to save the trust money. While it is an honor to be so named, this is a leadership position that plays a powerful role in managing a family’s wealth. Understanding that saving money is significant, it is important to fully explore both corporate and individual trustees to determine the most appropriate option for the trust.

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Individual trustees often have broad powers, a good deal of responsibility, and, in turn, accountability. Trustees must interpret and follow the terms of the trust agreement, oversee the asset management of the funds held in trust, make distributions from the assets, keep records, and do the necessary tax reporting. Here are five things the job description might not tell you, but are important to know:

  1. Fiduciary first. Trustees have what is called a fiduciary responsibility. What that means is that as trustee, you are legally bound to fulfill your duty of putting the benefactor’s welfare first when carrying out the settlor’s (the person who created the trust) wishes. In carrying out your duties, individuals must work to remain impartial and not let emotions cloud any judgment. In instances where this becomes too difficult a task, a corporate trustee may be the right choice.
  2. Managing the bottom line. One of a trustee’s key responsibilities is to manage the assets in the trust. This duty requires ongoing portfolio monitoring and responding to market conditions to ensure that the trust assets are managed in accordance with its investment objectives. Investment allocation decisions must be made in light of the changing needs of the beneficiaries, and the asset managers require ongoing oversight. A corporate trustee can assist by representing the collective interests of investors and ensure the company offering the investment complies with the trust deed.
  3. Mistakes can be costly. A beneficiary could challenge any and all of a trustee’s decisions, from the allocation decisions made, to the investment losses the trust incurs. Many trust agreements have language that attempts to protect the trustee from liability except for cases of gross negligence or willful misconduct. A corporate trustee administers trusts under the supervision of bank regulators. While individual trustees are expected to fulfill the same duties, they are not generally subject to regulatory scrutiny or accountable to regulators to the same degree.
  4. You may need help. Due to the complexities and requirements of trusts, often individuals must hire outside professionals, such as Trust Companies, to assist in carrying out the trust terms. Professional trustees can be added at any time to serve as co-trustee along with you. Combining the services of a corporate trustee with the personal connection of an individual trustee can help to provide peace of mind. In this situation, the responsibilities of each of the co-trustees should be clearly outlined in the trust document.
  5. It’s not entirely thankless. You are entitled to compensation. Typically, trustees are given a trustee fee in connection with the performance of their duties. The fee arrangement varies depending upon the state fee schedules for trustees and the terms of the trust. Professional corporate trustees typically charge approximately one percent of the total net worth of the estate. While this expense initially may appear greater than those of an individual trustee, the individual trustee may need to utilize the services of an investment manager, tax accountant and other professionals to fulfill trustee duties, which could add to overall expenses.

By enlisting the services of a corporate trustee, the trust would benefit from the continuity, prudence and expertise that a professional organization can provide. A corporate trustee brings experience in trusts and investments, accounting, record keeping and trust laws that an individual may not possess. In addition, a corporate trustee offers unbiased decision making that may be difficult for an individual trustee that has been appointed by the family.

To help decide which corporate trustee is appropriate, you may consider engaging in some of the services that are offered through investment management firms that have relationships with a wide array of organizations. Brinker Capital Wealth Advisory works with business owners, individual investors and institutions with assets of at least $2 million and has partnerships with firms that can assist with corporate trusts.

To learn more about Brinker Capital, a 30 year old firm following a disciplined, multi-asset class approach to building portfolios, and an overview of the services available through Wealth Advisory, click here.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a Registered Investment Advisor.

New year, new solutions

Noreen D. BeamanNoreen D. Beaman, Chief Executive Officer

There are few traditions as optimistic in spirit as resolution setting. While losing weight, enjoying life more, and living a healthier lifestyle typically top the resolutions charts, many Americans seek to create better financial outcomes in the upcoming year. The GoBankingRates.com 2017 Financial Resolutions Survey listed ‘save more, spend less,’ at the top of the list of financial resolutions, followed by paying down debt and increase income.

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If you aim to create better financial outcomes in the upcoming year, and beyond, here are five steps to bring you closer to your goal:

  1. Look within. The more you know about investment principles and the long-term historical record of the market, the better outcomes you can expect to achieve. Making your investment education a priority is proven to make a significant difference in outcomes. The American Association of Individual Investors (AAII) found that investing knowledge enhances risk-adjusted returns by at least 1.3% annually. Over 30 years, the improved portfolio performance can lead to up to 25% greater wealth.
  2. Control what matters most. What matters even more than picking the right stock, is controlling the impulses and biases that prove self-destructive, like trying to time the market or trusting your gut. For better investment outcomes, you must know your emotional triggers and come up with strategies to defuse them from sabotaging your success.
  3. Think purchasing power. Purchasing power is the most common objective and destination of a long-term investment strategy. It is the experience most investors want. Investors know they like the lifestyle they now enjoy and want to do what is needed to keep that lifestyle in the long-term. To do so, you must appreciate multi-asset class diversification and accept market volatility to increase future purchasing power.
  4. Benchmark against your goals, not market indices. Instead of looking to the Dow Industrial Average to gauge the adequacy of your performance, look to your goals. Personal benchmarking motivates positive savings behavior and helps you tune out the noise of the markets. Don’t allow yourself to get bogged down, nor hyped up, by the current buzz. Instead, let personal goals and the long-term historical market record guide your decisions.
  5. Stack the deck. By working with a trusted advisor who provides behavioral coaching, you stack the deck in your favor. Research has found that when an advisor applies behavioral coaching, performance increases from 2-3% per year. In times of uncertainty and market volatility, which you are bound to encounter, your advisor will help you stick to your financial resolutions.

For 30 years, Brinker Capital has provided investment solutions based on ideas generated from listening to the needs of advisors and investors. From being a pioneer of multi-asset class investments to using behavioral finance to manage the emotions of investing, our disciplined investment approach is the key to helping investors achieve better outcomes.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a Registered Investment Advisor.

 

Brinker Capital at FSI OneVoice 2017 in San Francisco

Noreen D. BeamanNoreen D. Beaman, Chief Executive Officer

Brinker Capital is proud to be a Premier Sponsor of the Financial Services Institute’s OneVoice 2017 conference in San Francisco, California for the fourth year. This annual gathering provides meaningful education and networking opportunities for members of the independent broker-dealers we serve.

In this atmosphere of uncertainty and opportunity, a significant portion of this year’s agenda is focused on the DOL Fiduciary Rule and its implications to our business. As an industry, we are all facing challenges to address this new rule and need this opportunity to collaborate to find the best solutions for our businesses.

For 30 years, Brinker Capital has acted as an ERISA 3(38) fiduciary to serve in the best interests of our clients. Brinker Capital’s purpose since 1987 has been to implement the ideas of diversification through multi-asset class investing with a disciplined investment approach. By continually enhancing and applying these principles, we strive to deliver better outcomes for financial advisors and their clients.

Brinker Capital is pleased to be a part of a pre-conference workshop on Monday, January 23 that focuses on helping women advance leadership roles within our industry. We will also participate in session tracks that impact our business in the year ahead. On Tuesday, January 24 at 8:00 am, Roddy Marino, EVP of National Accounts and Distribution, will be on a panel discussing the impact of the DOL Fiduciary Rule on independent firms’ fee-based platforms. On Tuesday at 1:30 pm, Avery Cook, SVP of Managed Products and Solutions, will share insights on comprehensive due diligence practices for independent firms. And, as part of the CEO Track on Tuesday at 9:30 am, I will be moderating the “Shifting Sands of Revenue in a Post-DOL World” panel discussion with guests David Canter, EVP of Practice Management and Consulting at Fidelity Clearing & Custody Solutions, Lori Hardwick, COO of Pershing and Susan S. Krawczyk, Partner at Sutherland Asbill & Brennan LLP.

Follow FSI and the event on social media: @FSIwashington #OneVoice17

Thanks for the opportunity FSI, we’re looking forward to a great event!

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Investment Insights Podcast: Five things that I learned this week

Rosenberger_PodcastAndrew Rosenberger, CFA, Senior Investment Manager

On this week’s podcast (recorded January 13, 2017), Andy discusses some of the facts, figures, and interesting tidbits we come across. Quick hits:

  • Families will spend an average of $233,610 per child, from birth through the age of 17.
  • The World Economic Forum’s top five risks are 1) Extreme weather events 2) Large-scale involuntary migration 3) Major natural disasters 4) Large-scale terrorist attacks and 5) Massive incident of data fraud or theft.
  • Student loan debt now tops $1.4 trillion dollars.
  • The currencies of India, Mexico, and Russia are all undervalued to the tune of 25-45%.
  • U.S. oil production is now beginning to increase again.

For Andy’s full insights, click here to listen to the audio recording.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Give thought to how you give this holiday season

Noreen D. BeamanNoreen D. Beaman, Chief Executive Officer

The holidays represent a time when many Americans express love and affection with gifts. Gift giving serves many purposes in our society. It helps define relationships, express feelings, show appreciation, smooth a disagreement, share good fortune, and strengthen bonds. While the joy of giving is undeniable, excessive spending could put your financial goals in jeopardy and ultimately stand in the way of happiness.

The American Research Group projects that the average person will spend $929 on gifts this holiday season. To put this amount in perspective, consider the following:

  • Last year, the average consumer spent $882, so this year consumers believe they will spend on average $47 more than last.
  • The last time consumers spending exceeded $900 was in 2006.
  • We’ve had a somewhat steady climb in spending since 2009 when the average person spent $417.
  • Gift spending peaked in 2001 when the average person spent $1,052 on holiday gifts.

live-simplyAs with any benchmark, the amount of money “the average person” spends on holiday gifts should bear little relevance on your spending. Whether you spend more or less than this projection is a personal choice that is best made with intention and with your own financial situation and goals in mind. These common holiday spending triggers, however, could get in the way of mindfulness and prompt you to spend more than intended.

Keeping up with others. If you try to match the amounts spent by colleagues, friends, family or peers, you could find yourself spending beyond your means and putting your financial goals in jeopardy.

Trying to be fair. A common cause of spend creep happens to create a sense of balance or fairness. When you overspend on one relative, you may be inclined to create equalization by matching the dollar value of gifts for others.

Just getting it done.  For some, holiday shopping is just another task in an already long list of things to accomplish by the end of the calendar year. It’s easy to overspend if you haven’t committed to a spending budget, decided who to buy for and what to get, and taken the time to seek out the best deals.

Autopilot. Sometimes we gift without considering whether the expenditure aligns with current realities. As families evolve, a discussion about how each member would like to celebrate the holidays may be worthwhile. For example, as your extended family grows, it may make sense to discuss a kids-only gift policy, put monetary limits on spending, or do a gift swap.

Self-purchases. Nearly sixty percent of holiday shoppers (58%) will buy for themselves and will spend on average of $139.61 doing so. This year’s projected self-spending is up 4% from 2015 and is at the second-highest level in National Retail Federation survey’s 13-year history.

The holidays only come once a year. Many people enter the holiday season as they would a free zone. They buy until they get to the end of their ever-growing list of recipients. They decorate until every square inch reflects the feeling of festivity in their heart. Unfortunately, many people do so without regard to the implications on short and mid-range financial goals and thus experience feelings of regret.

The act of gift giving has tremendous intrinsic and extrinsic value. A growing body of research suggests that the most important way in which money makes us happy is when we give it away. Gift giving at the expense of long-term financial goals, however, will bring anything but happiness.

Temptations beset all sides of the path to your financial dreams. During the holidays, temptations may take an altruistic form but still involve spending for today’s pleasures and forgetting about the Future You. This holiday season, give thought to how you give because the Future You is depending on your ability to be mindful, spot (over)spending triggers, and positively influence your ability to endure.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a Registered Investment Advisor

Addressing post-election anxiety

Crosby_2015Dr. Daniel Crosby, Executive Director, The Center for Outcomes & Founder, Nocturne Capital

Global events, such as the intensely divided presidential election that we just lived through, are certain to generate some periods of market volatility of varying lengths in addition to a significant amount of stress. However, we urge financial advisors and investors to retain a few dos and don’ts to help manage post-election anxiety:

Don’t equate risk with volatility. Volatility does not equal risk. Risk is the likelihood that you will not have the money to live the life you want to live. Paper losses are not “risk” and neither are the gyrations of a volatile market. Long term investors have been rewarded by equity markets, but those rewards come at the price of bravery during periods of short-term uncertainty.

Do know your history. Despite what political pundits and TV commentators would have you believe, this is not an unusually scary time to be alive. The economy continues to grow (slowly) and most quality of life statistics (crime, drug use, teen pregnancy) have been declining for years. Markets have always climbed a wall of worry, rewarding those who stay the course and punishing those who succumb to fear.

Don’t give in to action bias. At most times and in most situations, increased effort leads to improved outcomes. Investing is that rare world where doing less actually gets you more.

Do take responsibility. Most investors are likely to tell you that timing and returns are the biggest drivers of financial performance, but research tells another story. Research suggests that you are the best friend and the worst enemy of your own portfolio. Over the last 20 years, the market has returned roughly 8.25% per annum, but the average retail investor has kept just over 4% of those gains because of poor investment behavior.1 At times when market moves can feel haphazard, it helps to remember who is really in charge.

Don’t focus on the minute to minute. If you are investing in the stock market you have to think long-term. As mentioned above, you can avoid action bias by not checking your portfolio status all day every day, especially during times of higher volatility. Limited looking leads to increased feelings of security and improved decision-making.

Do work with a professional. Odds are that when you chose your financial advisor, you selected him or her because of their academic pedigree, years of experience or a sound investment philosophy. Ironically, what you may have overlooked is the largest value he or she adds—managing your behavior. Studies put the value added from working with an advisor at 2 to 3% per year. Compound that effect over a lifetime, and the power of financial advice quickly becomes evident.

Source: (1) Dalbar, Inc. Quantitative Analysis of Investor Behavior. Boston: Dalbar, 2015.

Views expressed are those of Brinker Capital, Inc. and are for informational/educational purposes.  Opinions and research referring to future actions or events, such as the future financial performance of certain asset classes, indexes or market segments, are based on the current expectations and projections about future events provided by various sources, including Brinker Capital’s Investment Management Group. Information contained within may be subject to change. Diversification does not assure a profit not guarantee against a loss.

Veterans Day: A time to say thank you

Noreen D. BeamanNoreen D. Beaman, Chief Executive Officer

Today we recognize those who have sacrificed careers, precious time with loved ones, and even their lives to answer our country’s call to service.

Please take a moment out of your busy day today to attend a Veterans Day event in your area or simply say thank you to those who are currently serving or have served in the military.

On this Veteran’s Day, we say thank you to our veterans at Brinker Capital—Chuck Widger, Tom Daley, Jimmy Dever, Lee Dolan, Jay O’Brien, Jim O’Hara, Jeff Raupp and Bill Talbot—and to everyone who has served and protected our country.

To be born free is an accident.
To live free is a privilege.
To die free is a responsibility.
–Brig. Gen. James Sehorn

If you’re looking for additional ways to get involved, click here for ideas.

Brinker Capital, Inc., a Registered Investment Advisor