Investing in Game of Thrones

Williams 150 X 150Dan Williams, CFA, CFPInvestment Analyst

Nothing else could make me, and many others, actually look forward to Sunday night like Game of Thrones. Of course I felt a need to draw some wisdom to the investment world from this show if for no other reason than I get to relieve my separation anxiety from the many months until the show comes back for its final season. Thankfully this season lends itself easily to the task.

For those unfamiliar with the show let me sum it up as briefly as possible (warning vague spoilers). There exists a continent called Westeros that is divided into numerous houses/kingdoms that swore fealty to the House that sits on the Iron Throne. In the recent past, there was a rebellion that disposed of the longstanding ruling House Targaryen and drove the surviving member(s) of the house off the continent into hiding. The show opens with a member of House Baratheon sitting on the throne. Well, that king gets killed “by accident on a hunting trip.” His best mate, who is head of House Stark, becomes involved in investigating the situation in the capital city and gets beheaded. House Lannister slides onto the throne by a member of the house being conveniently married to the former king. This whole situation causes much trouble as House Stark wants revenge, House Targaryen and Baratheon want to take back the throne, and the rest of the Houses see opportunity to reposition themselves. A bunch of people kill some other people by various methods. Some body parts get cut-off. Some dragons show up. Some people come back from the dead by unnatural methods. Really a classic story. So that is it.

Wait! I forgot! Up north there are reports of a huge frozen undead army being formed that threatens to sweep down and kill everyone. This threat is summed up as “Winter is coming.” No biggie, right? Oops!

GOT.Winter is Coming
The parallel that can be drawn to the investment world is that while people are chasing and comparing themselves to each other’s performance and asset class benchmarks, they take the eye off the primary goal – survival. The Houses all want more castles and the glory to sit up on the Iron Throne while John Snow, one of the show’s main protagonists who has been positioned up north for the majority of the show, said this season “If we don’t put aside our enmities and band together, we will die. And then it doesn’t matter whose skeleton sits on the Iron Throne.”

While we are not necessarily battling our neighbors – like the houses of Westeros – for bragging rights of investment returns, it is still the wrong struggle to have. The great threat to the north is our inability to meet our goals due to poor investment planning. We can go off track by spending too much or saving too little. We can take on too much or too little risk or invest in the wrong account types. We can be operating tax inefficient. We can fail to insure against the unlikely but devastating potential life events. Planning with an advisor should be focused on setting a path that provides the best likelihood for success against this enemy of insufficient assets for our goals rather than the bragging rights of a few year of investment returns.

During this season, attempts were made by John Snow to refocus the warring houses to the real threat of the north. This threat has been lurking for all seven seasons of the show and the big question is – is it too late for them? Similarly, the challenge of investment goal planning is easiest when taken on as early as possible or before winter comes. The adviser’s role is similar of that to John Snow’s, get their clients to start to properly prepare as early as possible for the threats that matter.

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.

Business ownership…its personal

Coyne_Headshot-150x150John Coyne, Vice Chairman

We recently held the second call in our Business Owner Transition series with Matt Coyne, author of Straight Talk from the Front Lines and CEO of Brandywine Mergers and Acquisitions.  Matt’s presentation primarily focused on the idea that an advisor must play the emotional therapist as much as the transition planner. He emphasized that an advisor’s role is to help the business owner realize the purpose of owning a tangible asset is to maximize its value, not to infuse it with a personality like a favorite old retainer in Downton Abbey.

Many years ago, I had the opportunity to hear the great Peter Lynch of Fidelity Magellan fame and he said something so profound that it’s been my mantra ever since.  He said, simply, “stocks don’t know you own them.”  He went on to state that stocks don’t care if you’re a Bishop or an axe murderer; they don’t know that your dad worked at the company for 30 years; or, that your grandmother made you swear you would never sell good old Texaco (my mom in this case).  These lessons apply equally here with some variations.

Business Ownership Its Personal

 
Every business owner must consider the impact of a sale on their employees, their customers, and their families.  But, that should be as dispassionate in the analysis as any other valuation they will be conducting.  A buyer, no matter how invested in the industry or this acquisition, is only looking at the purchase for the opportunity it presents to make money for themselves and their investors.  They will happily listen to war stories and personal histories at the closing dinner, but these will never move the EBITDA one dollar.

An advisor needs to help the business owner recognize that the business was a means to an end.  And, it is this reward that should have the personal feelings attached to it because it represents that they, their families and their legacy will enjoy the fruits of their labor.  It is like the young woman in the Liberty Mutual ad who loved but totaled her car “Brad” until the insurance company called and she broke into her happy dance.  So we all need to put on our tap shoes and get our owners out on the dance floor!

For 30 years, Brinker Capital has served financial advisors and their clients by providing the highest quality investment manager due diligence, asset allocation, portfolio construction and client communication services. Brinker Capital Wealth Advisory works with business owners, individual investors and institutions with assets of at least $2 million. To learn more about the services available through Brinker Capital Wealth Advisor, 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.

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