Unfiltered Finance
Welcome to "Unfiltered Finance," a podcast created by Symmetry Partners, LLC, an investment firm in Glastonbury, Connecticut. As part of our commitment to clients, this new media offering is designed to proactively address questions, and concerns, around a variety of investment-based topics. Your time, attention, and trust are paramount to our success, and, we’re grateful for it. As always, we’re invested in your goals. Symmetry Partners, LLC, is an investment adviser registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, or excluded or exempted from registration requirements. No one should assume that future performance of any specific investment, investment strategy, product, or noninvestment related content made reference to directly or indirectly in this article will be profitable. As with any investment strategy, there is a possibility of profitability as well as loss.
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The Series Finale | Thank You For Listening
01/11/2024
The Series Finale | Thank You For Listening
Welcome to the series finale! After more than six years, we are concluding the Unfiltered Finance podcast. It has been our sincere pleasure to inform both our investors, and financial advisors with this offering. Joining our host Tom Romano, for this proverbial curtain call, is Casey Dylan, Consultant from Story Market Services & the original host of Unfiltered Finance. We’ll be recalling some of our favorite memories, and discussing what this podcast has meant to the progression of our respective careers. If you have any questions or would like more information, reach out to us at You can also find us on , , , and . As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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Navigating Global Markets | How Can You Globally Diversify?
12/21/2023
Navigating Global Markets | How Can You Globally Diversify?
Welcome to part two of our podcast episode - "Navigating Global Markets". Many investment professionals believe it is imperative for investors to globally diversify their portfolios, and not put all of their proverbial eggs into one basket. We are joined by Symmetry's Brendan Kruh, Investment Associate, to conclude our discussion on the necessity of global diversification in your investments. If you have any questions or would like more information, reach out to us at You can also find us on , , , and . As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Opinions and views expressed on this podcast were current on the date recorded. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice, including any forward-looking estimates or statements which are based on certain expectations and assumptions. Although information and opinions given have been obtained from or based on sources believed to be reliable, no warranty or representation is made as to their correctness, completeness, or accuracy. The views and strategies described may not be suitable for everyone. This podcast does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. Please visit the Symmetry Partners website for important disclosure related to performance of any specific index quoted in this podcast.
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Navigating Global Markets | Are International Stocks Still Valuable?
12/20/2023
Navigating Global Markets | Are International Stocks Still Valuable?
With recent turmoil in the Middle East, the continued war in Ukraine, and global inflation, investors want their portfolios to feature more U.S. stocks. After all, domestic investments have performed well as of late. In this episode of Unfiltered Finance we are joined once again, by Symmetry's Brendan Kruh, Investment Associate, for a discussion on the need for global diversification, even during the most tumultuous times. If you have any questions or would like more information, reach out to us at You can also find us on , , , and . As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Opinions and views expressed on this podcast were current on the date recorded. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice, including any forward-looking estimates or statements which are based on certain expectations and assumptions. Although information and opinions given have been obtained from or based on sources believed to be reliable, no warranty or representation is made as to their correctness, completeness, or accuracy. The views and strategies described may not be suitable for everyone. This podcast does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction. Please visit the Symmetry Partners website for important disclosure related to performance of any specific index quoted in this podcast.
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Q3 2023 in Perspective | Part Two: Top Stories from the Third Quarter
11/16/2023
Q3 2023 in Perspective | Part Two: Top Stories from the Third Quarter
Rising oil prices have animated market participant’s fears of reinvigorated inflation pressures, increasing the chances that the Federal Reserve will impose more interest rate hikes. Join Casey Dylan, CIMA®, Investment Communications Strategist (Consultant), and Tom Romano our Head of Strategic Relationships & Product Development, for a detailed recap of some notable market events from Q3 of this year. If you have any questions or would like more information, reach out to us at You can also find us on , , , and . As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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Q3 2023 in Perspective | Part One: Interest Rates Reach 22-Year High
11/02/2023
Q3 2023 in Perspective | Part One: Interest Rates Reach 22-Year High
Markets were off to one of the best start in decades during the first half of 2023—then came the third quarter. The Federal Reserve resumed increasing rates, bringing them to a 22-year high at the Federal Open Market Committee (FOMC) meeting at the end of July. This led to ongoing elevated interest rates through August, pushing bond yields higher and challenging lofty equity valuations. In this episode, Casey Dylan, CIMA®, Investment Communications Strategist (Consultant), and Tom Romano our Head of Strategic Relationships & Product Development, will provide timely insights, and analysis, on market activity from around the world this financial quarter. We will also discuss what this could mean for long-term term investors. If you have any questions or would like more information, reach out to us at You can also find us on , , , and . As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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Déjà vu All Over Again | Staying in Value & Growth Over Time
10/26/2023
Déjà vu All Over Again | Staying in Value & Growth Over Time
"KEEP CALM AND CARRY ON." Not only is this a beloved motto, it's also a great rule of thumb for maintaining your portfolio allocations. Once again, we are joined by Symmetry's Brendan Kruh, Investment Associate, and Eide Bailly Wealth’s Brett Myer, CFA, CIMA®, Investment Strategy Director. In this second of two episodes, we'll be discussing why you should maintain growth and value positions during periods of market instability. If you have any questions or would like more information, reach out to us at You can also find us on , , , and . As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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Déjà vu All Over Again | Value or Growth Stocks?
10/12/2023
Déjà vu All Over Again | Value or Growth Stocks?
Once again, investors are faced with the same debate. Should I invest my money in large scale growth companies (e.g. Apple, Google), or, should I keep faith in the little guy and invest in some smaller companies (that seem poised to grow over time)? In this episode of Unfiltered Finance, we are thrilled to host not just one, but two special guests; our very own Brendan Kruh, Investment Associate, and Eide Bailly Wealth’s Brett Myer, CFA, CIMA®, Investment Strategy Director. Together, we’ll discuss present trends around both value stocks and growth stocks. Spoiler alert, it’s a more complex topic than you might think. If you have any questions or would like more information, reach out to us at You can also find us on , , , and . As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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Evidence-Based Investing | Part Two: The Risks of Trying to Time the Market
09/21/2023
Evidence-Based Investing | Part Two: The Risks of Trying to Time the Market
There is risk involved in trying to time markets. We believe it's best to apply multiple decades of research when making investment decisions. Today we are joined by Symmetry's Dr. John B. McDermott, Executive Director of Investments, to conclude our discussion about Evidence-Based investing. This episode will feature a detailed overview of the resources available to investors (who are curious to learn more) and the academic professionals who have helped to develop this investment strategy over decades of time. If you have any questions or would like more information, reach out to us at You can also find us on , , , and . As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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Evidence-Based Investing | Part One: Don't Depend on Guesswork
09/07/2023
Evidence-Based Investing | Part One: Don't Depend on Guesswork
This week, we work to define evidence-based investing, and explain some of the potential benefits of using this strategy. In part one of this two-part episode, our own Tom Romano, Head of Strategic Relationships and Product Development, is joined by Dr. John B. McDermott, Executive Director of Investments, for a historical retrospective on this fastidious investment approach. If you have any questions or would like more information, reach out to us at You can also find us on , , , and . As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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Q2 2023 in Perspective | Inflation & International Markets
08/17/2023
Q2 2023 in Perspective | Inflation & International Markets
In this final installment discussing Q2 of 2023, we dive into current events, and their potential effects on the Stock Market. Our hosts, Tom Romano, Head of Strategic Relationships & Product Development and Casey Dylan, CIMA®, Consultant sit down for a discussion of the "magnificent seven" growth stock winners, the current state of inflation, interest rates, heavily tilted tech stocks, changes among international markets, and the recent repeal of the Black Sea grain deal by Russia. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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Q2 2023 in Perspective | Tech Stocks Were Driven by the Surge in Artificial Intelligence
08/17/2023
Q2 2023 in Perspective | Tech Stocks Were Driven by the Surge in Artificial Intelligence
Despite a somewhat lackluster April and May, equities markets ended one of the better first halves of a year in quite some time by the end of June. The Nasdaq, S&P 500, and Dow were up 32.32%, 16.89%, and 4.94% for the year, respectively. It was the Nasdaq’s best first half of a year since 1983, primarily due to growth in tech stocks driven by the surge in artificial intelligence. In this first of two parts, we discuss quarterly returns for Q2 2023. Casey Dylan, CIMA®, Consultant, and Tom Romano, Head of Strategic Relationships and Product Development, will provide timely insights and analysis on what happened in markets and economies around the world in the second quarter and what this means for long-term term investors. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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Empowering Women Investors: Part One | Navigating Financial Success Together
08/07/2023
Empowering Women Investors: Part One | Navigating Financial Success Together
Two weeks ago, we held another successful week of AdvisorFest - an annual, week-long live-streaming event where we cover some of the most pressing issues Financial Advisors are presently facing. This year, we decided to host a live panel discussion about the experiences women have when creating long-term financial plans, and asserting an equal amount of authority in the handling of their household finances. Our very own Andrea Loin, Associate Director of Marketing, led a discussion along with financial advisors Diana Bacon, CFP®, CDFA®, MBA, and Joyce Bloomquist, CDFA®, of Apella Wealth. You’ll find some genuinely moving stories of challenges faced, and overcome by women investors here. We hope you find this episode to be insightful. Enjoy. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript: 00:00:07:01 - 00:00:37:17 Speaker 1 Hello and welcome back to Unfiltered Finance. I'm your host, Tom Romano. Two weeks ago, we held another successful week of Advisor Fest, an annual week long live streaming event where we cover some of the most pressing issues financial advisors are facing today. In part one of this special episode on Women investors, our very own Andrea Loin associate director of marketing, leads a discussion along with financial advisers Diana Bacon and Joyce Blomquist of Apollo Wealth will discuss some cautionary tales that can help investors learn which mistakes to avoid on their financial journey. 00:00:37:19 - 00:00:41:09 Speaker 1 We hope you find this episode to be insightful. Enjoy. 00:00:41:11 - 00:01:06:15 Speaker 2 Welcome everyone to the final session of our third Annual Advisor fest. Empowering Women Investors Navigating Financial Success Together. We're thrilled to have you here today as we embark on a journey to explore empowerment of women in the world of investing. During this webinar, we want to shed light on the unique perspectives and experiences of women investors and provide practical insights on how to effectively engage and support this growing demographic. 00:01:06:16 - 00:01:30:05 Speaker 2 Graphic It's important that we promote awareness and understanding of the specific challenges and opportunities faced by women investors in doing this, we hope to foster an inclusive environment and equip advisors like yourselves with the knowledge and tools to better serve women investors, which will ultimately lead to their financial success and empowerment. I have with me two financial advisors that work with Capella wealth, one of our sister firms. 00:01:30:05 - 00:01:44:08 Speaker 2 We have Diana Bacon. She's a CFP and a CDPHE and she has years of experience working in this very wonderful demographic. And we've Joyce Bloomquist, who is a cafe as well, also an advisor with Pell Wealth. Welcome. 00:01:44:09 - 00:01:47:00 Speaker 3 Thank you. Glad to be here today. 00:01:47:01 - 00:02:07:21 Speaker 2 Thank you for joining us. I read a statistic in doing research for this whole thing that really it surprised me because I'm a woman. I work in an investment firm. So I just assume I know all there is to know, but I don't. So about 39% of women have no retirement strategy. That seems like a very high number to me. 00:02:07:21 - 00:02:29:11 Speaker 2 So I looked it up and I was like, So what percentage of men don't have a retirement strategy? And it's only 25%. So there's a big gap there. It was shocking to me. And then I just assumed, right, we're in the 2023. Things should be the same for everybody, but they're not. And so coming together to discuss how do we to we do we grow that number or actually shrink that number down to be less. 00:02:29:11 - 00:02:46:17 Speaker 2 We want more women to have a plan for retirement. So, Diana, what are some strategies that you have that you use when addressing women investors with the challenges that are faced by them? How do you give them tools and tips and tricks to help them close that gap? 00:02:46:21 - 00:03:19:05 Speaker 3 Women in general, and you know, this is not some little niche. This is a huge market segment. We are 51% of the population To say women are all like X is very decent, enormous. However, we do see continuing themes over and over. The first is women. And we were raised this way, especially in the Western world. Well, actually, I would say while we're global globally, we never put ourselves first. 00:03:19:05 - 00:03:42:02 Speaker 3 And when I hear the statistic of the number of women who don't have a retirement plan, what do you have to do to have a retirement plan? You have to save. You have to invest. You have to be thoughtful of yourself. Make sure you either have that income stream or the assets to support you. And so the first thing that I work with a client is to change their money mindset. 00:03:42:04 - 00:03:48:22 Speaker 3 They need to put themselves first. I'm going to use the S-word. We got to be selfish. 00:03:49:00 - 00:03:53:12 Speaker 2 And that's really hard. Especially especially for me. I would have a hard time doing that. 00:03:53:14 - 00:04:12:17 Speaker 3 And it is. Yeah, yeah. I mean, think about it. Like having to say, I'm going to give my adult kids less as they're launching in life, but I want to do all this for them. I love them. You know, I have nurtured them, but I'm going to do less for them because I have to do for me for that. 00:04:12:17 - 00:04:32:05 Speaker 3 You know, I want to save for their college so they don't have to go through the things I did. All those things are prioritizing yourself. That is extremely difficult for women. So they got to start in that word, start to be selfish, and then get away with the H word shame. 00:04:32:10 - 00:04:46:18 Speaker 4 That is such a good point. I love it because I'm in this open space now. My kids are 20 and 22 and they see when do we let them go and be adults and when do we start saving like we should for. 00:04:46:18 - 00:05:01:11 Speaker 3 Ourselves that say And so many women start off because we have some credit card debt or paid too much on our car loan or, you know, just all these things that come up and we just put that shame on ourselves and then we don't deal with our finances. 00:05:01:13 - 00:05:19:10 Speaker 2 I like that you put the shame part of that and getting rid of the shame because I think being selfish is hard enough. But then you start to feel bad when you start to look at things. For me, it was matching my 41k, right? I'm like, Well, that takes away from money coming into the family. And and then I started realizing, No, it doesn't. 00:05:19:12 - 00:05:27:00 Speaker 2 It helps the long run. I'm doing it for me. I have to watch out for myself. So taking the shame out of it, that's probably harder than being selfish, to be honest. 00:05:27:02 - 00:05:32:18 Speaker 4 Yeah, We're caregivers, right? That's where we're moms, first and foremost. And it's hard to let that go. Yep. 00:05:32:21 - 00:05:51:13 Speaker 2 Caregivers is a good thing. Diana, your you did a webinar recently on closing that career, the career change and how to approach that career change. And I thought it was a great webinar. Not a lot of women think about that when they're leaving the workforce. I left for a couple of years, went back and not a lot of women think about what happens when you go back. 00:05:51:13 - 00:06:04:12 Speaker 2 And I think your webinar really opened up, you know, how to get back into the game and then how to be, again, selfish, how to focus on you to put yourself in a better space in life, in a better spot when you're trying to get back into the game. 00:06:04:14 - 00:06:32:12 Speaker 3 That's another area to that employment because so many women are underemployed to better support the family. Mm hmm. And the shame of saying, No, I want to do this. I want to have more of my earnings, particularly if, say, maybe your marriage or partnership isn't as steady and strong. The first thing when people are like, oh, I'm taking it, or when women are thinking about getting divorced, I'm like, Get a job or get a better job right now. 00:06:32:14 - 00:06:33:15 Speaker 4 Don't wait. 00:06:33:17 - 00:06:36:02 Speaker 3 Don't wait. Do it right now. 00:06:36:04 - 00:06:53:06 Speaker 2 See how that goes back to that, that shame and that self. Right. And be something I would find hard to do. But my husband is that I am what he calls the breadwinner of the family. And he tells all of his friends about it. And for me, that when I started to take on more, I felt like I was letting my family down. 00:06:53:12 - 00:07:09:06 Speaker 2 Right. You have to make that choice. And I realized I wasn't financially. I was helping my family, my 41k is growing, our family's growing, his 41k is growing. We're all working together. But I had to focus on me and make sure that I did that side of it, too. You actually hit on a great topic, Diana, and Joyce. 00:07:09:06 - 00:07:33:08 Speaker 2 I'm going to I'm going to start with you on this one. But a lot of the marriages might not be as solid, right? So I was divorced young and didn't even know that there was an option for me as far as financial planning goes. But can you explain how you would approach addressing the potential impact of divorce or even what would a heart a change in a lot of part of a big part of your life on a woman's financial situation? 00:07:33:10 - 00:07:48:12 Speaker 2 What makes it unique and different for that? Because I didn't even know what a CDF was until about five years ago and realizing that as someone who went through divorce, I could have had someone helping me too because I didn't realize what I was going through was unique. 00:07:48:14 - 00:08:09:02 Speaker 4 Right. And I have some input on that. You know, I've been through a divorce, too, and I think some of the things that are hard to wrap your arms around are when you're starting, you're kind of going from being with a partner to being by yourself. I mean, I think Diana's first point out of, you know, get back to work if you can and if it's possible, you know, we we want that to be the ultimate goal for the person. 00:08:09:04 - 00:08:26:07 Speaker 4 Why? It might not seem like you're making much at the time. I mean, maybe you got daycare costs and all that and maybe a lot of that money's going to their daycare costs and there's things in your mind or maybe you're saying, why am I even doing this? I mean, when I'm actually take it home isn't much after I pay all these people, but you're participating in Social Security. 00:08:26:07 - 00:08:53:19 Speaker 4 So that's important. You probably get your own health care. That's important, and that might make all the difference in the world by stepping into the workforce. At that point, you got to start accumulating those things for yourself. At this point when you go from where to me. And so that's something to really consider. Might not seem like you're bringing home that much, but you are benefiting from the benefits from the workplace, maybe for one K, maybe some free matching as little as you can contribute to the plan. 00:08:54:00 - 00:09:01:20 Speaker 4 There might be some pre matching that you need to consider as all these things are so important to get started back to you when you're going through that process. 00:09:01:23 - 00:09:24:07 Speaker 2 Makes perfect sense. And as an advisor, how do you educate not just women going through these these life changes, but how do you educate women on things that they need to know about their financial, about their finances, about that for one K, about going back to work? And though you think you're not making an impact with what you're making because it may be less than you want to at the time, how do you educate them? 00:09:24:07 - 00:09:35:01 Speaker 2 What are their tools and resources out there for them? Are there ways that you approach it that are different than you would, you know, approach a normal planning client? Are there tools of resources for them? 00:09:35:03 - 00:09:59:21 Speaker 3 I found that women are not educated when we're growing up on money matters the same way that men are. So first is getting the basics and we have the Internet now. So Internet and podcasts are wonderful. So it's like learning a new language. You have to just start jump in. There's a certain lingo to it, so you need to pick that up. 00:10:00:03 - 00:10:31:07 Speaker 3 So starting to listen to podcasts, you might not understand much. The first few try a bunch of them buying a new pair of jeans. You got to make sure it's a fit, you know, try ones. Once you hear things over and over again, will start to click, go on financial websites, read, you know, nerdwallet, Wikipedia, you know, all of these things where you can just start to learn the lingo and then talk to your friends. 00:10:31:09 - 00:11:13:21 Speaker 3 Men are talking to each other about money. We need, again, a sage word shame. Women don't want to talk about money. They don't want to make. They don't want to feel bad that they don't know something. But many women have found that financial services providers can be a little condescending. And that and that's a real struggle. And once you've been spoken down to getting that courage up again, to put yourself out there and ask questions and feel like someone's going to think you're you're not intelligent because you don't know, but how would you know if you never learned it or or. 00:11:13:21 - 00:11:27:23 Speaker 4 If you weren't married? And maybe the husband had it with his responsibility to take care of the finances. And maybe now you're by yourself, You're maybe you're divorced, or maybe you're widowed, and now it's all on you. So where do I start over with all this? 00:11:28:01 - 00:11:48:16 Speaker 3 Yeah. I've sat down with widows who are like, I don't even know where our checkbook is. I don't know how the, like, bill gets paid. I mean, all of these things where they really put it off on someone else, I will say, being involved in your finances, looking at your tax return, a lot of people don't even look at that. 00:11:48:16 - 00:12:10:17 Speaker 3 Look at your tax return. And I am absolutely biased. I will admit it. I'm a financial advisor. I am a certified financial planner. And I think working with a planner as early as you find one that suits you is really a big step in that. 00:12:10:19 - 00:12:28:00 Speaker 1 Thank you very much for joining us today. If you're a financial professional and you'd like to learn more, check the link in this episode's description to view all of the presentations from Advisor Fest 2023. As always, you can listen to all of our past episodes anywhere you get your podcasts. Thank you very much and we'll see you soon. 00:12:28:01 - 00:12:52:19 Speaker 5 Cemetery Partners LLC is an investment advisor firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempted from registration requirements. Registration of an investment advisor does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. 00:12:52:21 - 00:13:22:18 Speaker 5 No one should assume that future performance of any specific investment, investment strategy, product or non investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss due to various factors, including changing market conditions and or applicable laws. The content may not be reflective of current opinions or positions. 00:13:22:20 - 00:13:38:13 Speaker 5 Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of or is a substitute for personalized investment advice.
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Empowering Women Investors: Part Two | The Importance of Financial Planning
08/07/2023
Empowering Women Investors: Part Two | The Importance of Financial Planning
Today we conclude our discussion on women investors from AdvisorFest 2023. Symmetry's Andrea Loin, Associate Director of Marketing, leads a discussion along with financial advisors Diana Bacon, CFP®, CDFA®, MBA, and Joyce Bloomquist, CDFA® of Apella Wealth, on some of the critical factors, and life experiences, that should be incorporated into a woman's financial plan. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Symmetry Partners and Apella Wealth are affiliated entities. Transcript: 00;00;00;00 - 00;00;37;05 Unknown Hello and welcome back to Unfiltered Finance. I'm Tom Romano. Your host today, Andrea Line, assistant director of marketing, concludes our discussion on women investors with Dianna Bacon and Joyce Blomquist Financial Advisors with a paella wealth. You'll find some sage advice here for women who are working to assert their financial independence and plan for the future. Enjoy. If I'm an advisor working with several women investors, what are some tips that you could give them to starting that initial and being that that advisor? 00;00;37;05 - 00;01;00;06 Unknown You set it right there. Don't be condescending. What kind of tips would you give to an advisor working with this demographic, say, you know, joint? I mean, it's hard, right? Because you could be a male advisor trying to reach out to the women's group. Absolutely. So but you're probably less likely to join the women's community groups. That might be awkward, but definitely if you're a female advisor, get involved in the community with some of the community groups. 00;01;00;06 - 00;01;16;28 Unknown Even if you're a male advisor and you want to reach out to the women's group and help out, you know, it doesn't have to necessarily be all women's group. There's going to be women who are participating in these community groups. I say branch out in your community and see what kind of groups are related to investments, and maybe that's a good start. 00;01;16;29 - 00;01;37;16 Unknown Webinars. I mean, we have our webinar that we've been doing periodically, and I think we've gotten a really great group of people and they're not all women. We have a lot of men that join our groups too. So I think if you're you're spreading the word out there, you might be casting a wide net too to both groups, but you know, everyone's listening. 00;01;37;16 - 00;01;58;19 Unknown And so maybe it's not just a niche of just women, but they're part of that group can see that there is some understanding and they don't feel intimidated to come in and talk to you. And I think that's what's most important is that making them feel comfortable, because I know that even when I see married couples come in to our offices, you can tell right away the women's fair, the woman is very quiet. 00;01;58;20 - 00;02;17;13 Unknown Maybe the man's taking over the whole meeting. You can tell immediately really who has been doing the finances there. So really try to communicate with that spouse in that meeting and say, hey, you're part of this. What do you have? What's your input on this? But and then, you know, sometimes they're surprised and they they look at me like, oh, gosh, I really don't participate in this. 00;02;17;13 - 00;02;42;21 Unknown I'm just here to listen. But making them feel part of the conversation is so key. And pulling on one of the threads that Joyce touched on. One of the best things to do, particularly if you want to go into this, you're worried about sounding condescending because we know most advisors are men. Depending on what portion of the industry you're looking at, it's either, you know, 23% are women, 18% are women. 00;02;42;23 - 00;03;09;14 Unknown CFP, CFA. So make sure you're talking with them and not to them. Don't talk at them, pull them into the conversation. The best way to find out what their knowledge level is is to be having the conversation going through the accounts. They're going through a tax return, walking them through some of it. They might know, some of it they might not. 00;03;09;16 - 00;03;31;05 Unknown But if you're in a real true conversation, you're using your listening skills, you're keeping your mouth shut a good bit and letting them speak, that that's the first way to get into this area. I couldn't agree more. And people love stories, right? They love to know that you've been through the same things that maybe they have. It makes you real. 00;03;31;05 - 00;03;47;20 Unknown They mentioned a divorce. Hey, you know, I went through a divorce. Sorry to hear that. You did, too. Immediately they connect with you. Maybe that's a story that can relate to them. They know you've had that real life experience. And so they can really relate to that situation and and maybe open up a little bit more towards you. 00;03;47;22 - 00;04;07;11 Unknown Yeah, women are emotional. We make decisions on emotions. And I personally, when I picked my financial advisor, it was a connection I had. It wasn't, you know, they, they listened to me, Diana, They, they heard me. And I was not educated before. I didn't always work in this industry and I wasn't educated, but they didn't make me feel uneducated. 00;04;07;12 - 00;04;25;24 Unknown I don't know everything, so I don't want you to make me feel bad for not knowing everything. So when I met with a financial advisor the first time, that was exactly what it was. It was emotional connection. You know, this is somebody you're telling things you may not tell anyone else in your life. You know, monetary stuff is still taboo, you know, And I wanted a connection. 00;04;25;24 - 00;04;53;24 Unknown So you're totally right there. One of the things there's a lot of inequalities, right, that are still out there. How do you address those? There's gender specific issues, the pay gap, the career breaks, the caregiving responsibilities in that financial plan. So how do you take that? Because there was a stat that I read, it kind of made me sick to my stomach, but it was on average women experience an $80,000 lifetime pay gap when compared to men. 00;04;53;25 - 00;05;18;03 Unknown That's various factors that are, you know, controlled by controlling that. But there is a huge gap. How do you account for that in your financial plan for them? Do you account for that or do we just go by their plan and specific to them? Anyone working with women, if you're working with any marginalized group and in some areas women are marginalized, you need to address those specific issues with that group. 00;05;18;03 - 00;05;45;23 Unknown I am a strong believer that an advisor you have to not deal with gender generalities, but that client. So and I'm going to stay on that marginalize. If you are working with a woman of queer woman. Now that pay group gap has just expanded to women of color. Again, that gap has expanded less opportunities. We can we can put on our rose colored glasses and pretend like that doesn't happen, but it absolutely does. 00;05;45;23 - 00;06;10;13 Unknown And we know because we hear it from our friends, we see it with our clients, it's happening in real time. So not only do you want to look at that decreased salary, likely decrease raises, you want to adjust for that in any long term cash flow. Also increase spending. Mothers are more likely to help their adult children financially. 00;06;10;15 - 00;06;40;19 Unknown They're more likely to be burdened with. Not that it's a burden, but it is on time and resources with caring for parents, which means less time to work, less flexibility. And sometimes you cost on them, especially with the mother, because we know that aging women retire with less assets. I mean, all these statistics are so disheartening. I mean, I get to an area when you're like, I want to read anymore, I want to stick my head in the sand. 00;06;40;22 - 00;07;04;18 Unknown Yeah, you're right, Diane. At 95% of women at some point will be their families. Primary financial decision maker. We have we live longer. Our longevity is there. Many times we will outlive our husbands and be alone. These aren't just divorces. These are. This is widowhood. Later in life, many reasons why at some point in our lives we will be the primary financial decision maker. 00;07;04;20 - 00;07;26;17 Unknown These are important things to talk about. And in the long term plan, I have children health care costs that go along with having children. Your body changes and your health care costs increase. Do you do you incorporate that into the plan? Woman is going to have a family. I know it's not necessarily as big of an issue as you know before, but health care costs are going to be huge for for females. 00;07;26;18 - 00;07;52;21 Unknown Yeah, there's going to be an extra health care cost. Do you include that? Do you think of that in the plan? One thing I do in it is that a personal hard subject, but when I am working with a younger professional single woman, I ask what her fertility plans are. Oh, cause I am seeing a great deal of women. 00;07;52;21 - 00;08;26;06 Unknown Now you say I make great money. I don't. I don't need a partner. You're absolutely right. There have been single mothers since the beginning of time, and a will always happen. But that means you have to have a plan, adoption, you know, whatever they're going to do. Financial. Now you are the only caregiver for that child. So now we have more stress on life insurance. 00;08;26;09 - 00;08;59;21 Unknown You know, estate planning, guardianship. So it's not just the, you know, the increased costs. I have teenagers. Yes, I know that. Braces and broken ankles and broken wrist and yeah, all of that. So we do have those increased cost, but it's also I see more single women than men deciding on their parenthood as single people in the financial side of that is huge. 00;08;59;21 - 00;09;25;16 Unknown And that is an area where we're not only affecting the lives and providing value for that woman, but also for her future children and ensuring their security. Yeah, that makes perfect sense. Any other? I appreciate you both jumping on. And couple of times we've referenced the series that Diana and Joyce are both a part of at Capella. It's the Financial Independence for Women series. 00;09;25;16 - 00;09;45;12 Unknown You can find it on our Web site at Palo Health.com if you're interested. You know, take a listen. They have some great topics on there that are not just for women, but that will definitely help drive home some some great points. So take a look and take a listen. And I do appreciate you both jumping on as we conclude. 00;09;45;12 - 00;10;08;05 Unknown We hope that you as advisors have gain valuable insights into working with women investors by recognizing their unique perspectives, addressing their specific needs, and fostering that inclusive environment that we talked about. You can create a future where women investors thrive and they contribute to the growth and stability of the global economy and hopefully shrink some of those statistics that we started out with in the beginning of this, this webinar. 00;10;08;05 - 00;10;31;10 Unknown So if you have any questions, we can take a few questions for Joyce and Diana right now. I wanted to make one quick comment. Andrea. You had said that women make decisions emotionally. That's actually not been my experience. Oh, women do cling on to their fear much more than men, so that might stop them from taking first steps. 00;10;31;17 - 00;10;57;18 Unknown But I find women to be very pragmatic. And for advisors who are going to be working with women, expect the why? Why am I doing this? Why is that? V There I find that as women become educated and on their finances, they're happy to dig in, but they want to know why and they want every pass to be explained to them so that they know they're getting value for that dollar. 00;10;57;19 - 00;11;28;06 Unknown I've always found women extremely pragmatic. Yeah, that makes sense. I'm detail oriented. I want to know the down in the weeds information. Yeah, that makes perfect sense. So yeah. So make sure make sure you're ready to answer those questions, especially the single moms. Yep. And they know how to balance time and and figure out every little loophole they can to do their time and manage it well. 00;11;28;06 - 00;11;51;11 Unknown So while I do appreciate both Diana and Joyce joining us today and look forward to working with you all more in the future, thank you very much for joining us today. If you're a financial professional and you'd like to learn more, check the link in this episode's description to view all of the presentation from Advisor Fest 2023. As always, you can listen to all of our past episodes anywhere you get your podcasts. 00;11;51;18 - 00;12;18;15 Unknown Thank you very much and we'll see you soon. Cemetery Partners LLC is an investment advisor firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempted from registration requirements. Registration of an investment advisor does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. 00;12;18;17 - 00;12;48;14 Unknown No one should assume that future performance of any specific investment investment strategy, product or non investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss due to various factors, including changing market conditions and or applicable laws. The content may not be reflective of current opinions or positions. 00;12;48;16 - 00;13;10;06 Unknown Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of or is a substitute for personalized investment advice. Symmetry Partners and APL Wealth are affiliated entities.
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Fees & Transparency | How is Your Financial Advisor Being Paid?
06/22/2023
Fees & Transparency | How is Your Financial Advisor Being Paid?
Financial Advisors don't work for free. Depending on how their practice is structured, investors will be charged an assortment of fees for a financial advisor's services. In this episode of Unfiltered Finance, we are joined by JT Lavery, Symmetry's Associate Director of National Sales, to discuss how fees are structured and how advisors can work to be transparent with their clientele. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. 0 00:00:06.970 --> 00:00:10.520 Hello and welcome to Unfiltered Finance. This is your host, Tom Romano. 1 00:00:10.520 --> 00:00:13.640 And thank you all for joining us for, uh, this edition. 2 00:00:13.930 --> 00:00:16.320 Today we're gonna talk about something that I think, uh, 3 00:00:16.620 --> 00:00:21.160 weighs on a lot of investors' minds. Um, there, there tends to be, uh, 4 00:00:21.400 --> 00:00:24.320 somewhat of a lack of transparency on this topic in the industry. 5 00:00:24.320 --> 00:00:28.400 And the topic is, is fees and all fees associated with investing. 6 00:00:28.460 --> 00:00:32.400 We have the perfect guest for us here today. Uh, JT Lavery, uh, 7 00:00:32.400 --> 00:00:34.040 longtime coworker and friend of mine. 8 00:00:34.070 --> 00:00:37.320 He's the Associate Director of National Sales at Symmetry Partners. Jt, 9 00:00:37.320 --> 00:00:38.440 thanks for joining us here, 10 00:00:38.740 --> 00:00:40.560 Tom. Thanks for having me. Appreciate it. So, 11 00:00:40.740 --> 00:00:43.280 Jt, tell us a little bit about, about your background, um, 12 00:00:43.310 --> 00:00:44.600 working with advisors. 13 00:00:44.870 --> 00:00:48.000 I've been working with advisors, Tom, for about 23 years now, kind of in, 14 00:00:48.000 --> 00:00:51.920 in different facets. Uh, I started off on the service side of things at a, at a, 15 00:00:51.940 --> 00:00:55.720 at a major mutual fund company up in Boston, answering phones and, and, 16 00:00:55.860 --> 00:00:58.080 you know, trying to solve problems. And I, you know, 17 00:00:58.080 --> 00:01:02.160 transitioned over to the sales side, uh, a few years after that. So I have a, 18 00:01:02.160 --> 00:01:05.880 you know, pretty good background working with advisors that were more on the, 19 00:01:05.880 --> 00:01:07.240 uh, commission side of things, 20 00:01:07.380 --> 00:01:10.640 as well as advisors that are on the fee-based side of things. For 21 00:01:10.640 --> 00:01:14.160 Our listeners, um, describe the difference between the two because I, 22 00:01:14.240 --> 00:01:18.000 I think a lot of folks out there don't know if they're paying fees or 23 00:01:18.000 --> 00:01:18.700 commissions, and, 24 00:01:18.700 --> 00:01:22.760 and I've heard many times talking to investors that they don't think they pay 25 00:01:22.920 --> 00:01:23.630 anything. Mm-hmm. 26 00:01:23.630 --> 00:01:26.120 Yeah. So, uh, you know, commissions are paid out, uh, by, 27 00:01:26.120 --> 00:01:27.240 let's say a mutual fund company. 28 00:01:27.390 --> 00:01:30.680 They will pay out a commission to the advisor who sells that particular mutual 29 00:01:30.710 --> 00:01:32.080 fund to, uh, to their client. 30 00:01:32.460 --> 00:01:36.400 And it's could be paid out in a very various of different ways. Um, you know, 31 00:01:36.400 --> 00:01:39.240 if it's a shares, it'll be an upfront sales charge, B shares, 32 00:01:39.240 --> 00:01:40.760 which don't even think is even a thing anymore. 33 00:01:40.760 --> 00:01:43.760 It was a contingent deferred sales charge. There was no upfront sales charge, 34 00:01:43.980 --> 00:01:46.680 but it was a declining sales charge As time goes on and you, 35 00:01:46.700 --> 00:01:49.120 and you were to sell that particular holding, you know, the, 36 00:01:49.120 --> 00:01:53.120 the sales charge would be reduced. And then you also had c shares that were, 37 00:01:53.140 --> 00:01:56.280 you know, about a 1%, you know, uh, uh, trail that would, uh, 38 00:01:56.350 --> 00:01:57.800 that would pay out to the advisors. 39 00:01:57.800 --> 00:02:00.520 And those are paid through various fees that are within the mutual funds that 40 00:02:00.520 --> 00:02:03.040 the mutual fund companies, uh, structure around, you know, 41 00:02:03.040 --> 00:02:05.520 marketing of their particular products as well as, um, 42 00:02:05.540 --> 00:02:06.920 as selling those particular products, 43 00:02:06.930 --> 00:02:10.200 verse the fee side of things where it's advisors are just simply charging a fee 44 00:02:10.200 --> 00:02:13.640 for their advice. They're advising their clients on what they should be doing. 45 00:02:14.180 --> 00:02:17.240 Um, there's often, there's more than just, um, more advice, 46 00:02:17.310 --> 00:02:20.400 more than just advice that goes into it. It's, you know, financial planning, 47 00:02:20.680 --> 00:02:23.040 holistic planning and things like that. But it's generally a, 48 00:02:23.120 --> 00:02:25.760 a fee that's fully disclosed that they, that they pay. 49 00:02:26.300 --> 00:02:29.560 And the way most advisors will structure their fees, 50 00:02:29.590 --> 00:02:32.440 they'll structure 'em in such a manner that the more money you have, uh, 51 00:02:32.440 --> 00:02:34.840 you'll start to see those fees actually go down. So 52 00:02:34.840 --> 00:02:37.360 What I'm hearing you say, it sounds like, and I think the, 53 00:02:37.460 --> 00:02:39.800 you said contingent deferred sales charge, right? 54 00:02:39.860 --> 00:02:43.280 If if you're earning a commission, that is a, it's a sales charge, correct? 55 00:02:43.370 --> 00:02:48.040 Right. Whereas, uh, fee for advice is exactly that, 56 00:02:48.240 --> 00:02:51.480 right? It's a fee for, for giving advice so that it's not necessarily a, 57 00:02:52.040 --> 00:02:53.600 a sales charge. Um, 58 00:02:53.660 --> 00:02:56.200 why do you think it's important for investors to know the difference between the 59 00:02:56.200 --> 00:02:56.760 two? Well, 60 00:02:56.760 --> 00:02:59.440 It's important for them to know the difference. It's, 61 00:02:59.440 --> 00:03:02.040 I think it's just important for them to know what they're, what they're getting. 62 00:03:02.090 --> 00:03:05.040 First of all, commissions. You can say that there's, you know, 63 00:03:05.280 --> 00:03:08.120 conflicts of interest perhaps. Are they getting sold something that, 64 00:03:08.230 --> 00:03:10.880 that has a higher commission that, that, you know, 65 00:03:10.880 --> 00:03:14.040 the advisor's gonna get paid more money on, you know, verse, you know, 66 00:03:14.040 --> 00:03:14.873 they always say, you know, 67 00:03:15.000 --> 00:03:19.000 a fee-based advisor usually will generally sort of align themselves with the 68 00:03:19.000 --> 00:03:22.040 client, let's say, on the, on the same side of the table, so to speak. They're, 69 00:03:22.040 --> 00:03:25.400 they're, they're going in as a team, we're here to, you know, you got your, 70 00:03:25.420 --> 00:03:27.120 you want to get from point A to point B, 71 00:03:27.210 --> 00:03:28.800 let's figure out the best way to do that, 72 00:03:28.800 --> 00:03:31.680 and then we'll put you in the appropriate investments. And, you know, 73 00:03:31.680 --> 00:03:34.040 because they're not, you know, getting any commissions, you know, 74 00:03:34.040 --> 00:03:35.680 generally speaking, there's a, I think, 75 00:03:35.760 --> 00:03:39.240 a certain comfort level knowing that the investment solution's gonna be right 76 00:03:39.240 --> 00:03:39.780 for them. 77 00:03:39.780 --> 00:03:42.360 No, that, that's a really great explanation. And you know, this, 78 00:03:42.510 --> 00:03:45.160 this podcast where, where our advocates of, 79 00:03:45.220 --> 00:03:47.200 of financial advisors and financial advice, 80 00:03:47.200 --> 00:03:51.400 I've said many times before that I always get asked, you know, what's a, 81 00:03:51.400 --> 00:03:54.520 what's a great stock tip? What's a great tip? What's some advice for investing? 82 00:03:54.520 --> 00:03:57.520 And my advice is always work with a, a fee advisor, 83 00:03:58.030 --> 00:04:00.200 because that advice is extremely valuable. 84 00:04:00.470 --> 00:04:05.280 What are you seeing the average on the fee based side average advisory fees in 85 00:04:05.280 --> 00:04:09.360 the industry? What should investors, what should they know about advisory fees? 86 00:04:09.580 --> 00:04:10.720 Um, just generally? Yeah, generally, 87 00:04:10.720 --> 00:04:13.280 Generally speaking, I would, I would say that the, you know, 88 00:04:13.280 --> 00:04:18.160 the average fee probably comes in around 1%. Um, you know, we see, you know, 89 00:04:18.160 --> 00:04:20.160 just on our, on ourt here at Symmetry, 90 00:04:20.240 --> 00:04:23.360 I think the average advisory fee is somewhere around 97 basis points, 91 00:04:23.380 --> 00:04:24.280 if I'm not mistaken. 92 00:04:24.460 --> 00:04:29.120 And so we'll see advisors charge as little as maybe 60 or 50 basis points, 93 00:04:29.420 --> 00:04:34.280 and we'll see advisors charge, you know, as, as high as 125 basis points. 94 00:04:34.430 --> 00:04:37.760 It's hard to say what's right. It's, what it comes down to is, you know, 95 00:04:37.760 --> 00:04:39.960 your comfort level and what you're getting for those services. 96 00:04:40.350 --> 00:04:44.000 Some advisors will, uh, will charge, let's say lower basis points, 97 00:04:44.060 --> 00:04:47.120 but they'll also charge on top of that for other services, like, let's say, 98 00:04:47.120 --> 00:04:48.320 financial planning. Okay. 99 00:04:48.320 --> 00:04:52.680 Whereas some advisors will charge 125 basis points and let's say maybe financial 100 00:04:52.840 --> 00:04:56.040 planning's included in that. And so it's always good to know, you know, 101 00:04:56.260 --> 00:04:57.520 you know, not only what you're paying, 102 00:04:57.540 --> 00:05:00.960 but also what you're getting for that particular price or that fee that you're 103 00:05:00.960 --> 00:05:01.360 paying. Okay. 104 00:05:01.360 --> 00:05:03.920 So these are a couple things that I kind of want to dive into a little bit. 105 00:05:03.920 --> 00:05:05.840 First and foremost, I think, you know, 106 00:05:05.840 --> 00:05:10.360 it's not fair to talk about price and fees without talking about value, right? 107 00:05:10.360 --> 00:05:10.740 Right. 108 00:05:10.740 --> 00:05:15.600 And so I think that you are going to see varying degrees of fees across the 109 00:05:15.600 --> 00:05:18.600 board, depending on, on, on the advisor's value proposition, 110 00:05:19.180 --> 00:05:23.000 1% that we've seen that fee, that that really hasn't changed. Mm-hmm. Right? 111 00:05:23.000 --> 00:05:27.880 Mm-hmm. Um, we, we do hear a lot about price compression in the industry, but I, 112 00:05:27.880 --> 00:05:30.880 I think when it comes to the, the financial advisor's compensation, 113 00:05:30.940 --> 00:05:33.560 and I would argue that the financial advisor is the, uh, 114 00:05:33.560 --> 00:05:37.040 most valuable person in the value chain. Mm-hmm. That fee hasn't changed, 115 00:05:37.260 --> 00:05:40.800 but investors are looking more for, from their advisors. So there's some, 116 00:05:40.800 --> 00:05:42.520 there's some margin compression there, right? 117 00:05:42.790 --> 00:05:44.000 Yeah. The advisor, you know, uh, 118 00:05:44.000 --> 00:05:47.360 clients are becoming more savvy conversation around fees. It's, 119 00:05:47.360 --> 00:05:49.680 it's out in the open, right? You see 'em on commercials all the time, 120 00:05:49.870 --> 00:05:53.480 whether it's Schwab or Fidelity or Vanguard, you know, talking about, you know, 121 00:05:53.500 --> 00:05:57.720 low fees. So, uh, it's out there and clients are well aware of that. 122 00:05:58.180 --> 00:05:59.760 And so they're starting to ask questions, 123 00:05:59.760 --> 00:06:02.760 they're starting to ask what they're getting for, for that particular fee. 124 00:06:03.140 --> 00:06:05.040 But at the end of the day, you know, you know, it's, 125 00:06:05.040 --> 00:06:07.280 it's only an issue in the absence of value, you know, 126 00:06:07.280 --> 00:06:11.000 so if the advisor's providing value and they see that and they know that, then, 127 00:06:11.020 --> 00:06:12.000 you know, generally speaking, 128 00:06:12.000 --> 00:06:13.680 clients tend to be comfortable with what they're paying. 129 00:06:13.750 --> 00:06:17.800 Certainly, certainly. What are you, you know, the advisors that are charging 1%, 130 00:06:17.800 --> 00:06:21.960 what are the typical types of services that you see advisors performing for, 131 00:06:22.060 --> 00:06:24.120 for that fee to add value to the equation? 132 00:06:24.380 --> 00:06:26.560 That's a great question. You know, we, we kind of see, 133 00:06:26.980 --> 00:06:30.320 we see a lot of advisors that are rolling financial planning into their fee. 134 00:06:30.460 --> 00:06:32.600 You know, we, we, we see that there's, um, 135 00:06:32.600 --> 00:06:36.440 there's a lot of advisors that actually have a, a, um, what I would say, 136 00:06:36.480 --> 00:06:40.320 a very big financial planning focus. So they'll charge for financial plans, 137 00:06:40.540 --> 00:06:43.760 and they may do some advisory business along the way, uh, 138 00:06:43.760 --> 00:06:45.720 just to help out clients. And so they'll, you know, 139 00:06:45.720 --> 00:06:48.760 they may charge maybe a little less, maybe around 80 basis points, 140 00:06:48.760 --> 00:06:51.080 80 to 90 basis points, kind of what we're seeing there. 141 00:06:51.470 --> 00:06:53.040 Okay. That makes a lot of sense. I, I, 142 00:06:53.080 --> 00:06:56.120 I think that the value proposition for the advisors actually shifted quite a bit 143 00:06:56.120 --> 00:07:00.720 over the years. You know, you and I have talked, um, a lot about this and, 144 00:07:00.720 --> 00:07:01.000 you know, 145 00:07:01.000 --> 00:07:05.960 there was a time where the value proposition was thought to be returned. Mm-hmm. 146 00:07:06.470 --> 00:07:10.520 I'll pay you a higher fee for higher rates of return. And is that the case? No, 147 00:07:10.520 --> 00:07:10.720 because 148 00:07:10.720 --> 00:07:15.440 It's, you know, I, I think the, the juries, you know, come in, in terms of, 149 00:07:15.580 --> 00:07:19.160 of returns and in terms of what types of investments you should be in. I mean, 150 00:07:19.160 --> 00:07:19.720 right now, I mean, 151 00:07:19.720 --> 00:07:23.080 you're seeing huge outflows from going from what I would say traditional active 152 00:07:23.860 --> 00:07:28.080 to more traditional passive types of investing. And so I think the, the, 153 00:07:28.080 --> 00:07:32.000 the main role for the advisor is just really being that behavioral coach. Uh, 154 00:07:32.000 --> 00:07:33.880 when we're left to our own devices, we don't make, 155 00:07:33.900 --> 00:07:36.960 we necessarily don't make the best decisions, uh, when it comes to investing. 156 00:07:36.960 --> 00:07:41.040 We, we get very emotional about our, our money and when, when markets are down, 157 00:07:41.140 --> 00:07:43.600 we, we tend to hit, you know, hit the panic button and sell, 158 00:07:43.600 --> 00:07:46.760 and that's the wrong time to sell. And so, um, you know, when you look at the, 159 00:07:46.910 --> 00:07:51.000 like, industry studies that are out there, I mean, the vanguard's out, you know, 160 00:07:51.000 --> 00:07:53.440 advisor Alpha is a big one, shows that, you know, 161 00:07:53.440 --> 00:07:56.280 working with a financial advisor, you can, um, you know, 162 00:07:56.280 --> 00:08:00.840 capture about 300 basis points extra just by working with a financial advisor. 163 00:08:01.260 --> 00:08:02.760 And they actually attribute most of that to, 164 00:08:02.760 --> 00:08:04.920 but I think about half of that to behavioral coaching. Sure. 165 00:08:04.920 --> 00:08:07.160 And the, um, just for our listeners out there, 166 00:08:07.180 --> 00:08:10.480 the advisors Alpha study that was done by, uh, Vanguard, 167 00:08:10.560 --> 00:08:13.880 I believe it's a paper that they put out in conjunction with, 168 00:08:13.880 --> 00:08:15.120 with the Spectrum group. And, 169 00:08:15.120 --> 00:08:19.320 and it does show that investors who tend to work with financial advisors tend to 170 00:08:19.320 --> 00:08:20.400 have better performance, 171 00:08:20.460 --> 00:08:23.400 but it doesn't necessarily mean that the advisors tinkering with the portfolio. 172 00:08:23.500 --> 00:08:27.920 The value proposition, to your point, is coaching. It's competent, 173 00:08:27.920 --> 00:08:32.400 it's communication. It, it's, it's these things that help the investor, uh, 174 00:08:32.400 --> 00:08:34.520 whether the good times and the bad. And, and, 175 00:08:34.580 --> 00:08:37.240 and providing that sort of foundation, 176 00:08:37.270 --> 00:08:41.840 helping the investor stay the course really is the, the secret to, 177 00:08:41.900 --> 00:08:44.240 to having a successful investment experience. I 178 00:08:44.480 --> 00:08:47.240 Think it's also important to add that I think a lot of advisors now, you know, 179 00:08:47.240 --> 00:08:48.920 there is sort of a, a paradigm shift. 180 00:08:48.920 --> 00:08:52.720 It's not necessarily the returns that I can generate for you. Um, it's, 181 00:08:52.750 --> 00:08:55.240 it's the other things that I can do for you, um, 182 00:08:55.240 --> 00:08:58.360 because they know that they're not portfolio manager. Mm-hmm. You know, they're, 183 00:08:58.420 --> 00:08:59.040 you know, they're, 184 00:08:59.040 --> 00:09:01.840 they're running their own business and that business is helping people. 185 00:09:01.900 --> 00:09:04.560 And if they're spending all their time trying to figure out what the best stock 186 00:09:04.580 --> 00:09:07.320 is, they're, they're probably gonna miss the boat on, you know, 187 00:09:07.320 --> 00:09:09.600 helping their clients, you know, with their financial planning and, 188 00:09:09.600 --> 00:09:12.720 and meeting their, you know, their financial goals over time. Sure, 189 00:09:12.870 --> 00:09:16.000 Sure. So, you know, we talked a lot about the advisor compensation,...
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info_outline
Alternative Investments | Part Two: How Can They Mitigate Risk in Your Portfolio?
06/08/2023
Alternative Investments | Part Two: How Can They Mitigate Risk in Your Portfolio?
Alternative Investments are not just "cool" or intriguing products to own. In truth, they have the potential to help you endure tumultuous markets. In this episode, we are joined once again by Philip McDonald, CFA, CAIA, Managing Director of Research Investments & Portfolio Manager, to discuss how Alternative Investments can mitigate risk in your portfolio. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. 0 00:00:06.890 --> 00:00:09.120 Hello, this is Tom Romano with Unfiltered Finance. 1 00:00:09.270 --> 00:00:13.400 Welcome back to part two on our discussion of alternative investments here with 2 00:00:13.400 --> 00:00:14.360 us as Phil McDonald, 3 00:00:14.430 --> 00:00:18.720 portfolio Manager and managing Director of Investments at Symmetry Partners. 4 00:00:18.720 --> 00:00:19.760 Phil, welcome back. 5 00:00:20.020 --> 00:00:21.400 Thanks for having me back. Tom, 6 00:00:21.880 --> 00:00:24.880 I think we're getting a lot of questions from investors and and advisors because 7 00:00:24.880 --> 00:00:28.000 of the fact that you look at the performance of some of these alternative asset 8 00:00:28.000 --> 00:00:30.920 classes in a year like 2022. However, 9 00:00:31.640 --> 00:00:35.680 I think we would caution our listeners to, to not chase returns, 10 00:00:35.860 --> 00:00:40.040 and it's more of a strategic allocation that you wanna hold in your portfolio 11 00:00:40.140 --> 00:00:41.120 for a long duration. 12 00:00:41.600 --> 00:00:44.920 I would totally agree with that. And, and you have other considerations here, 13 00:00:44.920 --> 00:00:48.280 like broadly speaking, the expectation of the 60 40 portfolio, 14 00:00:48.300 --> 00:00:49.920 the return on the so-called 60 port, 15 00:00:49.930 --> 00:00:54.680 40 portfolio is likely going to be below average for in, in the near future. 16 00:00:54.780 --> 00:00:56.320 So you start to think about like, okay, 17 00:00:56.320 --> 00:01:00.200 my traditional portfolio isn't gonna return, you know, the 40 year average, 18 00:01:00.350 --> 00:01:03.080 what we saw decades ago. So where else might I be, 19 00:01:03.080 --> 00:01:06.280 might be able to go for returns and diversification? So you, 20 00:01:06.300 --> 00:01:10.440 you have that inflation surprises, you have increased correlation of, 21 00:01:10.460 --> 00:01:12.920 of traditional asset classes in the recent past. You know, 22 00:01:12.920 --> 00:01:16.360 of all these things kind of pointing to the benefit of having a diversified 23 00:01:16.710 --> 00:01:18.880 alternative strategy. And I would agree with you, 24 00:01:18.920 --> 00:01:22.280 I think you were alluding to the strength of 2022. It was, 25 00:01:22.300 --> 00:01:24.880 it was a very good year for certain alternative strategies. 26 00:01:25.000 --> 00:01:27.880 I would encourage people to think of that as an outlier year like that. 27 00:01:27.880 --> 00:01:31.280 That's not a year that can necessarily happen again unless all the bad things 28 00:01:31.280 --> 00:01:36.080 that happen in the equity and fixed income markets and with inflation kind of 29 00:01:36.490 --> 00:01:40.720 recur. So I, I would encourage people to almost think in terms of sharp ratio, 30 00:01:40.770 --> 00:01:43.600 right? So an excess return for a given volatility, 31 00:01:43.920 --> 00:01:47.320 a sharp ratio above 0.5, getting to maybe a 0.8, is, 32 00:01:47.340 --> 00:01:50.320 is the type of realm I think you should think of for, 33 00:01:50.380 --> 00:01:53.000 for a diversified alternative strategy. And, 34 00:01:53.180 --> 00:01:55.160 and to kind of put specifics on that, 35 00:01:55.380 --> 00:02:00.360 so something that has is managed to a 10% volatility or standard deviation that 36 00:02:00.360 --> 00:02:05.240 would be a five to 8% excess return on the risk-free rate. So, 37 00:02:05.660 --> 00:02:10.080 so you know, you're talking single digit excess returns for, uh, 38 00:02:10.200 --> 00:02:14.040 a strategy that's scaled to a 10% volatility. So, you know, 39 00:02:14.100 --> 00:02:16.480 to take people out of this expectation of, 40 00:02:16.780 --> 00:02:21.640 of a home run year kind of happening again, it's less likely to happen again. 41 00:02:21.660 --> 00:02:22.493 Gotcha. 42 00:02:22.900 --> 00:02:25.560 Um, just to clarify some of that, because I think that's some, 43 00:02:25.670 --> 00:02:28.880 some very important advice there. When we talk sharp ratio, 44 00:02:28.880 --> 00:02:32.000 the way I look at that is bang for your buck. Are you, 45 00:02:32.020 --> 00:02:35.960 are you getting the return for the risk that you are taking? 46 00:02:36.300 --> 00:02:37.720 And the higher the sharp ratio, 47 00:02:37.740 --> 00:02:39.800 the greater the return is for the risk that you're taking. 48 00:02:40.540 --> 00:02:44.800 And so when we're talking about, you know, years like 2022, which is an outlier, 49 00:02:44.810 --> 00:02:46.640 which I would agree, you know, 50 00:02:46.640 --> 00:02:51.640 investors could have alternatives in their portfolio for years with a trade off 51 00:02:51.640 --> 00:02:51.880 being, 52 00:02:51.880 --> 00:02:55.720 you might be getting single digit returns while the markets may be producing 53 00:02:55.720 --> 00:02:59.930 double digit returns. We don't know when the next 20, 22, 2 is gonna happen. 54 00:03:00.420 --> 00:03:05.280 But having an allocation of those alts will certainly help weather that storm. 55 00:03:05.820 --> 00:03:07.280 Uh, uh, totally agree. Yes. 56 00:03:07.380 --> 00:03:11.160 So I think a misconception here, and this is just from my conversations with, 57 00:03:11.160 --> 00:03:13.600 with advisors, investors alike, they think alternative strategies, 58 00:03:13.600 --> 00:03:15.000 they think returns. Mm-hmm. 59 00:03:15.080 --> 00:03:18.440 They think even tactical shifts into and hour. Exactly. Yeah. 60 00:03:18.460 --> 00:03:22.000 But what I'm hearing you say that this is more of a risk mitigating strategy 61 00:03:22.190 --> 00:03:24.000 than a return reaching strategy. 62 00:03:24.520 --> 00:03:28.080 I think it's, it's strongly risk mitigating from a diversification standpoint, 63 00:03:28.260 --> 00:03:30.320 but I'm not quite sure how 64 00:03:31.990 --> 00:03:34.760 Much you have to give up in returns. Okay. I mean, it, 65 00:03:34.880 --> 00:03:38.640 I I wouldn't necessarily say it, it's gonna hurt you over the long term. 66 00:03:38.760 --> 00:03:42.240 I think you need to think about the right portfolio you, you want to be in. And, 67 00:03:42.460 --> 00:03:46.000 you know, I dunno if you had a question here, but, uh, you know, there, 68 00:03:46.000 --> 00:03:50.200 there are some very specific use cases that I think make sense and that would be 69 00:03:50.520 --> 00:03:52.960 managing just the life cycle, 70 00:03:53.380 --> 00:03:58.280 how financial plans and asset allocations change as a person ages. Again, 71 00:03:58.380 --> 00:04:03.080 we, we have a finite kinda life here where we're earning and spending and maybe 72 00:04:03.080 --> 00:04:08.080 bequeathing and then preferences. So theoretically, as someone ages, 73 00:04:08.080 --> 00:04:11.640 they're the, the risk of their portfolio should, should come down over time. 74 00:04:11.640 --> 00:04:13.680 They're converting their human capital, 75 00:04:13.690 --> 00:04:17.200 their potential for earning during their career into financial capital. 76 00:04:17.200 --> 00:04:20.160 They're investing that hopefully they're being thoughtful about the 77 00:04:20.160 --> 00:04:23.760 diversification of, of, of those kind of two buckets and say, 78 00:04:23.760 --> 00:04:25.680 equity beta should come down as you age. 79 00:04:25.930 --> 00:04:28.080 Where do you go with that allocation in your portfolio? 80 00:04:28.640 --> 00:04:32.240 Historically and traditionally, someone would say, oh, fixed, fixed income, 81 00:04:32.240 --> 00:04:35.880 of course. But we've been seeing for a decade, you and I right, 82 00:04:35.930 --> 00:04:37.680 we're we're both nodding and smiling. 83 00:04:38.250 --> 00:04:43.120 There have been times when people were strongly opposed to increasing the fixed 84 00:04:43.120 --> 00:04:47.120 income allocation in their portfolio. So if it's just, you know, gas and break, 85 00:04:47.180 --> 00:04:49.360 you know, what do you do? You, you know, 86 00:04:49.360 --> 00:04:52.720 we've seen investors and advisors kind of freeze and, and say, oh, 87 00:04:52.720 --> 00:04:56.080 there's no solution here. But this third or fourth, right, 88 00:04:56.080 --> 00:05:00.560 with cash in the consideration bucket of allocation really opens things up. 89 00:05:00.620 --> 00:05:04.480 You can take down beta risk, uh, equity beta, 90 00:05:04.500 --> 00:05:09.000 and you can allocate and diversify not only into fixed income. 91 00:05:09.300 --> 00:05:10.100 Gotcha. 92 00:05:10.100 --> 00:05:13.640 And you, you know, we, I joke around saying it depends, right? We, 93 00:05:13.660 --> 00:05:18.080 we say that a lot here, um, because I also think it's a perfect portfolio. 94 00:05:18.340 --> 00:05:21.200 You know, we, we look at portfolios as being a series of trade offs. 95 00:05:21.580 --> 00:05:23.360 And so I immediately think, well gosh, you know, 96 00:05:23.360 --> 00:05:25.000 if you don't really give up any of the return, 97 00:05:25.000 --> 00:05:29.480 but you can definitely mitigate some of the risks through sharp ratio, 98 00:05:29.480 --> 00:05:32.920 as you said, like looking at that particular statistic, who, 99 00:05:32.920 --> 00:05:35.960 what are the trade-offs of, of investing in alternatives? And, 100 00:05:35.960 --> 00:05:38.920 and immediately I think, well, well, you're still, there's still cost, 101 00:05:39.030 --> 00:05:42.840 even though you can get lower cost alternative exposures, 102 00:05:42.840 --> 00:05:47.400 there's still a cost element to that. Um, and also, you know, 103 00:05:47.400 --> 00:05:50.320 we talk a lot about tracking error on the behavioral side, right? 104 00:05:50.380 --> 00:05:53.680 If you're gonna add an alternative asset class to your portfolio, 105 00:05:54.660 --> 00:05:58.080 but you're honed in on the s and p 500, you're, 106 00:05:58.080 --> 00:06:00.040 you're not gonna be tracking that index. 107 00:06:00.690 --> 00:06:01.220 Right? 108 00:06:01.220 --> 00:06:03.120 Is that, is that a correct way of thinking about it? 109 00:06:03.370 --> 00:06:04.040 Absolutely. 110 00:06:04.040 --> 00:06:07.600 And I'm glad you brought that up because not only are alternatives difficult to 111 00:06:07.600 --> 00:06:11.720 benchmark, there are some indices that I think, um, are, 112 00:06:11.740 --> 00:06:16.320 are relevant to a diversified, you know, conservative strategy. We, we, 113 00:06:17.220 --> 00:06:19.880 you know, we run an alternative strategy, uh, 114 00:06:19.880 --> 00:06:24.120 in different forms that is not seeking to, to be very volatile, right? 115 00:06:24.180 --> 00:06:28.040 So sub under that 10% volatility that I gave as, 116 00:06:28.180 --> 00:06:32.680 as the example to conceptualize a sharp ratio. So we, we, 117 00:06:32.740 --> 00:06:34.560 we don't even believe in a, uh, 118 00:06:34.560 --> 00:06:38.040 that high level of volatility in an alternative strategy. Um, 119 00:06:38.060 --> 00:06:39.280 but you raise a very good point. 120 00:06:39.300 --> 00:06:42.120 So not only are alternatives difficult to benchmark, 121 00:06:42.740 --> 00:06:44.880 but if you have alternatives in your portfolio, 122 00:06:45.860 --> 00:06:49.880 the appropriate benchmark for your portfolio should reflect 123 00:06:50.660 --> 00:06:55.480 the allocation you have. If it's 50% diversified equity, 124 00:06:56.770 --> 00:06:59.800 40% diversified fixed income, and 10% alts, 125 00:07:00.380 --> 00:07:04.880 you should probably benchmark yourself to a blended benchmark of a 126 00:07:04.880 --> 00:07:07.960 50, 40 10 mix of relevant indices. 127 00:07:08.540 --> 00:07:11.920 Not just look to the s and p 500, because again, 128 00:07:11.940 --> 00:07:14.440 you probably have a 0.5 beta in that portfolio. 129 00:07:14.980 --> 00:07:18.440 You don't want to compare yourself to something that is a 1.0 beta. 130 00:07:18.790 --> 00:07:22.880 Sure, sure. Absolutely. And you know, we, we talk a lot about, on this podcast, 131 00:07:23.480 --> 00:07:26.680 a lot of folks look at benchmarks to look at the performance, their portfolio, 132 00:07:26.740 --> 00:07:28.800 and I think that makes a lot of sense. But the true one, 133 00:07:28.800 --> 00:07:32.000 true benchmark is are you hitting your goals from a financial planning 134 00:07:32.000 --> 00:07:34.800 standpoint? Right? And so I think that's a better way to, to, 135 00:07:34.820 --> 00:07:38.640 to look at it versus just making sure that you may or may not be 136 00:07:38.990 --> 00:07:40.520 outperforming the s and p, 137 00:07:40.520 --> 00:07:44.400 which is a very visible benchmark out in the world today. 138 00:07:44.420 --> 00:07:47.560 And we can think the media outlets for that certainly. Right. 139 00:07:47.740 --> 00:07:50.680 So let's talk a little about, uh, allocation to alts, right? 140 00:07:50.680 --> 00:07:54.280 Let's say you have an investor, let's say it's 60% stock, 40% bond, 141 00:07:54.280 --> 00:07:58.400 maybe a small cash position in there. How should that investor consider adding, 142 00:07:58.820 --> 00:08:01.720 uh, alternatives to the portfolio? Is there a maximum amount you would put in? 143 00:08:01.740 --> 00:08:04.720 Is there a minimum amount? Would you take it from the stock side? 144 00:08:04.720 --> 00:08:07.440 Would you take it from the bond side? How does that work? And how should our, 145 00:08:07.460 --> 00:08:10.320 our listeners be conceptualizing adding that asset 146 00:08:10.320 --> 00:08:13.720 Class? So we, we have some opinions here, but I think in the end, it's, 147 00:08:13.720 --> 00:08:17.960 it's gonna be what is acceptable to the investor and what their financial 148 00:08:17.960 --> 00:08:22.520 advisors would recommend start the starting point matters. 149 00:08:22.900 --> 00:08:27.200 So if you're exceptionally conservative to start, say you're, 150 00:08:28.320 --> 00:08:31.980 you know, 10% equity in 90% fixed income, 151 00:08:32.260 --> 00:08:37.020 I think taking it ha having a a higher allocation alt might 152 00:08:37.450 --> 00:08:41.780 make more sense than if you were starting from the other end. So, uh, 153 00:08:41.840 --> 00:08:45.500 in terms of the distribution of returns and, and you know, 154 00:08:45.500 --> 00:08:47.980 the level of volatility of a diversified AL strategy, 155 00:08:48.250 --> 00:08:51.180 it's a little bit more similar to fixed income. It's, it's, 156 00:08:51.260 --> 00:08:54.540 I like to say those returns are fueled by different things. You know, it's not, 157 00:08:55.260 --> 00:08:59.200 you know, duration and credit risk and illiquidity type of stuff. 158 00:08:59.270 --> 00:09:02.840 It's other drivers that, that give you returns and alternatives. 159 00:09:02.860 --> 00:09:06.480 But our rules of thumb, which, you know, are for people to take or leave, 160 00:09:06.490 --> 00:09:11.000 would be maybe up to about 25% if you're starting from a very conservative, uh, 161 00:09:11.000 --> 00:09:14.800 portfolio. And if you're starting from a very aggressive portfolio, 162 00:09:14.830 --> 00:09:18.240 just say someone's a hundred percent equity invested in says, ah, 163 00:09:18.240 --> 00:09:22.160 I want to add malts to this portfolio, but I don't like fixed income. Um, 164 00:09:22.360 --> 00:09:23.480 I know a few of those, maybe, 165 00:09:24.210 --> 00:09:26.560 Maybe something more in the realm of 15%, 166 00:09:26.800 --> 00:09:31.560 I think lower than 10% allocation of anything to the portfolio is gonna have a, 167 00:09:32.120 --> 00:09:35.760 a, a limited effect on, on the outcome, right? 168 00:09:35.940 --> 00:09:40.200 So 10 percent's probably our general starting point to add something and, and, 169 00:09:40.260 --> 00:09:43.840 and see, uh, beneficial effect to the portfolio and, 170 00:09:43.980 --> 00:09:46.080 and where we've landed on where to fund it from. 171 00:09:46.080 --> 00:09:47.640 So I didn't forget that part of your question, 172 00:09:48.290 --> 00:09:52.560 where believers in prorata from the, 173 00:09:52.700 --> 00:09:53.720 the asset allocation, 174 00:09:54.260 --> 00:09:58.080 so if you're a 60 40 investor and you put say, 175 00:09:58.080 --> 00:09:59.560 20% alternatives, 176 00:10:00.010 --> 00:10:04.880 60% of that should be probably funded from a reduction in inequity 177 00:10:05.060 --> 00:10:07.960 and 40% from a reduction in fixed. And they go, again, 178 00:10:07.960 --> 00:10:12.320 these are starting rules of thumbs. I I am very familiar with people who, 179 00:10:12.910 --> 00:10:17.400 because that returns distribution to alts, you know, the volatility and the, 180 00:10:17.540 --> 00:10:22.520 and kind of the average return to the distribution to alts is a little 181 00:10:22.520 --> 00:10:24.520 more similar to fixed income than it is to equity. 182 00:10:24.760 --> 00:10:29.160 I know folks who want to take 100% on a fixed income, that is an approach, 183 00:10:29.420 --> 00:10:33.800 but if you think about that, you've done nothing to reduce your equity risk. 184 00:10:34.220 --> 00:10:37.920 So if someone is, again, aging life cycle is a consideration here, 185 00:10:38.760 --> 00:10:41.840 diversifying both systematic, traditional, 186 00:10:41.840 --> 00:10:43.600 systematic exposures of equity and fixed, 187 00:10:44.660 --> 00:10:48.160 we think taking from both makes a lot of sense to fund that ALT's position. 188 00:10:48.410 --> 00:10:50.640 There are exceptions, you know, there, there are, you know, 189 00:10:50.690 --> 00:10:54.560 there are people who have different savings or different, you know, 190 00:10:54.560 --> 00:10:58.880 sources of income, maybe people with three pensions, you know, like who, uh, 191 00:10:58.980 --> 00:11:02.280 who look a little different from an average investor. So again, 192...
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info_outline
Alternative Investments | Part One: There is Real Value in Non-Traditional Assets and Special Commodities
05/25/2023
Alternative Investments | Part One: There is Real Value in Non-Traditional Assets and Special Commodities
Today, we talk about an area of the market that many people have heard of, but haven’t chosen to invest in as of yet. Specifically, we’re talking about “Alternative Investments” - investment strategies that are different from and diversifying to, traditional asset classes. In this first half of this two-part episode, our own Tom Romano is joined by Symmetry’s Phil McDonald, CFA, CAIA, Managing Director of Research Investments & Portfolio Manager, to further define what “Alternative Investments” are, and why you may want to consider their potential benefits. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript 0 00:00:06.730 --> 00:00:10.400 Hello and welcome to Unfiltered Finance. This is your host, Tom Romano. 1 00:00:10.400 --> 00:00:12.160 Thank you for joining us. Uh, 2 00:00:12.160 --> 00:00:15.000 we have a special episode today where we want to talk about, uh, 3 00:00:15.000 --> 00:00:19.400 an area of the market that, uh, a lot of investors have probably heard of, uh, 4 00:00:19.620 --> 00:00:22.640 and probably most investors don't have a lot of exposure to. 5 00:00:23.180 --> 00:00:25.200 And that is alternative investments. 6 00:00:25.780 --> 00:00:29.200 And I have the perfect guest for us here today. Uh, Phil McDonald, 7 00:00:29.300 --> 00:00:33.040 who is a portfolio manager and the managing director of investments at Symmetry 8 00:00:33.040 --> 00:00:35.360 Partners, and is the resident expert on, 9 00:00:35.580 --> 00:00:39.360 on alternative investing here at Symmetry. So Phil, thanks for joining us today. 10 00:00:39.700 --> 00:00:41.280 Thanks for having me. I'm happy to be here. 11 00:00:41.900 --> 00:00:45.080 So I kinda wanna start very high level, Phil, um, 12 00:00:45.080 --> 00:00:49.200 because I think alternative investments is a, is a very, very broad topic. 13 00:00:49.400 --> 00:00:51.760 I mean, it can cover things, uh, 14 00:00:51.760 --> 00:00:55.760 such as precious metals to hedge fund strategies, um, 15 00:00:55.780 --> 00:00:59.760 all the way down to things like NFTs, right? Or, or even, you know, 16 00:00:59.760 --> 00:01:04.240 card collecting to an extent, right? So if you could just very high level give, 17 00:01:04.240 --> 00:01:08.520 give us a very broad definition, uh, on your view on alternative investing, 18 00:01:08.520 --> 00:01:09.020 please. 19 00:01:09.020 --> 00:01:09.720 And thank you that, 20 00:01:09.720 --> 00:01:14.680 that is a highly relevant question because alternatives is one of those labels 21 00:01:14.680 --> 00:01:17.760 and investing that doesn't have, uh, 22 00:01:17.880 --> 00:01:21.080 a perfectly agreed upon definition. I think, you know, 23 00:01:21.080 --> 00:01:24.640 certain people hear it and they think different things. Um, 24 00:01:24.800 --> 00:01:29.200 I think a useful definition to keep in mind is really, uh, 25 00:01:29.200 --> 00:01:33.080 the starting point is anything that is an investment strategy that is different 26 00:01:33.390 --> 00:01:37.800 from or diversifying to traditional asset classes that is 27 00:01:38.100 --> 00:01:41.080 equity and fixed income, right? Um, 28 00:01:41.180 --> 00:01:45.440 but I think you can't really stop there because, you know, 29 00:01:45.460 --> 00:01:48.840 you called attention to, to certain ideas that, you know, 30 00:01:48.840 --> 00:01:52.040 people might think of if, you know, you mentioned alternative investing, 31 00:01:52.320 --> 00:01:54.960 you know, baseball cards or, you know, 32 00:01:54.960 --> 00:01:58.520 a lot of interesting different artwork choices. Yeah. We've talked about, 33 00:01:58.520 --> 00:01:58.840 talked about 34 00:01:58.840 --> 00:01:59.270 That before. 35 00:01:59.270 --> 00:02:04.080 Cars, uh, timber farmland, you know, these are all, some, 36 00:02:04.320 --> 00:02:06.640 a lot of people think real estate, right? Which I think we could, 37 00:02:06.640 --> 00:02:07.600 we could debate that one, 38 00:02:07.700 --> 00:02:12.520 but I think not only should the investment strategy be different, but there, 39 00:02:12.530 --> 00:02:17.240 there should be kind of an economic rationale for why you might 40 00:02:17.510 --> 00:02:21.480 earn a return on that different strategy. And, and more specifically, 41 00:02:22.670 --> 00:02:27.560 where's the premium coming from? Right? So I think very quickly for me, 42 00:02:27.560 --> 00:02:31.600 that collapses down more to specific liquid, 43 00:02:32.380 --> 00:02:34.560 uh, investment in trading strategies. 44 00:02:34.950 --> 00:02:38.800 Sometimes based on themes we're al already familiar with in, 45 00:02:38.820 --> 00:02:40.640 in asset classes we're already familiar with. 46 00:02:40.640 --> 00:02:45.480 You don't necessarily have to go really far a field to find an 47 00:02:45.760 --> 00:02:49.480 addition to a portfolio that will, will make a difference in terms of, you know, 48 00:02:49.480 --> 00:02:51.920 adding an alternative, uh, investment exposure. 49 00:02:52.630 --> 00:02:55.560 Sure. Thank you for that. And, um, you know, 50 00:02:55.560 --> 00:02:58.680 I think it is that broad of a definition, right? I mean, uh, 51 00:02:58.990 --> 00:03:02.800 just to sort of clarify for, for our listeners, um, 52 00:03:02.860 --> 00:03:06.000 the word alternative means alternative, you said traditional asset classes, 53 00:03:06.460 --> 00:03:08.040 stocks, bonds. 54 00:03:08.610 --> 00:03:13.080 There is a correlation benefit to owning both stocks and bonds in a portfolio 55 00:03:13.270 --> 00:03:16.840 Most years. Most years. Yeah. We'll get to that. We will get to that. Um, 56 00:03:17.390 --> 00:03:20.640 however, um, you know, alternatives, to me it is a, 57 00:03:20.640 --> 00:03:25.280 it's a correlation story in, in all of those investments, if you will, 58 00:03:25.280 --> 00:03:30.200 whether it's cars, stamps, baseball cards, commodities, 59 00:03:30.670 --> 00:03:35.480 they are going to have or should have some sort of diversification benefit. 60 00:03:35.540 --> 00:03:37.000 And that's the purpose of it, right? 61 00:03:37.750 --> 00:03:39.200 Totally. You, you nailed it. 62 00:03:39.260 --> 00:03:44.120 The diversification benefit of an alternative strategy performing alternatively, 63 00:03:44.130 --> 00:03:46.480 right? So if you wanna get a little bit geeky, you know, 64 00:03:46.480 --> 00:03:50.160 you can think about something whose return stream looks different. So, you know, 65 00:03:50.220 --> 00:03:54.920 low correlation and expected return from that, you know, economic logic, 66 00:03:55.030 --> 00:03:58.760 that underlying fundamental theme as to if I do this trading strategy, 67 00:03:58.880 --> 00:04:03.760 I should expect a return, hopefully lower volatility than, than say, 68 00:04:03.920 --> 00:04:08.840 a equity market. So right there, you, you can talk about high sharp ratios or, 69 00:04:08.860 --> 00:04:12.560 you know, high excess returns relative to the volatility you're talking about. 70 00:04:12.780 --> 00:04:17.760 And, and absolutely diversification is the benefit. Very often, I, I, you know, 71 00:04:17.900 --> 00:04:21.520 use the, um, analogy of, you know, a third bucket of diversification. 72 00:04:21.540 --> 00:04:23.840 All you thought really all you had was two, well, 73 00:04:23.840 --> 00:04:27.760 there's this third bucket you might want to consider for some clients. And, 74 00:04:27.820 --> 00:04:31.240 and one, one thing I want to clarify here on, on this topic while we're here, 75 00:04:31.710 --> 00:04:35.040 most of these strategies are not a hedge, 76 00:04:35.500 --> 00:04:37.360 diversification is not a hedge. 77 00:04:37.820 --> 00:04:41.000 So if you're diversified with regard to, you know, 78 00:04:41.020 --> 00:04:45.600 equity markets and volatility, it doesn't mean when equities go down 10%, 79 00:04:45.780 --> 00:04:49.680 you go up 10%. It's not that directly, you know, 80 00:04:49.950 --> 00:04:53.360 inverse of a relationship. It's unrelated, you know, 81 00:04:53.360 --> 00:04:58.240 it's not sensitive to what the equity or fixed income market hopefully is doing. 82 00:04:58.420 --> 00:05:00.080 That's really what diversification is. 83 00:05:00.380 --> 00:05:03.360 So it's not the taking the, the counterpoint, if you will, right? 84 00:05:03.390 --> 00:05:08.240 Like something zigs this must zag, so to speak. Right? And so the idea is, it, 85 00:05:08.350 --> 00:05:13.240 it's not going to behave from a return standpoint like any other, 86 00:05:13.260 --> 00:05:17.080 it shouldn't behave like any other asset classes you currently have in your 87 00:05:17.080 --> 00:05:20.680 portfolio. And I really like the way you put that sort of a, a third bucket, 88 00:05:20.680 --> 00:05:24.640 right? I I maybe even a fourth, right? Because I think of cash. Yeah, exactly. 89 00:05:24.700 --> 00:05:29.160 So, so most investors have cash, bonds and stocks, 90 00:05:29.270 --> 00:05:31.120 most of their 401ks. And so what you're saying, 91 00:05:31.120 --> 00:05:35.200 there's this whole other realm of alternatives that can have 92 00:05:36.140 --> 00:05:40.880 diversification benefits because of the fact that they don't behave like stocks, 93 00:05:41.170 --> 00:05:43.120 bonds, and cash. Correct. 94 00:05:43.980 --> 00:05:48.880 So let's talk a little bit because I think alternatives sometimes get a bad 95 00:05:48.980 --> 00:05:52.120 rap. Um, I think a lot of it has to do with the, 96 00:05:52.260 --> 00:05:54.720 so maybe the broad definition has something to do with it, 97 00:05:54.780 --> 00:05:56.920 but let's just kind of pick it apart with some of the, 98 00:05:57.010 --> 00:06:00.920 the arguments I've heard from, uh, investors and financial advisors alike. 99 00:06:00.920 --> 00:06:03.400 And the first one that comes to mind is cost, right? You know, 100 00:06:03.400 --> 00:06:04.040 you think hedge funds, 101 00:06:04.040 --> 00:06:08.160 you think two 20 or three and 30 where you're the managers earning, you know, 102 00:06:08.180 --> 00:06:10.040 2%, 3% plus a, 103 00:06:10.160 --> 00:06:13.360 a large portion of the profits talk to us a little bit about cost with 104 00:06:13.360 --> 00:06:14.090 alternatives, 105 00:06:14.090 --> 00:06:17.920 Right? And that I think is a fair critique of, 106 00:06:18.320 --> 00:06:20.960 I dunno if I wanna call it a traditional model of alternative investing, 107 00:06:20.960 --> 00:06:24.320 maybe older model where some of this, these strategies started mm-hmm. 108 00:06:24.490 --> 00:06:26.840 Which really only offered in limited partnerships, 109 00:06:27.290 --> 00:06:29.760 which tend to have high minimums, you know, 110 00:06:29.760 --> 00:06:33.880 so only high net worth folks can qualify for them. They're illiquid. 111 00:06:34.180 --> 00:06:38.000 So capital could be tied up for something even up to 10 years opaque, 112 00:06:38.060 --> 00:06:41.880 you're not really sure what the manager is doing and, and expensive, you know, 113 00:06:41.880 --> 00:06:42.640 even, you know, 114 00:06:42.640 --> 00:06:46.240 sometimes you have like fund to funds and feeder funds and you have layers of 115 00:06:46.240 --> 00:06:49.440 fees, and then obviously those, those performance fees come into play as well. 116 00:06:50.180 --> 00:06:54.560 Um, so the good news is that that's not the only way to access alternative 117 00:06:54.560 --> 00:06:56.360 strategies. Now, you, 118 00:06:56.580 --> 00:07:00.720 the investor is able to invest in mutual funds and even ETFs that offer 119 00:07:00.950 --> 00:07:04.520 alternative strategies for the most part, liquid, transparent, you know, 120 00:07:04.520 --> 00:07:07.920 you get all the benefits of, you know, the regulatory requirements of, 121 00:07:07.940 --> 00:07:09.880 of being a fund in these structures. 122 00:07:10.580 --> 00:07:14.920 Not all strategies live well in that liquid structure. 123 00:07:15.380 --> 00:07:19.240 So, you know, you don't have quite literally that list of, you know, 124 00:07:19.240 --> 00:07:21.760 that funny list of all the things we could think of that someone might think of 125 00:07:21.760 --> 00:07:25.240 as, as a good investment. So you, you are more constrained, 126 00:07:25.300 --> 00:07:28.760 but still there's quite a bit to, to choose from. And then, you know, 127 00:07:28.760 --> 00:07:29.593 to your point, 128 00:07:29.710 --> 00:07:33.040 most of those strategies are just gonna have a very straightforward expense 129 00:07:33.170 --> 00:07:37.960 ratio on the fund. It'll be very clear what the investor has to pay on average. 130 00:07:38.340 --> 00:07:43.040 You typically see higher fees than, you know, a traditional say, 131 00:07:43.210 --> 00:07:47.320 index fund for equity or, or, or fixed income. But you, 132 00:07:47.320 --> 00:07:51.560 you're getting something different in, in a well-managed alternative strategy, 133 00:07:51.610 --> 00:07:54.280 Right? And you hit on a couple of of points there, right? 134 00:07:54.310 --> 00:07:57.040 Cost is something that always comes up. And uh, 135 00:07:57.200 --> 00:08:01.240 I understand that even in some of these ETF or mutual fund type vehicles, 136 00:08:01.270 --> 00:08:03.280 that there, there could be a higher layer of cost, 137 00:08:03.280 --> 00:08:08.160 but there are ways to get exposures to these asset classes without paying 138 00:08:08.580 --> 00:08:13.480 two and 20. Mm-hmm. Right. Um, you also mentioned liquidity, right? 139 00:08:13.600 --> 00:08:15.080 I think that gets solved for, 140 00:08:15.580 --> 00:08:18.680 if you're not using a limited partnership sort of vehicle. 141 00:08:19.300 --> 00:08:21.880 If you're using an etf, they're very, very liquid. 142 00:08:22.140 --> 00:08:24.520 So you can get your money whenever you may need it. 143 00:08:24.540 --> 00:08:27.800 But you also hit on something that I think is, I think, 144 00:08:27.800 --> 00:08:30.600 important to investors and it's transparency, right? 145 00:08:30.700 --> 00:08:32.880 The opacity of a hedge fund, traditional, 146 00:08:33.100 --> 00:08:37.360 if I can use the word traditional hedge fund tends to be a little bit, uh, 147 00:08:37.370 --> 00:08:41.280 black boxy, if you will, right? Right. And maybe investors are thinking of, 148 00:08:41.620 --> 00:08:44.160 you know, things like Bernie Madoff or things like that, right? 149 00:08:44.160 --> 00:08:45.800 Where you don't know what's going on under the hood, 150 00:08:45.940 --> 00:08:49.440 but an ETF or a mutual fund, 151 00:08:50.260 --> 00:08:54.760 an ETF specifically, you're gonna get a a lot of transparency in that. Correct? 152 00:08:55.030 --> 00:08:55.320 Yeah, 153 00:08:55.320 --> 00:08:55.900 Absolutely. 154 00:08:55.900 --> 00:08:57.080 So you know exactly what you're holding. 155 00:08:57.250 --> 00:09:00.720 Absolutely. And, and, uh, you've touched upon a point, 156 00:09:00.730 --> 00:09:03.560 which I think is very relevant, 157 00:09:03.660 --> 00:09:08.480 and thankfully there's been an evolution in the industry to kind of bring 158 00:09:08.480 --> 00:09:10.960 attention to some of that. So the, 159 00:09:11.100 --> 00:09:14.280 the idea of a global macro go anywhere, 160 00:09:14.410 --> 00:09:19.240 hedge fund a star manager who, you know, returned a thousand percent last year, 161 00:09:19.780 --> 00:09:23.640 you know, raising funds, just like in telling investors, I'm really smart. 162 00:09:23.820 --> 00:09:26.760 I'm smarter than all the rest. Invest with me. 163 00:09:26.790 --> 00:09:29.640 I'll find whatever the opportunity is globally, you know, 164 00:09:29.640 --> 00:09:32.240 regardless of country or region or asset class. Like, 165 00:09:32.360 --> 00:09:36.040 I will go find that opportunity and I will achieve a higher return. That, 166 00:09:36.740 --> 00:09:41.440 that's certainly something to probably be very careful of, right? He, 167 00:09:41.440 --> 00:09:44.920 he might wanna shy away from that. So over the last, I don't know, 168 00:09:44.920 --> 00:09:47.040 I'll say 25 years or so, there, 169 00:09:47.040 --> 00:09:49.840 there's been light kind of shown upon this idea that, you know, 170 00:09:49.840 --> 00:09:52.960 hedge funds don't hedge, you know, some hedge funds have a lot of beta, 171 00:09:52.990 --> 00:09:53.880 some hedge funds are, 172 00:09:54.020 --> 00:09:57.240 are implementing strategies you can get with liquid strategies. You know, 173 00:09:57.240 --> 00:10:00.920 this idea of hedge fund replication was, was an interesting arm of, uh, 174 00:10:00.920 --> 00:10:03.120 quantitative research. So I, I think for, 175 00:10:03.180 --> 00:10:07.000 for those who are interested and have the time as an alternative investor, you, 176 00:10:07.020 --> 00:10:10.880 you should be able to get from your manager a very specific explanation of 177 00:10:11.070 --> 00:10:13.800 exactly what's happening in the strategy, 178 00:10:14.980 --> 00:10:16.480 why it's an alternative strategy, 179 00:10:16.740 --> 00:10:19.440 why the fee being charged on that strategy makes sense, 180 00:10:19.660 --> 00:10:23.320 how it's diversifying to traditional asset classes. And really, I think at a, 181 00:10:23.320 --> 00:10:24.720 on a very basic level, 182 00:10:25.110 --> 00:10:30.040 confirm you're not paying alternative investment fees for 183 00:10:30.270 --> 00:10:32.120 just call it equity beta, right? 184 00:10:32.120 --> 00:10:36.080 Because we know equity beta is available in really high quality ETFs from 185 00:10:36.120 --> 00:10:38.840 Vanguard for probably three basis points. Yeah. 186 00:10:38.840 --> 00:10:42.880 I think that's a very important point, right? And, and we're firm believers on, 187 00:10:42.940 --> 00:10:47.440 on, on transparency. And if you're using alternatives correctly, 188 00:10:47.540 --> 00:10:49.000 if I'm understanding what you're saying, 189 00:10:49.260 --> 00:10:52.240 and it is a diversification play to ensure that you're getting that 190 00:10:52.240 --> 00:10:55.960 diversification, you need that level of transparency. And a lot of times, and, 191 00:10:55.960 --> 00:10:58.400 and we've read about this and talked...
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Q1 2023 | Putting the Quarter-in-Perspective | Part Two: Interest Rate Hikes & Bank Failures
05/11/2023
Q1 2023 | Putting the Quarter-in-Perspective | Part Two: Interest Rate Hikes & Bank Failures
Stories of historically atypical interest rate hikes, and multiple bank failures, concerned many advisors in the early days of 2023. Join us for the second (and final) part of our discussion with Casey Dylan, CIMA®, Consultant, and the host of Unfiltered Finance, Tom Romano, Head of Strategic Relationships, as we discuss some of the more prominent news events, and their effects, during Q1 of this year. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript: 0 00:00:01.900 --> 00:00:07.800 Let's let's 1 00:00:07.600 --> 00:00:10.600 shift a little bit to some of the headlines that we saw because there was 2 00:00:10.600 --> 00:00:15.100 there's quite a bit. It felt like it was a very long quarter. Yeah, and you 3 00:00:14.200 --> 00:00:17.700 know as we did see some positive results, but can we 4 00:00:17.600 --> 00:00:21.300 talk a little bit about just in general some of the headlines that we saw and 5 00:00:20.600 --> 00:00:25.000 then specifically I want to take a dive into inflation 6 00:00:23.600 --> 00:00:26.700 and then the banks because that was 7 00:00:26.700 --> 00:00:30.200 a really big headline. We got a lot of a lot of calls regarding that look 8 00:00:29.800 --> 00:00:31.200 there there were 9 00:00:33.300 --> 00:00:35.900 Striking headlines around things like 10 00:00:36.800 --> 00:00:40.800 shocks to sort of economic surprises on 11 00:00:42.000 --> 00:00:45.300 job numbers to what was going on with the FED 12 00:00:45.100 --> 00:00:48.400 to Banks not just near the United States but 13 00:00:48.100 --> 00:00:51.600 internationally and yet what you see is kind 14 00:00:51.400 --> 00:00:55.000 of, you know markets do what they do in in any given day. They respond 15 00:00:54.600 --> 00:00:57.900 to that but they are quick to incorporate the news 16 00:00:57.600 --> 00:01:01.300 and get back to pricing on other kinds of things. And 17 00:01:00.600 --> 00:01:05.200 so I would say as a micro dosage of 18 00:01:04.600 --> 00:01:08.400 what the ride is for investors. It's 19 00:01:07.800 --> 00:01:11.000 this it's if you can sort of 20 00:01:11.000 --> 00:01:14.400 take in stride that there are going to be lots of headlines and 21 00:01:14.100 --> 00:01:17.500 that there may be short-term Market reactions headlines over the 22 00:01:17.400 --> 00:01:21.000 longer term that kind of gets filtered out on 23 00:01:20.400 --> 00:01:23.700 the upside and downside right and what you get back 24 00:01:23.400 --> 00:01:26.600 to is. Hey one of my paying for right I'm paying for some kind 25 00:01:26.500 --> 00:01:30.100 of future earnings or I'm lending with some expectation that 26 00:01:29.800 --> 00:01:33.800 I'm going to get paid and income stream based on that and that tends 27 00:01:33.000 --> 00:01:36.700 to drown out the short term noise and now 28 00:01:36.400 --> 00:01:40.200 you're back to factors of how much did I pay did I 29 00:01:40.100 --> 00:01:41.700 get my earnings did I not is 30 00:01:42.000 --> 00:01:45.600 We're upside to that right and markets are kind of a weighing machine 31 00:01:45.500 --> 00:01:48.900 in that sense. Right? They're weighing those earnings. They're weighing those 32 00:01:48.900 --> 00:01:52.200 cash flows in the future. Right? So I would say 33 00:01:52.000 --> 00:01:55.900 lots of lots of news lots of scurrying 34 00:01:55.000 --> 00:01:56.300 around the news. 35 00:01:57.100 --> 00:02:01.000 You know at the end of the day we're sort of where we started one 36 00:02:00.100 --> 00:02:03.200 of the headlines and one of the things that we've been getting a lot 37 00:02:03.200 --> 00:02:06.300 of questions about I'm talking about is is inflation. I know we've spent some time 38 00:02:06.200 --> 00:02:09.600 already today talking about that. We did 39 00:02:09.400 --> 00:02:13.500 see US inflation ease a little bit but there 40 00:02:13.100 --> 00:02:16.300 might be some pressures coming up. So if you don't mind commenting on that, that 41 00:02:16.100 --> 00:02:19.200 would be great. Yeah, you bet. I think it's helpful to kind of 42 00:02:19.200 --> 00:02:21.200 take a step back and look at 43 00:02:22.200 --> 00:02:25.700 With the onset of the pandemic right everything kind 44 00:02:25.400 --> 00:02:28.800 of shut down and then when we went to reopen things back up 45 00:02:28.600 --> 00:02:32.000 factories didn't necessarily open up, especially in 46 00:02:31.900 --> 00:02:36.600 places like China right for some time. Right and the the 47 00:02:35.300 --> 00:02:39.700 supply chain was suddenly 48 00:02:38.300 --> 00:02:41.500 constrained and so we 49 00:02:41.300 --> 00:02:44.300 had a hard time getting Goods, right but there was a lot 50 00:02:44.300 --> 00:02:48.400 of demand because we were at home, you know person stuff and so 51 00:02:48.200 --> 00:02:51.700 as you have demand shoot up but supplies constrained 52 00:02:51.200 --> 00:02:54.500 price shoots up, right? That's just sort of Economics 101 53 00:02:54.200 --> 00:02:57.400 and we saw that and at the time, you know, the Fed was quick 54 00:02:57.200 --> 00:03:00.500 to say, hey, look we think this is transitory think eventually things 55 00:03:00.200 --> 00:03:03.700 settle down we get manufacturing back online. We work 56 00:03:03.400 --> 00:03:06.700 out the bugaboos associated with the supply chain 57 00:03:06.500 --> 00:03:09.600 and those the price pressure doesn't inflationary pressure should come back 58 00:03:09.500 --> 00:03:13.100 down over time and in large respect 59 00:03:12.800 --> 00:03:16.500 this seems to have proven that out right? 60 00:03:15.800 --> 00:03:19.100 I think what really got the fed's 61 00:03:18.800 --> 00:03:21.800 attention and started them down the path. 62 00:03:22.200 --> 00:03:26.100 Of really dramatically raising rates was 63 00:03:25.400 --> 00:03:28.700 the fact that well while goods were 64 00:03:28.500 --> 00:03:31.800 sort of starting to come back down. It was 65 00:03:31.600 --> 00:03:34.900 inflation associated with services that was going up. And 66 00:03:34.600 --> 00:03:37.800 in fact, what we've seen is good coming down 67 00:03:37.600 --> 00:03:40.700 the the overall inflation of 68 00:03:40.600 --> 00:03:44.500 the CPI number or that PC number coming down from its 69 00:03:44.100 --> 00:03:48.100 highs last summer, but while that's been happening underneath 70 00:03:48.900 --> 00:03:52.300 Inflation associated with Services has continued to 71 00:03:52.100 --> 00:03:52.600 go up. 72 00:03:53.200 --> 00:03:56.500 And so even if we're at a point now where the latest inflationary readings 73 00:03:56.200 --> 00:03:58.100 are half of what they were. 74 00:03:58.900 --> 00:04:00.400 Just a year ago this time. 75 00:04:01.600 --> 00:04:05.500 Services inflation is up and continuing to go the wrong direction. Right? And 76 00:04:05.200 --> 00:04:08.400 so the the FED has said hey, look 77 00:04:08.200 --> 00:04:11.400 first of all, we don't look at kind of the overall CPI number. We don't 78 00:04:11.300 --> 00:04:15.500 that's not how we measure it. We're looking at these underlying statuents and 79 00:04:14.900 --> 00:04:18.600 they prefer the the pce as 80 00:04:18.200 --> 00:04:21.300 opposed to CPI, but they're all just kind of ways of measuring, you know 81 00:04:21.300 --> 00:04:24.900 inflation in the economy. And so 82 00:04:24.400 --> 00:04:27.400 one of the ways that we've looked at 83 00:04:27.400 --> 00:04:30.600 this for a very long time is core CPI, right? We're stripping out the 84 00:04:30.400 --> 00:04:34.100 volatility of energy and food because those tend to move around so much and then 85 00:04:33.900 --> 00:04:37.300 you know, we've been introduced to this concept that not 86 00:04:37.000 --> 00:04:40.500 only is it core CPI, but it's core Goods CPI and 87 00:04:40.200 --> 00:04:44.100 course Services CPI. And so the FED now is very focused 88 00:04:43.600 --> 00:04:48.000 on core Services looking at Services minus 89 00:04:47.000 --> 00:04:50.400 services for energy and food and what 90 00:04:50.100 --> 00:04:54.000 we see are again our sort of troubling Trends 91 00:04:53.100 --> 00:04:56.500 around services and housing 92 00:04:56.100 --> 00:04:59.400 in terms of the impact that that 93 00:04:59.200 --> 00:05:01.400 has now pushing. 94 00:05:01.600 --> 00:05:04.700 Up or holding up those inflation numbers and if they 95 00:05:04.600 --> 00:05:08.100 continue on the wrong direction, that's what the fed's concern about and the 96 00:05:07.600 --> 00:05:11.500 the whammy that potentially comes 97 00:05:10.600 --> 00:05:13.900 from if Services costs go 98 00:05:13.700 --> 00:05:16.800 up at some point that starts to impact Goods costs as 99 00:05:16.700 --> 00:05:20.600 well. Right? And so if you look at this where the the white 100 00:05:19.800 --> 00:05:23.200 bars are coming down, right the the concern 101 00:05:22.800 --> 00:05:26.400 is that Services cost the cost of producing goods 102 00:05:25.800 --> 00:05:29.200 and delivering them right is going to impact the the cost 103 00:05:29.000 --> 00:05:32.500 that gets passed through and goods start to come back up and there's sort 104 00:05:32.100 --> 00:05:35.500 of a double double impact of inflation if 105 00:05:35.400 --> 00:05:38.700 you will and that's what I think the FED is incredibly concerned about 106 00:05:38.500 --> 00:05:41.600 and and why they say look we're gonna ratchet rates up 107 00:05:41.600 --> 00:05:45.700 and we're gonna keep them up there long enough until we're convinced that we've we've 108 00:05:44.800 --> 00:05:48.000 stamped this out and brought it back down to a level that's 109 00:05:47.800 --> 00:05:51.000 livable because the last thing you want to do is take your foot off the pedal. 110 00:05:51.800 --> 00:05:55.300 And then suddenly have a Resurgence of these 111 00:05:55.000 --> 00:05:58.300 inflation Air Forces which that we've saw 112 00:05:58.000 --> 00:06:01.400 in the 70s, right if you think about what we've we've 113 00:06:01.200 --> 00:06:04.800 seen this show before the early 70s the FED raising 114 00:06:04.500 --> 00:06:08.400 rates taking their their foot off the brake, I guess and then 115 00:06:08.000 --> 00:06:11.900 Resurgence of inflation in the late 70s stagflationary 116 00:06:11.200 --> 00:06:14.500 environment and it took the volcker FED in the 80s 117 00:06:14.200 --> 00:06:17.800 taken rates to places. We'd never seen until recently right to 118 00:06:17.400 --> 00:06:20.700 to stamp that out. And so I think the FED 119 00:06:20.500 --> 00:06:24.000 is taking a lesson from history and said we don't want to repeat those mistakes. 120 00:06:23.600 --> 00:06:27.000 We're gonna stay on this until we're sure right absolutely and 121 00:06:26.600 --> 00:06:30.200 speaking of the fed and it says been a very fast pace 122 00:06:29.600 --> 00:06:32.800 in terms of Ray hikes. Yeah 123 00:06:32.600 --> 00:06:36.200 historically exactly exactly so 124 00:06:35.800 --> 00:06:40.400 they they have meant business and I 125 00:06:39.500 --> 00:06:44.100 think Market participants repeatedly made 126 00:06:43.200 --> 00:06:47.000 the mistake of not taking 127 00:06:46.700 --> 00:06:48.200 the FED at its word. 128 00:06:48.700 --> 00:06:51.900 Right and and equities markets have 129 00:06:51.700 --> 00:06:54.900 definitely gotten well ahead of the FED particularly at 130 00:06:54.700 --> 00:06:58.600 the end of last year and maybe potentially the beginning of this year bond markets 131 00:06:58.200 --> 00:07:01.500 now are pricing that the FED 132 00:07:01.200 --> 00:07:05.000 will pull back and yet the FED is saying no. No, we're we're 133 00:07:04.600 --> 00:07:08.600 gonna raise rates and we're gonna keep them there longer and that's 134 00:07:07.600 --> 00:07:10.900 you know, we have no expectation that we would 135 00:07:10.800 --> 00:07:14.300 pull back from that anytime this year. Right? So the market 136 00:07:13.800 --> 00:07:17.000 participants are our forward looking forward pricing, but 137 00:07:16.900 --> 00:07:20.500 they seem to not be taking the FED at its word. I think that's pulled 138 00:07:20.100 --> 00:07:23.800 back a little bit in February and March we started to 139 00:07:23.500 --> 00:07:25.400 see Market participants kind of get their arms around. 140 00:07:26.300 --> 00:07:29.400 Actually be coming and we see you know 141 00:07:29.400 --> 00:07:33.400 investors like hedge funds really sort of looking at volatility 142 00:07:32.400 --> 00:07:36.000 Bets with the expectation that hey this 143 00:07:35.600 --> 00:07:39.300 may get a little more turbulent before it gets better. Right? So 144 00:07:39.000 --> 00:07:44.200 there's a lot of sort of now Market positioning 145 00:07:43.200 --> 00:07:46.500 for the fed me 146 00:07:46.300 --> 00:07:49.800 actually do this and we may see an economic pullback, 147 00:07:49.300 --> 00:07:52.800 but that may not necessarily mean the FED response to 148 00:07:52.800 --> 00:07:56.500 it. Right? I think again as we look forward the 149 00:07:55.900 --> 00:08:00.100 the way that I would think about this as an investor as a the 150 00:07:59.200 --> 00:08:03.000 stock market is not the economy, right? The 151 00:08:02.400 --> 00:08:06.200 markets are definitely driven by 152 00:08:05.700 --> 00:08:09.400 interest rates and fed movement 153 00:08:09.000 --> 00:08:10.200 and yet 154 00:08:12.500 --> 00:08:16.400 Much like headlines the markets take that 155 00:08:16.200 --> 00:08:20.200 news and stride it gets built into prices and there 156 00:08:19.800 --> 00:08:23.000 may be short-term volatility associated with this but if you look out over 157 00:08:22.800 --> 00:08:26.300 time, you know, what what do we see going back to 158 00:08:26.000 --> 00:08:29.200 you know, as long as we have records 1926 and Beyond 159 00:08:29.000 --> 00:08:32.600 right Imperial heads when interest rates 160 00:08:32.300 --> 00:08:36.300 go up interest rates go down inflationary environments disinflationary environments 161 00:08:35.900 --> 00:08:40.100 recessionary environments across all of those things markets 162 00:08:38.900 --> 00:08:42.400 tend to produce a return 163 00:08:42.100 --> 00:08:45.700 of you know, seven to ten percent average annual 164 00:08:45.400 --> 00:08:49.000 you don't get that every year but you get on average over time and it's 165 00:08:48.700 --> 00:08:52.200 paying you for those cash flows so much like, 166 00:08:51.900 --> 00:08:55.100 you know, the all the comments that we've had prior to 167 00:08:54.900 --> 00:08:55.200 this. 168 00:08:56.500 --> 00:08:59.900 As investors, it's important to sort of take in its Stride 169 00:08:59.800 --> 00:09:02.900 Right put some blinders on there may be volatility associated with 170 00:09:02.800 --> 00:09:06.400 this ride. You will get wet on this ride. Right but we 171 00:09:05.800 --> 00:09:08.900 promise you'll come out in the other side, right and when you do, 172 00:09:08.800 --> 00:09:11.900 you know, the markets will get back to doing what they 173 00:09:11.800 --> 00:09:15.000 do, which is you know, paying you for putting Capital to work 174 00:09:15.000 --> 00:09:18.400 in there. So so that I would say again we watch these 175 00:09:18.100 --> 00:09:21.300 things. We we sort of especially working 176 00:09:21.100 --> 00:09:24.200 in the industry. It's a incumbent upon 177 00:09:24.100 --> 00:09:27.200 us to have some product prognostication about where this could 178 00:09:27.100 --> 00:09:30.800 be headed at the end of the day what we think matters very little it's 179 00:09:30.100 --> 00:09:33.300 what actually happens and we build portfolios to 180 00:09:33.100 --> 00:09:36.600 be as robust as we can because Anything Could Happen. Yeah, that's that's fantastic. 181 00:09:36.100 --> 00:09:39.300 And that's a really good way of putting it. We don't know what's 182 00:09:39.100 --> 00:09:40.000 happening, but we're 183 00:09:41.000 --> 00:09:45.000 We're invested in a way to endure what's to come? Right? Exactly. So 184 00:09:44.100 --> 00:09:47.500 one of the headlines that we we spent 185 00:09:47.300 --> 00:09:50.700 a lot of time talking to advisors and investors alike is the 186 00:09:50.600 --> 00:09:54.200 the notion of the banks and we saw from Silicon Valley 187 00:09:54.000 --> 00:09:56.100 and First Republic and a few others. 188 00:09:57.000 --> 00:10:00.200 I think it's a it's a risk reward story. But I also think 189 00:10:00.000 --> 00:10:04.400 this is the diversification story there. I'd love to hear your thoughts. Yeah. Well, yes, 190 00:10:03.700 --> 00:10:05.500 I think 191 00:10:06.600 --> 00:10:08.300 the the situation with the banks 192 00:10:09.300 --> 00:10:13.300 has a lot to do with other stuff, right? Yes, the 193 00:10:12.600 --> 00:10:15.800 the banks were quick to come out and say well this 194 00:10:15.600 --> 00:10:18.800 is a consequence of how rapidly the FED is 195 00:10:18.600 --> 00:10:22.300 raised interest rates. And this is potentially impaired the 196 00:10:22.200 --> 00:10:25.300 asset base of these Banks and there's no question right over the 197 00:10:25.200 --> 00:10:28.600 course of 2022. You saw the asset base 198 00:10:28.200 --> 00:10:31.500 drop significantly across banks in 199 00:10:31.400 --> 00:10:34.800 general because right so, you know first principles, 200 00:10:34.400 --> 00:10:37.500 what is a bank do they take money in when they 201 00:10:37.500 --> 00:10:41.100 take that money in as a deposit? It's a liability to them. Right? 202 00:10:40.500 --> 00:10:43.600 So they take that liability and they got to go match it up 203 00:10:43.500 --> 00:10:47.000 with an asset and they do that either by making loans and if 204 00:10:46.900 --> 00:10:50.800 they can't make enough loans, then they got to go buy bonds treasuries. 205 00:10:50.300 --> 00:10:53.800 For instance, right? Yes. That's the old against the 206 00:10:53.300 --> 00:10:56.600 liabilities. So if you if you've got a bank that 207 00:10:56.300 --> 00:10:59.600 has a bunch of bonds that they're holding as an asset 208 00:10:59.300 --> 00:11:03.000 and the...
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Q1 2023 | Putting the Quarter-in-Perspective | Part One: Market Performance
04/27/2023
Q1 2023 | Putting the Quarter-in-Perspective | Part One: Market Performance
The sudden failure of Silicon Valley Bank in March jostled investors' confidence in the market. But, the overall performance of various tech stocks in Q1, such as Tesla, Meta, Alphabet, Amazon, Salesforce, AMD, and Broadcom, served to revive optimism for the stock market's near future. Join Casey Dylan, CIMA®, Consultant, and our host Tom Romano, Head of Strategic Relationships and Product Development, in this first half of of our Q1 recap, as we discuss both market, and factor performance, in the first few months of 2023. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript: 0 00:00:01.900 --> 00:00:07.400 Good afternoon, 1 00:00:07.400 --> 00:00:10.700 everyone. This is Tom Romano head of strategic relationships at 2 00:00:10.700 --> 00:00:14.200 symmetry partners and joined with me. Today is Casey Dillon 3 00:00:13.200 --> 00:00:16.900 a long time friend of symmetry and our 4 00:00:16.900 --> 00:00:19.500 internal communication strategist. Thank you Casey for 5 00:00:19.500 --> 00:00:22.400 joining us today. Tom is excellent to be here with you live in 6 00:00:22.400 --> 00:00:25.100 person. Yeah, fantastic. Fantastic So today, we're gonna go 7 00:00:25.100 --> 00:00:28.900 through our q1 2023 quarter in 8 00:00:28.900 --> 00:00:31.700 perspective. It's been quite the 9 00:00:31.700 --> 00:00:34.800 interesting quarter to say the least we've had 10 00:00:34.800 --> 00:00:37.800 some volatile markets. Although 11 00:00:37.800 --> 00:00:40.400 I'll be at some positive results. We've seen things 12 00:00:40.400 --> 00:00:43.300 like banking collapses in the headlines. There's still of 13 00:00:43.300 --> 00:00:46.600 course the concerns about inflation. And so 14 00:00:46.600 --> 00:00:49.800 Casey thank you for joining us to give us some perspective 15 00:00:49.800 --> 00:00:52.300 of what's going on in the market. So in a 16 00:00:52.300 --> 00:00:55.800 nutshell what happened in q1 of 2023, yeah 17 00:00:55.800 --> 00:00:58.300 in a nutshell, I'll be brief if I 18 00:00:58.300 --> 00:01:00.500 can so if you recall 19 00:01:01.800 --> 00:01:04.300 The fourth quarter of last year, right? The 20 00:01:04.300 --> 00:01:07.600 last year was a brutal year across a number of metrics, but 21 00:01:07.600 --> 00:01:10.500 the fourth quarter we started to see some respite 22 00:01:10.500 --> 00:01:13.300 from that and the first two months of the fourth quarter, 23 00:01:13.300 --> 00:01:16.600 right? We saw markets actually rebound pretty 24 00:01:16.600 --> 00:01:19.500 significantly in October and November and much of 25 00:01:19.500 --> 00:01:23.000 that was driven by the sense across 26 00:01:22.700 --> 00:01:25.900 the markets Market participants that maybe 27 00:01:25.900 --> 00:01:28.500 the Fed was done raising interest rates, maybe 28 00:01:28.500 --> 00:01:31.400 that the inflationary pressures that 29 00:01:31.400 --> 00:01:34.700 we had seen in the spring of 2022. We're 30 00:01:34.700 --> 00:01:37.400 starting to Abate and the market is 31 00:01:37.400 --> 00:01:40.800 a forward-looking forward pricing mechanism. And so 32 00:01:42.200 --> 00:01:45.200 In the fourth quarter, that's what it did. It looked forward. 33 00:01:45.200 --> 00:01:48.700 It started to anticipate a period when the the 34 00:01:48.700 --> 00:01:51.300 Fed was not raising interest rates and inflation would be tamed. 35 00:01:51.300 --> 00:01:55.100 And of course what happened in December was 36 00:01:54.100 --> 00:01:57.800 a bit of a comeuppance for 37 00:01:57.800 --> 00:02:00.400 those Market participants who got a little bit ahead of 38 00:02:00.400 --> 00:02:03.500 the fed and we saw a pullback in 39 00:02:03.500 --> 00:02:03.700 December. 40 00:02:04.400 --> 00:02:07.600 And markets responding to the fact that the FED said well, no, 41 00:02:07.600 --> 00:02:10.500 we're pretty set on continuing to raise rates. 42 00:02:10.500 --> 00:02:12.800 And and we think we're gonna keep them higher longer. 43 00:02:13.700 --> 00:02:16.500 As we rolled into the first quarter of this year. We saw 44 00:02:16.500 --> 00:02:19.900 a replay of a lot of those Dynamics coming into 45 00:02:19.900 --> 00:02:23.000 January Market participants 46 00:02:22.300 --> 00:02:24.000 again. It's sort of 47 00:02:25.400 --> 00:02:28.200 Determined that this was the year the Fed was 48 00:02:28.200 --> 00:02:31.100 going to stop rate and Market participants started to 49 00:02:31.100 --> 00:02:34.200 look forward and price as if the not only 50 00:02:34.200 --> 00:02:37.600 with the FED stop racing rates, but they would start to pull rates 51 00:02:37.600 --> 00:02:42.400 back by the end of the year given where people 52 00:02:41.400 --> 00:02:45.300 reading the tea leaves assumed the 53 00:02:45.300 --> 00:02:47.500 economy would be by mid-year. 54 00:02:48.200 --> 00:02:51.800 And so you saw a really robust Rebound in 55 00:02:51.800 --> 00:02:54.000 January for a lot of the names that have been 56 00:02:54.200 --> 00:02:57.900 really beat up in 2022 specifically the 57 00:02:57.900 --> 00:03:01.000 large cab growth and Tech names and 58 00:03:00.300 --> 00:03:03.200 so there was something of a reversion to 59 00:03:03.200 --> 00:03:06.300 the mean in terms of those names really 60 00:03:06.300 --> 00:03:09.500 leading the charge in January. Those are 61 00:03:09.500 --> 00:03:12.200 the names that were most beaten up in 2022. Those are the 62 00:03:12.200 --> 00:03:15.500 names that snap back fastest in the 63 00:03:15.500 --> 00:03:18.500 first quarter. And so January where we 64 00:03:18.500 --> 00:03:22.900 saw for instance the S&P down 20% for 65 00:03:22.900 --> 00:03:25.200 2022. We saw 66 00:03:25.200 --> 00:03:28.100 a Resurgence just in the month of January the SP was up 67 00:03:28.100 --> 00:03:31.400 like eight percent and the NASDAQ double that right just on the 68 00:03:31.400 --> 00:03:34.400 strength of kind of those large cap Tech names and of course what happened 69 00:03:34.400 --> 00:03:38.100 as we rolled into February the news that 70 00:03:37.100 --> 00:03:40.400 came out on the sort of 71 00:03:40.400 --> 00:03:43.400 economic underpinnings specifically job data for 72 00:03:43.400 --> 00:03:47.100 January really surprised Market 73 00:03:46.100 --> 00:03:48.100 participants because 74 00:03:48.200 --> 00:03:52.400 It was so robust. So strong it exceeded expectations. It 75 00:03:51.400 --> 00:03:54.800 served as a really Stark reminder that we're 76 00:03:54.800 --> 00:03:55.500 not out of the woods yet. 77 00:03:56.200 --> 00:03:59.500 And and it sent shock waves 78 00:03:59.500 --> 00:04:02.400 across the market in the sense that everyone who 79 00:04:02.400 --> 00:04:06.000 had said. Okay. Well now the FED is gonna have to wind this down all 80 00:04:05.200 --> 00:04:08.400 the sudden the the realized maybe not 81 00:04:08.400 --> 00:04:11.400 right not only is the fed maybe not gonna wind this 82 00:04:11.400 --> 00:04:14.700 down because the economy is hotter than we thought it was but we potentially 83 00:04:14.700 --> 00:04:17.600 risk sort of a flare-up of inflation 84 00:04:17.600 --> 00:04:20.100 just as it was coming down and the FED may have 85 00:04:20.100 --> 00:04:23.500 to get more aggressive in in tackling that and 86 00:04:23.500 --> 00:04:27.000 so February saw sort of a revisitation of 87 00:04:26.400 --> 00:04:29.500 those expectations that market participants 88 00:04:29.500 --> 00:04:33.100 had and as we rolled into March then all 89 00:04:32.100 --> 00:04:35.800 eyes were on the Senate 90 00:04:35.800 --> 00:04:38.700 hearings with the the chairman 91 00:04:38.700 --> 00:04:41.200 of the fed and based on his 92 00:04:41.200 --> 00:04:44.700 comments Futures skyrocketed for an expectation 93 00:04:44.700 --> 00:04:47.200 of a 50 basis point raise at 94 00:04:47.200 --> 00:04:50.500 the end of March the Futures went up to like a 70% chance that 95 00:04:50.500 --> 00:04:53.300 the Fed was gonna raise 50 basis points, and 96 00:04:53.300 --> 00:04:55.500 of course what happened then you know days later. 97 00:04:56.100 --> 00:05:00.000 Started imploding right and that sort 98 00:04:59.100 --> 00:05:03.000 of Royal financial markets and 99 00:05:02.500 --> 00:05:05.200 the FED did end up raising rates. But 100 00:05:05.200 --> 00:05:08.200 only by 25 basis points after they had worked to 101 00:05:08.200 --> 00:05:11.200 sort of rescue. I don't know rescues the 102 00:05:11.200 --> 00:05:15.500 right term but step in aggressively and calm markets 103 00:05:14.500 --> 00:05:17.200 particularly folks who 104 00:05:17.200 --> 00:05:20.600 had cash on deposited Banks to keep sort 105 00:05:20.600 --> 00:05:23.200 of a contagion effect and a larger Bank Run taking place. 106 00:05:23.200 --> 00:05:26.800 Right? So we end the first quarter with a really 107 00:05:26.800 --> 00:05:29.900 sort of wild trip of markets shooting 108 00:05:29.900 --> 00:05:32.500 up coming back down a lot of volatility a lot 109 00:05:32.500 --> 00:05:35.400 of fear injected in markets in March with the 110 00:05:35.400 --> 00:05:38.300 headlines and yet at the end of the quarter you finished up 111 00:05:38.300 --> 00:05:41.900 pretty again pretty solidly across 112 00:05:41.900 --> 00:05:45.000 us markets International Development markets emerging 113 00:05:44.400 --> 00:05:47.700 markets in fixed income inequities, right? 114 00:05:47.700 --> 00:05:50.400 We it was a it was a pretty decent first 115 00:05:50.400 --> 00:05:53.800 quarter from a return perspective despite all of that. Yeah sure. 116 00:05:53.800 --> 00:05:56.000 It was like it's a very interesting quarter. 117 00:05:56.100 --> 00:05:59.200 And I'd like the way you put it on the things the kind of the Resurgence of 118 00:05:59.200 --> 00:06:03.100 these tech companies that didn't have a great year last year, but you're 119 00:06:02.100 --> 00:06:05.500 seeing asset classes such as the energy 120 00:06:05.500 --> 00:06:08.600 sector right who had a great year last year is to 121 00:06:08.600 --> 00:06:11.300 use your your term of aversion to the mean right? They had 122 00:06:11.300 --> 00:06:14.500 a tough time in the first quarter, right? Yeah. Yeah and and frankly 123 00:06:14.500 --> 00:06:18.200 prices have been coming down in oil and gas pretty 124 00:06:17.200 --> 00:06:18.800 consistently. 125 00:06:19.200 --> 00:06:22.800 Since last fall so we did see a continuation of that. I 126 00:06:22.800 --> 00:06:27.300 do think and likely there's 127 00:06:26.300 --> 00:06:29.200 more conversation to be had 128 00:06:29.200 --> 00:06:32.900 around this but the concern that I have or 129 00:06:32.900 --> 00:06:35.500 or would have based on 130 00:06:35.500 --> 00:06:38.600 how markets performed in the first quarter is that 131 00:06:38.600 --> 00:06:41.900 it was so dominated by a 132 00:06:41.900 --> 00:06:44.100 handful of names, right? We we've seen 133 00:06:44.100 --> 00:06:47.300 this Dynamic before where we're 134 00:06:47.300 --> 00:06:51.000 sort of the top largest growth Tech 135 00:06:50.300 --> 00:06:53.800 names sort of dominate performance 136 00:06:53.800 --> 00:06:56.500 of the market and we and we saw that again in 137 00:06:56.500 --> 00:07:01.500 the first quarter right? You think about Facebook alphabet 138 00:07:00.500 --> 00:07:04.700 Apple Google Netflix, right? 139 00:07:03.700 --> 00:07:06.500 All of those firms were 140 00:07:06.500 --> 00:07:09.500 really been challenged in 2022 had a 141 00:07:09.500 --> 00:07:12.300 nice Resurgence across the first quarter, but when 142 00:07:12.300 --> 00:07:16.000 you dig deeper into the performance particularly here domestically what 143 00:07:15.200 --> 00:07:18.900 you see is they were the lion 144 00:07:19.100 --> 00:07:22.400 Care of that return that we saw the market it was once again 145 00:07:22.400 --> 00:07:27.100 the fact that these top handful of names represent twenty 146 00:07:25.100 --> 00:07:28.600 plus percent of the overall 147 00:07:28.600 --> 00:07:32.000 market, right? So think S&P 500 has got ostensibly 500 148 00:07:31.500 --> 00:07:34.700 names in it the top 10 names 149 00:07:34.700 --> 00:07:38.000 accounted for all at 150 00:07:37.100 --> 00:07:40.400 least 80% of that return right the 151 00:07:40.400 --> 00:07:43.300 top top five names half of it, right? So so 152 00:07:43.300 --> 00:07:46.400 again, you're getting a lot of that return concentrated in 153 00:07:46.400 --> 00:07:47.000 these names. 154 00:07:47.900 --> 00:07:51.600 Because they're so large disproportionately to 155 00:07:50.600 --> 00:07:55.200 the other names in those indices 156 00:07:54.200 --> 00:07:57.300 and it lit. It's the rising tide lifting 157 00:07:57.300 --> 00:08:00.200 all boats, but the concern that you 158 00:08:00.200 --> 00:08:03.100 have with that and we saw that in 2022 when the 159 00:08:03.100 --> 00:08:06.600 air goes out of the balloon to a degree. Well that 160 00:08:06.600 --> 00:08:09.500 can be a double-edged sword. Right if those names start 161 00:08:09.500 --> 00:08:13.000 to pull back in valuations, you 162 00:08:12.300 --> 00:08:15.400 could see that turn around and become an anchor pulling 163 00:08:15.400 --> 00:08:19.000 markets down, right and that can happen very quickly just based 164 00:08:18.100 --> 00:08:21.600 on the fact that it's so concentrated in a 165 00:08:21.600 --> 00:08:24.000 handful of names that are all sort of in the 166 00:08:24.300 --> 00:08:27.100 same kind of economic Waters right in terms of kind of 167 00:08:27.100 --> 00:08:30.600 this large growth Tech, you know richly valued. 168 00:08:30.600 --> 00:08:33.100 Yeah. It sounds a lot like me, you know, I've 169 00:08:33.100 --> 00:08:37.200 had these conversations over the years even going back before 2022 170 00:08:36.200 --> 00:08:39.700 coming out of the pandemic 171 00:08:39.700 --> 00:08:42.300 and those tech stocks. They were the story they were leading 172 00:08:42.300 --> 00:08:45.400 the charge and what I'm hearing you say, is that sort 173 00:08:45.400 --> 00:08:47.800 of the casing q1, but that double-ed 174 00:08:47.800 --> 00:08:50.700 word is just going back 2022 would 175 00:08:50.700 --> 00:08:53.700 be an example of if you're not well Diversified 176 00:08:53.700 --> 00:08:56.800 that could be a painful experience it can and I'm 177 00:08:56.800 --> 00:08:57.900 I'm reminded of 178 00:08:59.300 --> 00:09:02.400 The experience that we had coming out of the tech bubble, 179 00:09:02.400 --> 00:09:05.300 right? So if you think about if in fact 180 00:09:05.300 --> 00:09:08.300 the run-up invaluations in this sort of handful of 181 00:09:08.300 --> 00:09:11.400 techniques is analogous to what we saw in 182 00:09:11.400 --> 00:09:12.000 the late 90s. 183 00:09:14.200 --> 00:09:17.300 They were so richly valued that when the 184 00:09:17.300 --> 00:09:20.600 tech Bubble Burst it took a decade the Lost 185 00:09:20.600 --> 00:09:24.200 decade right of just you know, subpar returns 186 00:09:23.200 --> 00:09:26.300 for the valuations to get 187 00:09:26.300 --> 00:09:29.500 back to a place where markets could then start 188 00:09:29.500 --> 00:09:32.400 to take off again. And so the concern that 189 00:09:32.400 --> 00:09:36.200 that one might have is valuations are 190 00:09:35.200 --> 00:09:40.400 still Rich, right? Even after 2022 on 191 00:09:39.400 --> 00:09:43.200 a Price to Book basis very 192 00:09:42.200 --> 00:09:45.600 expensive on a price to 193 00:09:45.600 --> 00:09:50.500 forward earnings basis. It's expensive and 194 00:09:48.500 --> 00:09:51.600 so it's not 195 00:09:51.600 --> 00:09:54.600 as if these are our Bargains to 196 00:09:54.600 --> 00:09:57.800 be had in a Marketplace that that's discounting 197 00:09:57.800 --> 00:10:00.700 them. They are still incredibly expensive. And so 198 00:10:00.700 --> 00:10:03.400 anything that goes wrong right if the 199 00:10:03.400 --> 00:10:06.300 if in fact the economy runs into turbulence at 200 00:10:06.300 --> 00:10:09.700 some point or the expectations for growth, I mean, 201 00:10:09.700 --> 00:10:12.600 you know, we're in earning season and Netflix had sort 202 00:10:12.600 --> 00:10:14.100 of positive numbers, but 203 00:10:14.100 --> 00:10:17.700 They sort of gave lackluster guidance for next quarters 204 00:10:17.700 --> 00:10:20.400 growth. Right? So all you need is for for Market 205 00:10:20.400 --> 00:10:23.400 participants to to a once again sour on the 206 00:10:23.400 --> 00:10:27.400 prospects of these names and you're right back to it's 207 00:10:26.400 --> 00:10:29.300 too too rich like I'm paying 208 00:10:29.300 --> 00:10:32.500 too much today for for earnings in 209 00:10:32.500 --> 00:10:35.100 the future that may or may not materialize right? And so 210 00:10:35.100 --> 00:10:38.700 I've got to pay less and so the price has to come down. Yeah, right. And 211 00:10:38.700 --> 00:10:41.300...
/episode/index/show/symmetrydeltapodcast/id/26661435
info_outline
Choosing the Right Financial Advisor | Part 2: Which Professional Credentials are Most Important to You?
04/13/2023
Choosing the Right Financial Advisor | Part 2: Which Professional Credentials are Most Important to You?
Not all financial advisors are created equally. Some have certified credentials, some charge their clients fees, and others may get paid on commission (if they offer investment products). In part two of this podcast episode, our own Tom Romano, Head of Strategic Relationships and Product Development, is joined by Symmetry’s Michael Storer, Senior Regional Director, and a financial advisor from our sister firm, Apella Wealth, Peter Leppones, CFP®, to discuss the important credentials of, and differences between, financial advisors. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript: 0 00:00:01.900 --> 00:00:07.500 Welcome back 1 00:00:07.500 --> 00:00:10.500 to part 2 of choosing the right financial advisor. This 2 00:00:10.500 --> 00:00:13.100 is Tom Romano with unfiltered finance and I'm back 3 00:00:13.100 --> 00:00:16.200 here with my guests. Mike store senior Regional director at 4 00:00:16.200 --> 00:00:20.000 symmetry partners and Peter laponis financial advisor 5 00:00:19.200 --> 00:00:22.200 and cfp at Apollo wealth. Thank you for joining us 6 00:00:22.200 --> 00:00:25.400 gentlemen, so go Peter certified financial 7 00:00:25.400 --> 00:00:28.400 planner see FP Mike. I'm 8 00:00:28.400 --> 00:00:31.800 asked this question to you because Peter is a cfp. What 9 00:00:31.800 --> 00:00:34.700 are the credential what other credentials that investors should 10 00:00:34.700 --> 00:00:37.200 be looking for as they're going through this process of choosing a 11 00:00:37.200 --> 00:00:40.500 financial advisor. I mean cfp certainly is one of them sure. There's 12 00:00:40.500 --> 00:00:43.200 you know, I mean I come across a wide variety 13 00:00:43.200 --> 00:00:47.500 of different advisors and that have different different designations 14 00:00:46.500 --> 00:00:49.300 and it and sometimes it 15 00:00:49.300 --> 00:00:52.400 depends on it depends on you know, what type 16 00:00:52.400 --> 00:00:56.400 of work they're doing for the client. It may not always be, you know 17 00:00:56.400 --> 00:00:59.400 cfp, but most of the advisors that I'm working with their 18 00:00:59.400 --> 00:01:01.500 certified financial planners, but there's 19 00:01:01.900 --> 00:01:05.000 there's SEMA, you know, which is a certified Investment 20 00:01:04.500 --> 00:01:07.800 Management associate, I 21 00:01:07.800 --> 00:01:10.500 believe and that I look 22 00:01:10.500 --> 00:01:13.500 at CFA and see Sima as kind of two different 23 00:01:13.500 --> 00:01:14.300 designations that 24 00:01:15.500 --> 00:01:18.200 Are are very strong. I mean these people are incredibly smart. 25 00:01:18.200 --> 00:01:21.700 They pass a lot of tests to get where they are. But I 26 00:01:21.700 --> 00:01:24.500 look at the see the SEMA and the 27 00:01:24.500 --> 00:01:27.300 the CFA which is a chartered financial 28 00:01:27.300 --> 00:01:31.100 analyst as more geared towards Investments to 29 00:01:30.100 --> 00:01:33.300 a certain extent. So they're if you've 30 00:01:33.300 --> 00:01:37.000 got an advisor that is more seamors or CFA oriented. 31 00:01:36.500 --> 00:01:40.300 I think you're probably you could and Peter 32 00:01:39.300 --> 00:01:42.900 you can correct me if I'm wrong lean more 33 00:01:42.900 --> 00:01:45.800 towards them probably approaching it from an investment perspective. 34 00:01:45.800 --> 00:01:49.100 Whereas I think a cfp is 35 00:01:48.100 --> 00:01:52.100 going to approach the relationship from everything 36 00:01:51.100 --> 00:01:54.400 that Peter just talked about in terms of how they 37 00:01:54.400 --> 00:01:57.200 want to how they want to work with you moving 38 00:01:57.200 --> 00:02:00.300 forward Investments are important no doubt, but I think from 39 00:02:00.300 --> 00:02:03.700 the standpoint of the approach if 40 00:02:03.700 --> 00:02:06.200 you're looking for a planner, you know a cfp is 41 00:02:06.200 --> 00:02:10.000 where you want to be if you want someone that's more focused on. Okay, I'll construct 42 00:02:09.300 --> 00:02:12.800 a portfolio for you, but I think Sima and 43 00:02:12.800 --> 00:02:15.300 CFA tend to lose tend to 44 00:02:15.400 --> 00:02:18.200 Themselves more towards investment only to a certain 45 00:02:18.200 --> 00:02:21.400 extent now that's not every single or CFA but I think from that 46 00:02:21.400 --> 00:02:24.400 perspective those types of designations. Those are the ones that I come across 47 00:02:24.400 --> 00:02:27.700 primarily obviously, there's other designations with 48 00:02:27.700 --> 00:02:30.400 the insurance realm that you know, you like a 49 00:02:30.400 --> 00:02:33.200 chfc that would be which I 50 00:02:33.200 --> 00:02:36.400 I don't even remember that. It's a chartered leave its chartered Financial 51 00:02:36.400 --> 00:02:39.700 consult consultant, right which is different than a chartered financial analyst 52 00:02:39.700 --> 00:02:42.400 which is kind of interesting but you know, they'd be focused more on 53 00:02:42.400 --> 00:02:45.500 and probably the insurance side of the investment process. 54 00:02:45.500 --> 00:02:48.200 So I come across a lot but I would say 55 00:02:48.200 --> 00:02:51.900 that I feel comfortable saying it that the 56 00:02:51.900 --> 00:02:55.400 cfp is the designation where you know, mostly you're 57 00:02:55.400 --> 00:02:58.600 going to be getting more of a planning approach. Whereas I 58 00:02:58.600 --> 00:03:02.200 think the other designations might lean towards something else within 59 00:03:01.200 --> 00:03:04.700 the whole scope of planning but more, 60 00:03:04.700 --> 00:03:07.100 you know designated or specific on that 61 00:03:07.100 --> 00:03:11.000 side sure. I think it's important, you know, individuals professionals 62 00:03:10.500 --> 00:03:14.000 regardless of the industry having credentials after 63 00:03:13.400 --> 00:03:15.400 their name shows that they're 64 00:03:15.400 --> 00:03:18.600 to the business. They're probably lifelong Learners, 65 00:03:18.600 --> 00:03:23.000 which is something you probably want to look for in a financial advisor. And 66 00:03:21.200 --> 00:03:25.300 I would agree with you a cfp 67 00:03:24.300 --> 00:03:27.600 is probably the starting point. However, the 68 00:03:27.600 --> 00:03:31.000 the SEMA the Cima in the CFA, 69 00:03:30.200 --> 00:03:33.900 which I would agree are more investment driven. 70 00:03:35.700 --> 00:03:38.100 Um working with a firm who has a cfp has the point 71 00:03:38.100 --> 00:03:41.300 of contact Peter, but that doesn't mean you don't have access to 72 00:03:41.300 --> 00:03:44.500 cfa's and seamas as well. Right, correct. And 73 00:03:44.500 --> 00:03:47.500 that's that's part of the teamwork approach here that you 74 00:03:47.500 --> 00:03:51.200 know behind the scenes. I know that there's cfas working on our portfolios. 75 00:03:50.200 --> 00:03:53.100 So so I think 76 00:03:53.100 --> 00:03:57.500 you could see someone with another non-cfp designation 77 00:03:57.500 --> 00:04:00.200 but is what's their firm like do they have a team behind 78 00:04:00.200 --> 00:04:04.100 them is maybe they have a a young hire 79 00:04:03.100 --> 00:04:06.700 a new hire coming out of college who's studying 80 00:04:06.700 --> 00:04:09.200 for his or her cfp and that's their parent plan 81 00:04:09.200 --> 00:04:12.600 who works on the financial plan. So I mean to I think 82 00:04:12.600 --> 00:04:15.300 you might be doing a disservice just because 83 00:04:15.300 --> 00:04:18.400 someone doesn't have cfp understand more about what's 84 00:04:18.400 --> 00:04:21.200 what's going on at the firm and not just 85 00:04:21.200 --> 00:04:25.100 the designation. But I do agree having a designation and you 86 00:04:24.100 --> 00:04:28.400 made you reminded me. My continuing 87 00:04:27.400 --> 00:04:30.500 ed is coming up and it's it's comprehensive. I've 88 00:04:30.500 --> 00:04:34.000 got I've got a lot to do several hours to to 89 00:04:33.000 --> 00:04:34.100 keep 90 00:04:34.600 --> 00:04:37.500 Cfp designation current I've 91 00:04:37.500 --> 00:04:40.800 got to do some continuing education requirements online. Yeah, me 92 00:04:40.800 --> 00:04:43.100 too. Thanks for the reminder. I would say I didn't 93 00:04:43.100 --> 00:04:46.300 mean to say that, you know, the cfp is definitely starting point. But Peter 94 00:04:46.300 --> 00:04:49.800 brings up a great point that you when you visit with these cfps. They 95 00:04:49.800 --> 00:04:50.800 do have those other. 96 00:04:51.600 --> 00:04:54.400 People in their organizations that cover those parts 97 00:04:54.400 --> 00:04:57.200 of the planning process for them from that standpoint 98 00:04:57.200 --> 00:05:00.200 So and I've met many cfps that have their SEMA or have their CFA as 99 00:05:00.200 --> 00:05:03.400 well. So depends on who I'm speaking with, but there's there's a 100 00:05:03.400 --> 00:05:06.400 wide variety of different designations and some have won 101 00:05:06.400 --> 00:05:10.000 some have many or some have, you know, more than one right? So something 102 00:05:09.200 --> 00:05:12.400 that you would recommend investors look for as they're gonna 103 00:05:12.400 --> 00:05:15.200 go through absolutely. Absolutely. Absolutely. Yeah Mike we 104 00:05:15.200 --> 00:05:18.100 for all the cfps out there yet. We're definitely the top 105 00:05:18.100 --> 00:05:21.200 designation. No doubt about no doubt about it. We can 106 00:05:21.200 --> 00:05:25.900 leave it at that. Very good very good. So I 107 00:05:25.900 --> 00:05:28.500 have a few more questions and this has been great gentlemen, but 108 00:05:29.700 --> 00:05:32.800 What are some of the resources online resources 109 00:05:32.800 --> 00:05:35.400 right, you know, I don't think people use phone books 110 00:05:35.400 --> 00:05:39.100 anymore to find Financial professionals. What are 111 00:05:38.100 --> 00:05:41.100 some of the things my gear you're working 112 00:05:41.100 --> 00:05:44.000 with thousands of advisors. Like how do you how do you 113 00:05:44.100 --> 00:05:47.200 go about and find an advisor that that you would want to work with 114 00:05:47.200 --> 00:05:50.600 a professional level but not only professional of 115 00:05:50.600 --> 00:05:53.900 us person maybe from even personal standpoint where can 116 00:05:53.900 --> 00:05:56.300 investors go? Well they can they can you 117 00:05:56.300 --> 00:05:59.800 know go online and you know, there's a couple of different organizations that 118 00:05:59.800 --> 00:06:02.700 are out there that you could look at like the Financial Planning Association is 119 00:06:02.700 --> 00:06:05.600 a great place to start that's that's a 120 00:06:05.600 --> 00:06:08.600 big one National Association of 121 00:06:08.600 --> 00:06:11.800 personal financial advisors is another great site 122 00:06:11.800 --> 00:06:14.600 as well the certified financial planner 123 00:06:14.600 --> 00:06:17.100 board. You can go that route as well. I mean, 124 00:06:17.100 --> 00:06:20.400 that's probably the best place to start you can find someone in your general area 125 00:06:20.400 --> 00:06:23.100 that could help you there. There's another firm out there 126 00:06:23.100 --> 00:06:26.600 XY Planning Network which is which 127 00:06:26.600 --> 00:06:29.300 is a pretty good tool for to search for fee only. 128 00:06:29.700 --> 00:06:32.200 Financial advisors you mentioned, you know 129 00:06:32.200 --> 00:06:35.200 word of mouth or referrals from from your friends 130 00:06:35.200 --> 00:06:38.200 or family that may be working with a financial advisor. So all of 131 00:06:38.200 --> 00:06:41.100 them are great great ways to to identify some of 132 00:06:41.100 --> 00:06:44.300 that you might want to work with at least get the opportunity to interview them to see 133 00:06:44.300 --> 00:06:47.700 if they would be a good fit for you. Yeah. I think there's a lot of great resources online, 134 00:06:47.700 --> 00:06:50.500 you know, one of the things that Peter and 135 00:06:50.500 --> 00:06:53.500 I talk about quite a bit is you know working with someone 136 00:06:53.500 --> 00:06:56.200 who understands you someone who's working with 137 00:06:56.200 --> 00:06:58.600 other investors like me. 138 00:06:59.300 --> 00:07:02.900 Right in a lot of times if someone has a very specific need or 139 00:07:02.900 --> 00:07:05.500 specific sort of outcome. They're 140 00:07:05.500 --> 00:07:08.800 looking for they can identify the right Financial professional 141 00:07:08.800 --> 00:07:11.200 by not only looking at those websites, but 142 00:07:12.200 --> 00:07:15.100 LinkedIn Facebook. Look, who are these? 143 00:07:15.100 --> 00:07:18.300 Look who at the who these advisors are look at 144 00:07:18.300 --> 00:07:21.500 the circles that they're in right? You know it a funny story my parents 145 00:07:21.500 --> 00:07:24.200 who are not great investors. They were 146 00:07:24.200 --> 00:07:27.400 both School teachers had a pension but when they were looking for 147 00:07:27.400 --> 00:07:30.400 financial advisor, they didn't look any 148 00:07:30.400 --> 00:07:33.700 further than you know, the Connecticut Teachers Retirement Financial 149 00:07:33.700 --> 00:07:36.400 advisory. It was a really long name like 150 00:07:36.400 --> 00:07:39.500 that. I know I'm butchering it and talking it right but they will 151 00:07:39.500 --> 00:07:42.600 work Connecticut Teachers that must be the guy that we work with without even 152 00:07:42.600 --> 00:07:45.800 thinking twice about it, but they knew they felt comfortable and 153 00:07:45.800 --> 00:07:48.500 they trusted that the this particular individuals working 154 00:07:48.500 --> 00:07:49.900 with other, Connecticut Teachers. 155 00:07:50.800 --> 00:07:53.400 Here to add to any of that Peter. I mean, I think that 156 00:07:53.400 --> 00:07:56.400 you know, I've had done. Oh my 157 00:07:56.400 --> 00:07:57.600 second cap. We have pulled that one back. 158 00:07:58.300 --> 00:07:59.300 I won't ask that question better. 159 00:08:00.300 --> 00:08:00.300 All right. 160 00:08:04.500 --> 00:08:05.500 so Peter 161 00:08:06.900 --> 00:08:09.200 You know, I've talked about this it it's a mutual 162 00:08:09.200 --> 00:08:12.400 interview between an advisor and an investor the investors making 163 00:08:12.400 --> 00:08:16.000 a choice, but the advisors making a choice as well. So talk 164 00:08:15.200 --> 00:08:17.800 a little bit about that process if you will. 165 00:08:18.400 --> 00:08:21.700 Yeah, I think that's that's a great question. And I definitely 166 00:08:21.700 --> 00:08:24.300 encourage people to come up with a 167 00:08:24.300 --> 00:08:28.000 list of questions and interview multiple 168 00:08:27.500 --> 00:08:30.200 advisors definitely. But yeah, when when 169 00:08:30.200 --> 00:08:33.500 I'm meeting with with a New Prospect, I'm interviewing 170 00:08:33.500 --> 00:08:36.700 them as well. And there's things I'm I'm looking 171 00:08:36.700 --> 00:08:39.900 for I want to make sure that number 172 00:08:39.900 --> 00:08:43.600 one there. They're gonna be happy working with us. I've 173 00:08:42.600 --> 00:08:45.500 told people who I refer to 174 00:08:45.500 --> 00:08:48.000 them as Gunslingers. They want to pick stocks. They want to 175 00:08:48.100 --> 00:08:51.500 be in and out of the market they want they want action and I've told 176 00:08:51.500 --> 00:08:54.800 people I go I don't think we're gonna be a good fit. I'm a 177 00:08:54.800 --> 00:08:57.000 nice person. You seem like a nice person you seem to get along but 178 00:08:57.800 --> 00:09:00.300 we're going to have different philosophies and and I want 179 00:09:00.300 --> 00:09:03.200 you to be happy and I don't want to waste your time and I 180 00:09:03.200 --> 00:09:06.200 don't want to have my time wasted and so I've had to tell people I just don't think 181 00:09:06.200 --> 00:09:09.800 that this is necessarily going to work. Um, also there's 182 00:09:09.800 --> 00:09:12.300 when I start to hear people talk and I say this 183 00:09:12.300 --> 00:09:12.800 to clients 184 00:09:13.500 --> 00:09:16.600 and Prospects I start to get a gut feeling about what's 185 00:09:16.600 --> 00:09:19.400 going on. And when I start to hear about things like 186 00:09:19.400 --> 00:09:22.300 well a lot of debt, you know, you've got 187 00:09:22.300 --> 00:09:25.600 and not good. You don't have good financial habits. 188 00:09:25.600 --> 00:09:28.300 You're spending all your money. You've got 189 00:09:28.300 --> 00:09:31.200 a lot of debt a lot of bad debt. It's one thing to have a mortgage your car 190 00:09:31.200 --> 00:09:34.100 payments. Those are those are necessary. We'll call those 191 00:09:34.100 --> 00:09:38.200 good debt necessary debt. We start talking about large student 192 00:09:37.200 --> 00:09:40.500 loans. We start talking about large credit 193 00:09:40.500 --> 00:09:41.300 card balances. 194 00:09:42.500 --> 00:09:45.900 I may not be able to work with you. I you may be better off going 195 00:09:45.900 --> 00:09:49.600 and having credit counseling...
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Choosing the Right Financial Advisor | Part One: Work with Someone You Trust
03/30/2023
Choosing the Right Financial Advisor | Part One: Work with Someone You Trust
As financial professionals, we’re often asked one simple question: “do you know what I should buy right now?” In truth, we don’t believe it’s possible to successfully predict market behaviors most of the time. But, we do believe that a qualified financial advisor can help you devise a plan for long-term success. In this episode of Unfiltered Finance, our own Tom Romano, Head of Strategic Relationships and Product Development, is joined by Symmetry’s Michael Storer, Senior Regional Director, and a financial advisor from our sister firm, Apella Wealth, Peter Leppones, CFP®, to answer a more important question: “what should you consider when choosing a financial advisor?” If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript: 00:00:01.900 --> 00:00:07.400 Hello and 1 00:00:07.400 --> 00:00:10.700 welcome to unfiltered Finance. I'm your host Tom romano. 2 00:00:10.700 --> 00:00:13.300 And thank you for joining us this episode today. We 3 00:00:13.300 --> 00:00:17.000 are talking about choosing the right financial advisor and 4 00:00:16.200 --> 00:00:19.400 I have the perfect guests for this topic 5 00:00:19.400 --> 00:00:22.300 joining us here today first and foremost Mike 6 00:00:22.300 --> 00:00:25.600 store who is a senior Regional director 7 00:00:25.600 --> 00:00:28.100 at symmetry Partners. I asked Mike to be 8 00:00:28.100 --> 00:00:31.700 on the podcast because he works with thousands of financial advisors across 9 00:00:31.700 --> 00:00:34.200 the country. He knows which ones 10 00:00:34.200 --> 00:00:37.200 are doing the appropriate job and due diligence and 11 00:00:37.200 --> 00:00:41.200 planning for their clients and the others who might be dare. I 12 00:00:41.200 --> 00:00:44.500 say fake it Mike faking it and of 13 00:00:44.500 --> 00:00:47.800 course a long time friend of mine Mr. Peter loponis 14 00:00:47.800 --> 00:00:50.900 who's a certified financial planner and financial advisor 15 00:00:50.900 --> 00:00:53.100 with Apollo wealth and happens to be 16 00:00:53.100 --> 00:00:56.200 my personal financial planner. So gentlemen, thank you both for joining 17 00:00:56.200 --> 00:00:59.600 us here today. You're welcome, Tom. Thanks Tom. Great to be here. I thought 18 00:00:59.600 --> 00:01:01.600 this was appropriate topic for us to discuss. 19 00:01:01.900 --> 00:01:04.500 you know coming out of the pandemic I travel a 20 00:01:04.500 --> 00:01:07.400 lot for business and I've been on many planes 21 00:01:07.400 --> 00:01:10.400 over the last few months and you know, whether it's an 22 00:01:10.400 --> 00:01:11.100 airport or 23 00:01:12.400 --> 00:01:16.200 Are sitting next to someone on a plane and just bring 24 00:01:15.200 --> 00:01:19.000 up some small talk and people understand 25 00:01:18.300 --> 00:01:21.300 that I'm working in the financial services a business. 26 00:01:21.300 --> 00:01:25.000 And the first question. I always get is got any 27 00:01:24.200 --> 00:01:27.300 tips. What should I be buying? What 28 00:01:27.300 --> 00:01:31.000 should I be selling? Right? It's a very common question and for 29 00:01:30.300 --> 00:01:33.100 years, my response has always been and I'm 30 00:01:33.100 --> 00:01:36.400 a firm believer of this is the best advice I can give anyone in 31 00:01:36.400 --> 00:01:39.300 that moment is to work with 32 00:01:39.300 --> 00:01:42.300 someone you trust financial planner financial 33 00:01:42.300 --> 00:01:46.300 advisor that's working in a fiduciary capacity. I 34 00:01:45.300 --> 00:01:48.300 have a number of reasons why I say that but 35 00:01:48.300 --> 00:01:51.700 Mike I'd love to hear it from your perspective. Why should 36 00:01:51.700 --> 00:01:54.300 investors people planning for 37 00:01:54.300 --> 00:01:57.300 retirement or for any other Financial need be working 38 00:01:57.300 --> 00:02:00.100 with a financial professional? That's a great question. 39 00:02:00.100 --> 00:02:03.100 I think you hit on it at the in your opening 40 00:02:03.100 --> 00:02:04.100 remarks Tom is that 41 00:02:04.900 --> 00:02:05.200 You know. 42 00:02:06.300 --> 00:02:09.300 Having traveled the country for many 43 00:02:09.300 --> 00:02:14.300 years working with a number of different types of advisors and meeting 44 00:02:13.300 --> 00:02:16.900 with clients at the same time, you know clients have 45 00:02:16.900 --> 00:02:19.200 different desperate needs in terms of when it 46 00:02:19.200 --> 00:02:22.100 comes to financial Financial advice so they can 47 00:02:22.100 --> 00:02:25.100 certainly learn about it on on a website if they 48 00:02:25.100 --> 00:02:28.500 want to but I found that especially the 49 00:02:28.500 --> 00:02:31.900 best advisors are working working with 50 00:02:31.900 --> 00:02:34.400 clients and from that 51 00:02:34.400 --> 00:02:36.300 perspective. I know who these advisors are. 52 00:02:37.300 --> 00:02:40.500 And I know they're doing a great job for their clients. And for me, 53 00:02:40.500 --> 00:02:43.400 the one thing that comes to mind besides everything 54 00:02:43.400 --> 00:02:46.100 else at a financial advisor does because I think about it in 55 00:02:46.100 --> 00:02:49.600 my own world is comfort and peace of mind, right? There's lots 56 00:02:49.600 --> 00:02:51.400 of different moving Parts when it comes to planning. 57 00:02:52.200 --> 00:02:55.500 And and what you're going to do with your money for the long term and even myself 58 00:02:55.500 --> 00:02:58.200 being in this business, I worry about am I making 59 00:02:58.200 --> 00:03:01.900 the right decisions? So I think a lot of it comes down 60 00:03:01.900 --> 00:03:05.400 to peace of mind and comfort. I think that that's high 61 00:03:04.400 --> 00:03:07.300 level. There's a lot of you can drill down from there 62 00:03:07.300 --> 00:03:10.900 but I think for most clients if you think about it, it's getting that 63 00:03:10.900 --> 00:03:13.400 pressure off of you and bringing a 64 00:03:13.400 --> 00:03:16.500 professional and to make sure that you're meeting your life goals, whatever those might 65 00:03:16.500 --> 00:03:19.400 be sure. No, absolutely. I think what I'm hearing you say, I 66 00:03:19.400 --> 00:03:23.100 hear things like planning and long-term and Peter 67 00:03:22.100 --> 00:03:25.700 I'll shift over to you. So 68 00:03:25.700 --> 00:03:28.400 what I'm hearing Mike say and I loved for you to plan 69 00:03:28.400 --> 00:03:31.400 on this when someone asks me got any tips, 70 00:03:31.400 --> 00:03:32.700 why is that the wrong question? 71 00:03:34.600 --> 00:03:35.200 well, I think 72 00:03:36.700 --> 00:03:39.500 the answer they're looking for everyone wants something 73 00:03:39.500 --> 00:03:42.600 that's exciting and and sexy that 74 00:03:42.600 --> 00:03:43.200 they can tell. 75 00:03:44.400 --> 00:03:47.500 Their friends. I think you've used the term water cooler alpha or 76 00:03:47.500 --> 00:03:50.900 Golf Course Alpha everyone thinks somehow because we're 77 00:03:50.900 --> 00:03:53.600 sitting here on the inside. We're insiders. We've 78 00:03:53.600 --> 00:03:56.600 got more information than than they do 79 00:03:56.600 --> 00:03:59.300 as as retail investors, but 80 00:03:59.300 --> 00:04:02.600 that's just not the case and and it's not about 81 00:04:02.600 --> 00:04:05.200 hitting that home run with the stock because 82 00:04:05.200 --> 00:04:08.500 if you're gonna be picking individual stocks, there's gonna 83 00:04:08.500 --> 00:04:11.300 be some home runs in there, but there's got to be some singles and 84 00:04:11.300 --> 00:04:14.500 doubles there's gonna be some losers too. It just 85 00:04:14.500 --> 00:04:18.000 it's gonna happen statistically, but when 86 00:04:17.100 --> 00:04:20.600 we talk about a plan and what 87 00:04:20.600 --> 00:04:23.700 it can do for you long term the sense of confidence 88 00:04:23.700 --> 00:04:26.300 that it's going to give you. That's what you really need. Hey, it's 89 00:04:26.300 --> 00:04:29.300 great to be able to say Jesus I bought in at this stock when when it 90 00:04:29.300 --> 00:04:32.500 was at 10 and it went to a hundred and in two years. It's a 91 00:04:32.500 --> 00:04:33.700 great story, but 92 00:04:35.200 --> 00:04:38.500 Is better to have a sense of confidence and comfort with your 93 00:04:38.500 --> 00:04:41.200 plan and with your financial outcomes, and that's why 94 00:04:41.200 --> 00:04:44.500 sitting down and taking the time to go through a plan with a 95 00:04:44.500 --> 00:04:47.100 cfp with someone who's a fiduciary is really in your 96 00:04:47.100 --> 00:04:50.400 best interest versus getting that that hot stock tip. 97 00:04:50.400 --> 00:04:53.100 Yeah, I would agree. The one thing that 98 00:04:53.100 --> 00:04:56.200 I always comes to mind when someone says got any tips the first 99 00:04:56.200 --> 00:04:59.700 thing I'm thinking well if I had some I wouldn't tell you I'd keep 100 00:04:59.700 --> 00:05:02.300 it all for myself, right? There's wildly more Capital 101 00:05:02.300 --> 00:05:06.600 to be to be earned when you keep those secrets to yourself right quick 102 00:05:05.600 --> 00:05:08.100 short story. Tom and 103 00:05:08.100 --> 00:05:11.400 Peter. My son is out in gainfully employed 104 00:05:11.400 --> 00:05:14.600 in the Working World now and he has a little bit of money and he 105 00:05:14.600 --> 00:05:17.700 asked me about a year ago a year and a half ago to Dad what 106 00:05:17.700 --> 00:05:20.700 stocks should I pick? And so I immediately opened 107 00:05:20.700 --> 00:05:24.300 up the Barron's journal and 108 00:05:24.300 --> 00:05:27.200 I just looked at the stocks to pick now I said, hey, you 109 00:05:27.200 --> 00:05:30.100 know, if you want to buy some technology, here's a bunch of Technology names. I said, 110 00:05:30.100 --> 00:05:33.400 you know, the market has been involved, but if you want to buy stocks, here's a 111 00:05:33.400 --> 00:05:34.800 couple of names that you can just 112 00:05:35.300 --> 00:05:39.500 Your portfolio. So of course he did that on my advice and 113 00:05:38.500 --> 00:05:41.300 then about a year later. He 114 00:05:41.300 --> 00:05:44.400 was blaming me because I'm the one that picked the stocks from in the 115 00:05:44.400 --> 00:05:45.000 stocks were Downs. 116 00:05:45.800 --> 00:05:48.600 I just thought that was kind of interesting because it I did 117 00:05:48.600 --> 00:05:51.400 exactly the opposite of what I should have said to him right in terms 118 00:05:51.400 --> 00:05:54.400 of how we should be approaching these but you know, this was play 119 00:05:54.400 --> 00:05:57.500 money for him. So I let him learn a little bit about what it 120 00:05:57.500 --> 00:06:00.300 really means to invest in those types of questions of the wrong questions, 121 00:06:00.300 --> 00:06:03.000 right as you just mentioned Peter and so I thought it was 122 00:06:03.200 --> 00:06:06.400 a really good it was a it was a learning moment for him to understand that 123 00:06:06.400 --> 00:06:09.700 you don't just pick stocks and they go up. Oh, absolutely and like 124 00:06:09.700 --> 00:06:13.000 I I actually I do that with with clients. I'll 125 00:06:12.200 --> 00:06:13.600 say to them. 126 00:06:14.600 --> 00:06:17.100 If you want to open up a small account and I 127 00:06:17.100 --> 00:06:20.000 use the term your Casino money. Hey, you got to go to 128 00:06:20.100 --> 00:06:23.300 the casino and sit there and maybe go out to dinner have a drink play the 129 00:06:23.300 --> 00:06:26.500 slot sit at a table if you lose a hundred or 200 130 00:06:26.500 --> 00:06:27.100 or $300. 131 00:06:28.500 --> 00:06:30.300 It was a night of entertainment you had a good time. 132 00:06:31.300 --> 00:06:34.600 I see take your Casino money and put it into an account and 133 00:06:34.600 --> 00:06:37.300 buy a couple of stocks and just it's it's 134 00:06:37.300 --> 00:06:40.400 good education for you. You might learn some valuable 135 00:06:40.400 --> 00:06:43.900 lessons, but you're gonna pay really close attention. Even 136 00:06:43.900 --> 00:06:46.200 if it's only five or 10 shares of a 137 00:06:46.200 --> 00:06:49.200 company and you'll you'll learn a lot for it. So I think there is certainly a 138 00:06:49.200 --> 00:06:52.900 value in that but with large sums of Money Retirement accounts 139 00:06:52.900 --> 00:06:55.400 brokerage accounts. Absolutely not none of 140 00:06:55.400 --> 00:06:58.700 this stock picking. It's got to be a low cost. Well Diversified portfolio. 141 00:06:58.700 --> 00:07:01.100 So I'm hearing you say it's okay to sit in a 142 00:07:01.100 --> 00:07:01.300 little bit. 143 00:07:02.300 --> 00:07:05.800 Any bit tiny bit? Absolutely. No, I didn't. You 144 00:07:05.800 --> 00:07:08.300 know, I like to play the market myself, but I'm only doing 145 00:07:08.300 --> 00:07:11.500 that with my my entertainment dollars not my 146 00:07:11.500 --> 00:07:14.500 long-term assets that that my family 147 00:07:14.500 --> 00:07:18.100 and I are going to need at some point in time. Right? So Peter 148 00:07:17.100 --> 00:07:20.400 you've been talking a lot about planning right and and 149 00:07:20.400 --> 00:07:23.200 I've been in this business for a long time as with you 150 00:07:23.200 --> 00:07:27.500 you and I've worked together for many many years. I've noticed 151 00:07:26.500 --> 00:07:29.800 the value proposition of financial advisor 152 00:07:29.800 --> 00:07:32.300 has changed right at one point. It was that 153 00:07:32.300 --> 00:07:36.200 stock picker many many years ago. So this 154 00:07:35.200 --> 00:07:38.400 day and age what what do 155 00:07:38.400 --> 00:07:41.500 you see as the value proposition to a financial advisor? 156 00:07:42.200 --> 00:07:46.000 In my opinion, it has to be the plan because that's 157 00:07:45.300 --> 00:07:48.500 where we've had success as a firm. I've 158 00:07:48.500 --> 00:07:51.300 had success as an advisor clients have had success 159 00:07:51.300 --> 00:07:54.700 following that advice and and really 160 00:07:54.700 --> 00:07:57.100 it's about the planning and that's the most 161 00:07:57.100 --> 00:08:00.600 valuable advice. I give to my clients. Hey, we're with 162 00:08:00.600 --> 00:08:04.200 a low cost. Well Diversified portfolio. We're going 163 00:08:03.200 --> 00:08:06.300 to get a market return the market for us 164 00:08:06.300 --> 00:08:09.300 taking risk. We will get a market return and my 165 00:08:09.300 --> 00:08:12.700 return will be no different than my clients because we invest in very similar 166 00:08:12.700 --> 00:08:16.300 similarly constructed portfolios, but 167 00:08:15.300 --> 00:08:16.700 really 168 00:08:17.900 --> 00:08:20.800 Whether we get an 8% return 9% 10% 169 00:08:20.800 --> 00:08:23.300 return long-term. It's really 170 00:08:23.300 --> 00:08:24.100 the plan. 171 00:08:25.200 --> 00:08:28.500 That is is going to drive all that and just because 172 00:08:28.500 --> 00:08:31.400 their portfolio is up a certain year that that's 173 00:08:31.400 --> 00:08:32.800 great and they like to see that. 174 00:08:33.900 --> 00:08:36.100 But again, the plan is going to say well geez, I 175 00:08:36.100 --> 00:08:39.700 know now I can retire at age 62. I'm 176 00:08:39.700 --> 00:08:43.600 going to take Social Security at 67 when 177 00:08:42.600 --> 00:08:44.700 I retire at 62. 178 00:08:45.500 --> 00:08:48.500 I'm going to be able to pay for my own health insurance until 179 00:08:48.500 --> 00:08:51.700 I hit MediCare at age 65. I mean, those are questions 180 00:08:51.700 --> 00:08:54.300 that aren't even related to a rate 181 00:08:54.300 --> 00:08:57.300 of return or a stock pick or any of that. They're planning 182 00:08:57.300 --> 00:09:00.300 questions, but they're extremely important to people the very 183 00:09:00.300 --> 00:09:03.300 comprehensive list of questions versus should you be in a 184 00:09:03.300 --> 00:09:06.100 60% stock 40% bomb for far beyond that 185 00:09:06.100 --> 00:09:09.400 correct? Correct, but it's it's about the the layers and 186 00:09:09.400 --> 00:09:13.200 the investment management risk reward asset 187 00:09:12.200 --> 00:09:16.000 allocation being allocated appropriately. 188 00:09:17.400 --> 00:09:20.100 According to your risk tolerance that's all part of it. But you 189 00:09:20.100 --> 00:09:23.200 do when I sit down with clients we talk about the 190 00:09:23.200 --> 00:09:26.200 performance we talk about what the markets have been doing and we really start 191 00:09:26.200 --> 00:09:29.700 to get into those those items Healthcare Medicare long 192 00:09:29.700 --> 00:09:33.900 term care gifting money to people grandchildren 193 00:09:32.900 --> 00:09:35.700 setting up a 529 194 00:09:35.700 --> 00:09:38.200 accounts. All those types of things. These 195 00:09:38.200 --> 00:09:41.200 are the goals and the things that are important to clients and they come 196 00:09:41.200 --> 00:09:45.000 through the planning process. Yeah, that's extremely valuable right life 197 00:09:44.100 --> 00:09:47.800 comes at you fast, and...
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Reducing Your Tax Bill - Part Two
03/09/2023
Reducing Your Tax Bill - Part Two
In our last episode, we discussed the importance of a portfolio’s asset allocation, and, how that relates to “Reducing Your Tax Bill”. In part two of this episode, we are joined once again by Symmetry’s Managing Director of Research and Investments, Philip McDonald, CFA, CAAIA & Glenn Shirley, CAIA, Head of Investor Relations for Quantinno Capital Management, to discuss the methods by which you can “re-charge that tax benefit”. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. 00:00:01.800 --> 00:00:07.600 Hello listeners, 1 00:00:07.600 --> 00:00:10.900 welcome back to part two of our conversation on 2 00:00:10.900 --> 00:00:13.500 investing in taxes. Once again, I'm joined by Glenn 3 00:00:13.500 --> 00:00:16.500 Shirley from quantino and Phil McDonald from symmetry. 4 00:00:16.500 --> 00:00:19.100 Thanks gentlemen for joining us again, whether or not the market goes up 5 00:00:19.100 --> 00:00:22.800 or down when you have the long short overlay you have 6 00:00:22.800 --> 00:00:26.700 opportunities to to find losers losses. 7 00:00:26.700 --> 00:00:29.700 If you will to reach hard that tax benefit, 8 00:00:29.700 --> 00:00:32.400 it's some what counterintuitive right we're looking 9 00:00:32.400 --> 00:00:35.300 for Securities that have gone down in 10 00:00:35.300 --> 00:00:38.100 value, but I think the truth of the matter is is that when you 11 00:00:38.100 --> 00:00:41.600 own an ETF that's tracking an index or mutual 12 00:00:41.600 --> 00:00:44.300 fund that's tracking index. The reality is Phil 13 00:00:44.300 --> 00:00:47.600 you do own those losers. You just might not see them right? They're always 14 00:00:47.600 --> 00:00:50.200 that's right. Yeah looking at and that's 15 00:00:50.200 --> 00:00:53.300 a great Point looking at say in S&P 500 or 16 00:00:53.300 --> 00:00:57.300 Russell 1000 ETF. You you see one number, 17 00:00:56.300 --> 00:00:59.300 you know one one price 18 00:00:59.300 --> 00:01:01.500 one return but behind 19 00:01:02.300 --> 00:01:06.100 You're likely going to have dozens and dozens of positions 20 00:01:05.100 --> 00:01:08.200 that throughout the year and at year end 21 00:01:08.200 --> 00:01:11.900 are in or in a lost position. So in 22 00:01:11.900 --> 00:01:14.400 direct indexing, it just kind of breaks down that wrapper and 23 00:01:14.400 --> 00:01:17.700 you hold, you know hundreds of Securities directly. So 24 00:01:17.700 --> 00:01:20.800 you kind of see those a little bit more clearly sure and 25 00:01:20.800 --> 00:01:24.400 we've seen that in recent years right with some of these tech stocks 26 00:01:24.400 --> 00:01:27.400 the Fang stocks if you will Facebook Apple Amazon Netflix Google 27 00:01:27.700 --> 00:01:30.200 Etc. They were driving the returns of the S&P and there 28 00:01:30.200 --> 00:01:33.400 was a vast majority of those securities within the S&P that 29 00:01:33.400 --> 00:01:36.300 were in the red and by unwrapping it you can 30 00:01:36.300 --> 00:01:39.600 take advantage of those you still run into the issue of 31 00:01:39.600 --> 00:01:42.700 the portfolio seizing and what 32 00:01:42.700 --> 00:01:45.400 I mean by that is what we've been talking about having that portfolio 33 00:01:45.400 --> 00:01:48.000 get to a point where you don't have any room to make 34 00:01:48.300 --> 00:01:51.600 any trades without incurring some sort of tax consequence, but I 35 00:01:51.600 --> 00:01:54.900 think that's where the 1330 comes in right Glenn you're 36 00:01:54.900 --> 00:01:57.300 able to apply that strategy on 37 00:01:57.300 --> 00:02:00.700 top of an existing portfolio generate losses in 38 00:02:00.700 --> 00:02:02.200 any Market environment. And so 39 00:02:02.200 --> 00:02:05.100 So I think that that's a really interesting thing Glenn. Can you talk a little bit? 40 00:02:05.100 --> 00:02:08.200 I didn't mean to interrupt you, but could you talk a little bit about what is 41 00:02:08.200 --> 00:02:11.400 what happens with the risk exposure by putting that overlay on 42 00:02:11.400 --> 00:02:14.500 right investor with that 100 dollars 30 long 43 00:02:14.500 --> 00:02:17.100 30 short what what happens to the 44 00:02:17.100 --> 00:02:20.600 risk characters of that particular account? Sure. Yeah great 45 00:02:20.600 --> 00:02:23.300 question Tom. So if you look at if you just 46 00:02:23.300 --> 00:02:26.900 put on a 30% long 30% short 47 00:02:26.900 --> 00:02:29.300 portfolio. And you said what is the risk of 48 00:02:29.300 --> 00:02:32.500 that portfolio in isolation by itself? The answer 49 00:02:32.500 --> 00:02:36.000 to that is about one percent and that 50 00:02:35.100 --> 00:02:38.300 could be there be you know, standard deviation how much it's 51 00:02:38.300 --> 00:02:42.100 going to move around or it could be if you're if you're looking at that benchmarked 52 00:02:41.100 --> 00:02:44.200 to a you know, an index like 53 00:02:44.200 --> 00:02:47.400 the S&P 500 that would be one percent tracking here. So pretty 54 00:02:47.400 --> 00:02:50.500 modest, you know, a lot of active Equity strategies have tracking 55 00:02:50.500 --> 00:02:53.300 air easily of two percent or more. So we're 56 00:02:53.300 --> 00:02:56.300 not adding a lot of of risk just via that long 57 00:02:56.300 --> 00:02:59.500 short extension, but in reality as I mentioned you have 58 00:02:59.500 --> 00:03:01.600 these kind of Legacy accounts that 59 00:03:02.200 --> 00:03:05.700 Some elevated levels of risk that long short extension is 60 00:03:05.700 --> 00:03:08.200 a tool to reduce that risk. So even though 61 00:03:08.200 --> 00:03:11.400 you have a 1% risk in 62 00:03:11.400 --> 00:03:14.300 that long short extension in isolation. If you use that 63 00:03:14.300 --> 00:03:17.400 long short extension efficiently to reduce 64 00:03:17.400 --> 00:03:20.600 the total risk of the portfolio, then oftentimes we 65 00:03:20.600 --> 00:03:23.900 can also we can actually reduce kind of the total tracking 66 00:03:23.900 --> 00:03:26.400 error or risk versus The Benchmark of a 67 00:03:26.400 --> 00:03:29.200 tax less harvesting strategy often we can at least 68 00:03:29.200 --> 00:03:32.400 keep it the same. So when you look at a quantino kind 69 00:03:32.400 --> 00:03:35.900 of 130 30 tax loss harvesting account tracking errors 70 00:03:35.900 --> 00:03:38.400 typically one and a half percent on average 71 00:03:38.400 --> 00:03:41.400 and that's very very similar to what of 72 00:03:41.400 --> 00:03:44.300 what a clients are probably experiencing in their long only text less 73 00:03:44.300 --> 00:03:47.100 harvesting accounts as well. So just to reiterate what you're 74 00:03:47.100 --> 00:03:50.400 saying by applying the the 1330 extension to 75 00:03:50.400 --> 00:03:53.700 a portfolio the clients risk exposures still that 76 00:03:53.700 --> 00:03:56.300 principle investment is what I'm hearing you say, 77 00:03:56.300 --> 00:03:59.400 however, I think what I think a really really strong 78 00:03:59.400 --> 00:04:01.700 point is that it's not necessarily 79 00:04:02.200 --> 00:04:05.900 the risk by putting the overlay but it actually can be a risk mitigator Phil 80 00:04:05.900 --> 00:04:09.200 you and I have run across these many many times where investors 81 00:04:08.200 --> 00:04:11.600 come to us and we look at their existing Holdings 82 00:04:11.600 --> 00:04:14.200 and we're working on a Case right now 83 00:04:14.200 --> 00:04:17.600 where the investor who probably should 84 00:04:17.600 --> 00:04:20.500 have a balanced portfolio between Brawley Diversified 85 00:04:20.500 --> 00:04:21.600 stocks and bonds. 86 00:04:22.200 --> 00:04:25.900 Is stuck in a single stock position that they 87 00:04:25.900 --> 00:04:28.200 can't do anything with because of the 88 00:04:28.200 --> 00:04:31.200 fact that it's it's got such a low cost basis if 89 00:04:31.200 --> 00:04:34.600 they were to sell that security. They would be looking at some significant. 90 00:04:35.400 --> 00:04:38.400 Tax consequences, but only a single 91 00:04:38.400 --> 00:04:41.300 stock is a real risky Endeavor. Oh, no question, 92 00:04:41.300 --> 00:04:41.800 and I think 93 00:04:43.300 --> 00:04:46.400 This is such an incredibly powerful benefit of this 94 00:04:46.400 --> 00:04:49.600 strategy. And I think it it sometimes is you know 95 00:04:49.600 --> 00:04:52.600 mentioned second after the the tax Alpha 96 00:04:52.600 --> 00:04:55.300 and hey, you can keep more of what you earn but this is so 97 00:04:55.300 --> 00:04:57.100 incredibly powerful, you know, thinking of 98 00:04:58.200 --> 00:05:01.300 Really sad examples through time like Enron, you know things went 99 00:05:01.300 --> 00:05:04.400 very bad for people who held most of their company 100 00:05:04.400 --> 00:05:07.200 stock a lot of incentive plans. These 101 00:05:07.200 --> 00:05:10.400 days will give employees options and shares and 102 00:05:10.400 --> 00:05:13.000 all that. So this is an issue or a lot 103 00:05:13.500 --> 00:05:16.700 of investors and I think this solution really is, you know virtuous and 104 00:05:16.700 --> 00:05:19.400 really helping them in their Financial Health and just to 105 00:05:19.400 --> 00:05:22.600 maybe put a finer point on it and at the 106 00:05:22.600 --> 00:05:25.900 risk of being a little repetitive, you know, if you own a 107 00:05:25.900 --> 00:05:29.200 large amount of your, you know, large amount of your financial wealth 108 00:05:28.200 --> 00:05:31.600 is in an oil stock or a 109 00:05:31.600 --> 00:05:32.100 tech stock. 110 00:05:32.700 --> 00:05:35.800 Immediately in putting on the 13030 strategy 111 00:05:35.800 --> 00:05:38.400 the the 30 extension the 112 00:05:38.400 --> 00:05:40.000 30 more long can hold. 113 00:05:40.700 --> 00:05:42.900 Every other industry except that one you hold. 114 00:05:43.500 --> 00:05:46.900 Imagine that diversification and then the short can reduce 115 00:05:46.900 --> 00:05:50.000 that exposure to that one industry. So overnight in 116 00:05:49.500 --> 00:05:52.400 what in in the first, you know 117 00:05:52.400 --> 00:05:55.700 day of transactions you go from hey, I 118 00:05:55.700 --> 00:05:58.800 might end up like Enron or wow. My my 119 00:05:58.800 --> 00:06:01.400 financial wealth is gonna ride up and down with 120 00:06:01.400 --> 00:06:04.900 the price of crude oil or how Google does and 121 00:06:04.900 --> 00:06:07.400 immediately you're getting more 122 00:06:07.400 --> 00:06:10.000 of a diversified Market portfolio. Even if 123 00:06:10.200 --> 00:06:13.900 you're just shooting toward maybe an S&P 500 Index. It's immediately 124 00:06:13.900 --> 00:06:16.100 beneficial Glen. I don't know if you'd add 125 00:06:16.100 --> 00:06:20.400 anything to that but I really find that as you know, powerful benefit 126 00:06:19.400 --> 00:06:22.400 to the end investor. Yeah, the 127 00:06:22.400 --> 00:06:25.900 your correct fell the deals exchange solution that 128 00:06:25.900 --> 00:06:28.300 quantino offers is really a use case 129 00:06:28.300 --> 00:06:31.400 that came about from client feedback. We're fortunate to 130 00:06:31.400 --> 00:06:34.400 work with a lot of family offices. These are very wealthy families that 131 00:06:34.400 --> 00:06:37.500 have concentration in their portfolio. 132 00:06:37.500 --> 00:06:40.300 They built wealth via service to a public company or 133 00:06:40.300 --> 00:06:43.400 investing in a company that went public and eventually 134 00:06:43.400 --> 00:06:46.000 They want to turn the corner from you know, 135 00:06:46.300 --> 00:06:50.600 this this wealth that has been built by that concentration turning 136 00:06:49.600 --> 00:06:52.400 the corner toward wealth preservation and that 137 00:06:52.400 --> 00:06:55.500 means diversification. So how do we do that in a tax efficient manner? 138 00:06:55.500 --> 00:06:58.800 There's exchange funds that we you 139 00:06:58.800 --> 00:07:01.500 know that are really an option for very wealthy families, but 140 00:07:01.500 --> 00:07:05.200 really not for clients at scale. They're multi-million 141 00:07:04.200 --> 00:07:07.200 dollar minimums their private 142 00:07:07.200 --> 00:07:10.500 Fund Solutions and you know, you're vestly 143 00:07:10.500 --> 00:07:13.800 investing in a hedge fund that's gonna take seven years to diversify 144 00:07:13.800 --> 00:07:15.500 and they're very expensive. So we always knew 145 00:07:16.600 --> 00:07:19.800 that if we could use our capabilities to help clients diversify 146 00:07:19.800 --> 00:07:22.100 concentrated positions to be a pretty powerful thing and 147 00:07:22.100 --> 00:07:25.600 that 30 by 30 extensions the the way we do that so, you 148 00:07:25.600 --> 00:07:27.100 know, we put that long short extension on 149 00:07:27.700 --> 00:07:30.300 The extension generates tax benefits along the 150 00:07:30.300 --> 00:07:33.100 way we can use that extension to reduce the risk of 151 00:07:33.100 --> 00:07:36.200 that concentrated position. You're totally right there. And then 152 00:07:36.200 --> 00:07:39.300 over time as we generate those consistent tax benefits 153 00:07:39.300 --> 00:07:42.300 that gives us a mechanism to sell 154 00:07:42.300 --> 00:07:45.900 down that concentrated position, but we're always matching 155 00:07:45.900 --> 00:07:48.300 the tax benefits that we generate with the 156 00:07:48.300 --> 00:07:51.100 capital gains that we are realizing by selling down that 157 00:07:51.100 --> 00:07:51.400 position. 158 00:07:52.400 --> 00:07:55.700 And then once we sell we're rebalancing into a 159 00:07:55.700 --> 00:07:58.300 diversified index of the advisor and the client's Choice 160 00:07:58.300 --> 00:08:01.900 could be S&P 500. It could be Global stocks really whatever 161 00:08:01.900 --> 00:08:04.700 the asset allocation decision ends up 162 00:08:04.700 --> 00:08:07.400 being so yeah a typical even low basis very 163 00:08:07.400 --> 00:08:10.500 low basis position 20% cost basis. We 164 00:08:10.500 --> 00:08:13.400 can help diversify in a tax efficient manner 165 00:08:13.400 --> 00:08:15.100 in around seven years. 166 00:08:16.300 --> 00:08:19.100 That's very cool. It's a very clever strategy. I mean 167 00:08:19.100 --> 00:08:23.200 we're talking about tax benefits, but what we're really talking about is 168 00:08:22.200 --> 00:08:24.500 transitioning a 169 00:08:25.300 --> 00:08:28.900 Well, I would consider a concentrate risky portfolio very 170 00:08:28.900 --> 00:08:31.200 risky at times into something that 171 00:08:31.200 --> 00:08:34.700 is more suitable for that investor more Diversified but 172 00:08:34.700 --> 00:08:37.600 doing it in a way that they don't 173 00:08:37.600 --> 00:08:40.900 have to feel the the pain of unwinding 174 00:08:40.900 --> 00:08:44.000 those positions that might have some very significant embedded 175 00:08:43.300 --> 00:08:46.600 gains. You know it our 176 00:08:46.600 --> 00:08:47.500 industry we get 177 00:08:49.100 --> 00:08:52.000 picked on I guess for being very jargony right a lot 178 00:08:52.600 --> 00:08:55.100 of jargon and terms that a lot of folks that 179 00:08:55.100 --> 00:08:58.400 are not in this industry on a daily basis and 180 00:08:58.400 --> 00:09:02.000 we throw out the term tax Alpha quite a bit and 181 00:09:01.300 --> 00:09:04.300 I'll throw this question out to both the a Phil and Glenn. 182 00:09:04.300 --> 00:09:07.700 Can we just Define what tax Alpha is 183 00:09:07.700 --> 00:09:10.400 and then can you quantify it? Sure. Yeah. Yeah 184 00:09:10.400 --> 00:09:13.300 to us. I think of tax Alpha is 185 00:09:13.300 --> 00:09:13.900 tax savings. 186 00:09:14.900 --> 00:09:18.400 So, you know if if quantino generates 187 00:09:17.400 --> 00:09:20.900 a dollar of short-term 188 00:09:20.900 --> 00:09:22.200 capital loss. 189 00:09:22.700 --> 00:09:25.700 Then if you have a short-term gain 190 00:09:25.700 --> 00:09:28.500 a dollar of short-term gains, that saves you 191 00:09:28.500 --> 00:09:32.200 40.8 percent. So I've saved the client 40 cents 192 00:09:31.200 --> 00:09:34.900 41 cents in tax. If 193 00:09:34.900 --> 00:09:37.400 I'm using that short-term law stuff set long 194 00:09:37.400 --> 00:09:41.300 term gains that that long-term gains rate essentially 23% 195 00:09:40.300 --> 00:09:43.400 at the federal level. So I've 196 00:09:43.400 --> 00:09:46.800 saved clients, you know, 24 cents 197 00:09:46.800 --> 00:09:49.000 on that dollar of a capital loss. 198 00:09:49.900 --> 00:09:52.700 So if I can consistently generate Capital losses 199 00:09:52.700 --> 00:09:55.700 if quantino can consistently do that. We're letting 200 00:09:55.700 --> 00:09:58.500 clients offset the capital gains 201 00:09:58.500 --> 00:09:59.500 that they have in their portfolio. 202 00:10:00.100 --> 00:10:03.600 and they're just keeping more of the return from those capital gains 203 00:10:03.600 --> 00:10:06.200 year to year and those capital gains from can come from a lot of different, 204...
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Reducing Your Tax Bill - Part One
02/23/2023
Reducing Your Tax Bill - Part One
The “Tax-Man” cometh! As this tax season proceeds ever forward, many investors are asking themselves the same question - “am I going to take a large tax-hit this year?” We cannot say how much you’ll be taxed on your present investments. But, we believe it’s possible to structure your portfolio in a manner that mitigates tax-loss, and, leaves more money in your respective pockets. Joining us today is Philip McDonald, CFA, CAIA, Symmetry’s Managing Director of Research and Investments & Glenn Shirley, CAIA, Head of Investor Relations for Quantinno, to explain how investors can more effectively structure their portfolios and avoid an excess of taxation. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Transcript: 00:00:01.800 --> 00:00:07.400 Hello everyone. 1 00:00:07.400 --> 00:00:10.800 Welcome to unfiltered Finance. This is your host Tom Romano. 2 00:00:10.800 --> 00:00:13.800 I want to welcome you all back. We have a very 3 00:00:13.800 --> 00:00:17.100 interesting topic to discuss with you today. It's 4 00:00:16.100 --> 00:00:19.400 the notion of investors keeping more money in 5 00:00:19.400 --> 00:00:22.900 their pockets by bringing tax management into 6 00:00:22.900 --> 00:00:25.300 their investment Holdings. Not only are 7 00:00:25.300 --> 00:00:28.200 we going to talk about tax management, but some of the things investors should 8 00:00:28.200 --> 00:00:31.200 be considering in terms of how they view Capital markets how they should be 9 00:00:31.200 --> 00:00:34.400 investing and then we have a couple of special guests 10 00:00:34.400 --> 00:00:38.000 to talk about some additional strategies that investors should 11 00:00:37.400 --> 00:00:40.700 consider in terms of bringing tax 12 00:00:40.700 --> 00:00:43.700 Alpha if you will to the table so joining 13 00:00:43.700 --> 00:00:46.100 us is Phil McDonald who is the 14 00:00:46.100 --> 00:00:49.400 president of the panoramic trust and managing director of 15 00:00:49.400 --> 00:00:52.700 research of symmetry Partners as well as Glenn Shirley 16 00:00:52.700 --> 00:00:55.700 who is a principal and head of investor relations 17 00:00:55.700 --> 00:00:58.200 at quantino Capital Management Glen and 18 00:00:58.200 --> 00:01:01.500 Phil. Thank you so much for joining us here today. Thanks for having me tone. Thanks Tom. 19 00:01:01.500 --> 00:01:01.800 It's great. 20 00:01:01.900 --> 00:01:04.900 be with you, you know at quantino 100% of 21 00:01:04.900 --> 00:01:07.200 our focus is on taxable investors and 22 00:01:07.900 --> 00:01:10.500 We're managing portfolios while also seeking 23 00:01:10.500 --> 00:01:13.300 to generate really consistent and strong tax benefits 24 00:01:13.300 --> 00:01:16.800 for clients. And that goal is to maximize their 25 00:01:16.800 --> 00:01:19.400 after-tax wealth to help them keep as much return as possible 26 00:01:19.400 --> 00:01:22.200 year to year and we couldn't be more thrilled to partner with Symmetry and 27 00:01:22.200 --> 00:01:25.200 the incredible advisors that you serve. So thanks 28 00:01:25.200 --> 00:01:28.300 for having us pleasure to have you both. I look forward 29 00:01:28.300 --> 00:01:31.300 to to the today's dialogue. Sometimes taxes aren't the 30 00:01:31.300 --> 00:01:34.300 most interesting topic. However, I think that 31 00:01:34.300 --> 00:01:37.300 there's some very important information that investors should 32 00:01:37.300 --> 00:01:40.700 be considering in terms of how they invest their assets. And 33 00:01:40.700 --> 00:01:43.000 so thank you both for joining us. There's a couple 34 00:01:43.100 --> 00:01:46.100 of different angles. I want to take this conversation, right? And the first 35 00:01:46.100 --> 00:01:49.000 one I think I want to to go towards is 36 00:01:50.100 --> 00:01:53.500 Specific investment philosophies, right? So Phil we adhere 37 00:01:53.500 --> 00:01:57.300 to what we refer to as an evidence-based investment philosophy allowing 38 00:01:56.300 --> 00:01:59.200 markets to produce the returns that 39 00:01:59.200 --> 00:02:03.300 are investors are entitled to at the end of the day. So talk 40 00:02:02.300 --> 00:02:05.700 to us a little bit from a tax standpoint 41 00:02:05.700 --> 00:02:08.200 the benefits of an evidence-based investment 42 00:02:08.200 --> 00:02:09.500 philosophy versus 43 00:02:10.500 --> 00:02:13.500 Paying for Alpha or active 44 00:02:13.500 --> 00:02:16.600 money management. Mm-hmm. No, you raise a erase. 45 00:02:16.600 --> 00:02:19.700 Very good point Tom. So our investment philosophy all 46 00:02:19.700 --> 00:02:22.800 often refer to it as multi-factor investing. It 47 00:02:22.800 --> 00:02:27.300 involves specific rules quantitative indicators 48 00:02:26.300 --> 00:02:29.800 that research for 49 00:02:29.800 --> 00:02:32.100 a very long time has indicated, you know 50 00:02:32.100 --> 00:02:35.400 might create a premium over time. So following, you know, 51 00:02:35.400 --> 00:02:38.900 a value and small and momentum and high quality 52 00:02:38.900 --> 00:02:41.600 High profitability type of strategy you might 53 00:02:41.600 --> 00:02:44.700 expect to do a little bit better than just a cap weighted 54 00:02:44.700 --> 00:02:47.300 index over time what you get with 55 00:02:47.300 --> 00:02:50.900 that again is, you know, rules-based very Diversified. So 56 00:02:50.900 --> 00:02:53.700 for the most part low turnover right there, 57 00:02:53.700 --> 00:02:56.300 there are there are some strategies that have 58 00:02:56.300 --> 00:02:59.000 a little turnover specifically momentum. You probably have a little 59 00:02:59.100 --> 00:03:02.600 bit higher turnover than a market capitalization way to index but 60 00:03:02.600 --> 00:03:05.600 generally speaking, you know, these signals are relatively slow 61 00:03:05.600 --> 00:03:08.500 moving you're very diverseified. Each holding is 62 00:03:08.500 --> 00:03:10.200 a small percentage of your portfolio. 63 00:03:10.700 --> 00:03:13.300 So for the most part, you don't have to turn over 64 00:03:13.300 --> 00:03:16.400 the portfolio very often. You don't have to trade a lot sell a 65 00:03:16.400 --> 00:03:19.200 lot to reposition into the into the next 66 00:03:19.200 --> 00:03:22.700 Holdings you would want. I mentioned momentum alone has has a 67 00:03:22.700 --> 00:03:25.900 higher turnover as an individual strategy. There are 68 00:03:25.900 --> 00:03:29.100 benefits in putting it together with other factors specifically 69 00:03:28.100 --> 00:03:31.100 momentum and value work very well 70 00:03:31.100 --> 00:03:35.000 together because they're negatively correlated and in the same portfolio, 71 00:03:34.600 --> 00:03:37.000 the the turnover momentum can be 72 00:03:37.600 --> 00:03:41.000 somewhat counteracted in reduced by having other factors 73 00:03:40.200 --> 00:03:43.200 in there specifically value. So the 74 00:03:43.200 --> 00:03:46.400 pairing of factors can help with the tax efficiency of 75 00:03:46.400 --> 00:03:49.200 the portfolio, right momentum by definition is a high 76 00:03:49.200 --> 00:03:53.100 turnover strategy. Meaning there's a lot of trading right now this 77 00:03:52.100 --> 00:03:55.800 this signal is you know, essentially a year 78 00:03:55.800 --> 00:03:58.300 or so a little less than a year. So you would 79 00:03:58.300 --> 00:04:01.200 expect and that's the 80 00:04:01.200 --> 00:04:04.400 standard kind of academic one year price momentum type of 81 00:04:04.400 --> 00:04:07.700 indicator quantitative rule. So you'd 82 00:04:07.700 --> 00:04:10.400 expect momentum to lead to changes at about 83 00:04:10.800 --> 00:04:14.500 Near Horizon your portfolio, which is especially inconvenient 84 00:04:13.500 --> 00:04:16.300 to with regard to tax 85 00:04:16.300 --> 00:04:19.600 law because you know, you have the short-term long term type of 86 00:04:19.600 --> 00:04:22.300 cap gain consideration as well. Sure. So I 87 00:04:22.300 --> 00:04:25.400 mean we've had a lot of conversations about on this podcast about 88 00:04:25.400 --> 00:04:28.100 a fishing markets diversification Buy and Hold 89 00:04:28.100 --> 00:04:31.600 stay the course, but what I'm hearing you say is that just from a 90 00:04:31.600 --> 00:04:34.500 tax standpoint it almost sounds like it's a convenient byproduct of 91 00:04:34.500 --> 00:04:37.300 it hearing to a buy an old strategy. That's a 92 00:04:37.300 --> 00:04:40.700 great way to think about it and you you mentioned relative to 93 00:04:40.700 --> 00:04:43.400 other strategies. So I want to respond directly to 94 00:04:43.400 --> 00:04:46.300 that as well. So let's just call, you know, 95 00:04:46.300 --> 00:04:49.300 multi-factor Diversified investing as a strategy 96 00:04:49.300 --> 00:04:52.400 and investment philosophy relative to you know, 97 00:04:52.400 --> 00:04:55.800 kind of old-fashioned active management where a 98 00:04:55.800 --> 00:04:58.500 manager is picking and choosing you were stocks 99 00:04:58.500 --> 00:05:02.000 maybe reacting to Market events 100 00:05:01.100 --> 00:05:04.400 making predictions turning the portfolio over, 101 00:05:04.400 --> 00:05:07.400 you know, if you know, each position is about 10% 102 00:05:07.400 --> 00:05:10.100 you know, just selling one position creates a lot 103 00:05:10.100 --> 00:05:10.700 of turnover. 104 00:05:10.700 --> 00:05:13.400 Or so typically those actively managed strategies 105 00:05:13.400 --> 00:05:16.500 that are more concentrated and and require more 106 00:05:16.500 --> 00:05:19.300 trading are less tax efficient. Lord know 107 00:05:19.300 --> 00:05:22.800 that absolutely makes sense and Glenn. I know that you share in our 108 00:05:22.800 --> 00:05:25.400 view on how Capital markets work. Do you 109 00:05:25.400 --> 00:05:28.500 care to add anything to fills comments? Well, I think tax laws 110 00:05:28.500 --> 00:05:32.200 harvesting in general is a perfect strategy 111 00:05:31.200 --> 00:05:34.600 to use evidence based investing 112 00:05:34.600 --> 00:05:37.100 and I say that because tax laws are 113 00:05:37.100 --> 00:05:40.300 visiting at its core is you have names in the portfolio that 114 00:05:40.300 --> 00:05:43.300 are essentially winners. They've appreciated we want 115 00:05:43.300 --> 00:05:45.400 to hold those continue to hold those names. 116 00:05:46.300 --> 00:05:49.700 But you're gonna have stocks that have gone down those stocks 117 00:05:49.700 --> 00:05:52.400 in a really simple example you 118 00:05:52.400 --> 00:05:55.400 would sell but at that moment when you sell that 119 00:05:55.400 --> 00:05:55.700 name. 120 00:05:56.500 --> 00:05:58.300 You have to replace it with another stock. 121 00:05:59.300 --> 00:06:02.600 So at that moment, that's a perfect time to utilize 122 00:06:02.600 --> 00:06:05.200 your evidence-based beliefs. If 123 00:06:05.200 --> 00:06:08.100 you want to tilt the portfolio toward cheaper stocks or 124 00:06:08.100 --> 00:06:11.900 stocks with better attributes of quality or profitability. If you 125 00:06:11.900 --> 00:06:14.400 add that in to the stock 126 00:06:14.400 --> 00:06:17.500 selection of replacing that name via, which 127 00:06:17.500 --> 00:06:20.200 you've realized that tax loss then we believe you 128 00:06:20.200 --> 00:06:23.200 can add some nice return Over The Benchmark over 129 00:06:23.200 --> 00:06:23.400 time. 130 00:06:24.100 --> 00:06:28.100 So yeah tax loss harvesting and offering after tax improvements 131 00:06:27.100 --> 00:06:30.200 for clients can type very nicely with 132 00:06:30.200 --> 00:06:31.700 evidence-based investing. 133 00:06:32.400 --> 00:06:35.500 Yeah, I think that intentional turnover if you will with 134 00:06:35.500 --> 00:06:39.000 tasks lost harvesting does open up the door for some creativity 135 00:06:38.500 --> 00:06:41.600 is what I'm hearing. You say Glenn in order 136 00:06:41.600 --> 00:06:45.600 of enhancing returns. I mean I've seen in the past people liquidata 137 00:06:44.600 --> 00:06:47.600 position, they might hold cash for 30 138 00:06:47.600 --> 00:06:49.700 days or might replace it with an ETF. 139 00:06:50.700 --> 00:06:53.400 But Glenn what I'm hearing you say is that when that happens, there's 140 00:06:53.400 --> 00:06:54.600 opportunities to be a little bit more. 141 00:06:55.700 --> 00:06:58.900 Creative I guess the word when it comes to reinvesting those 142 00:06:58.900 --> 00:07:01.400 assets special specifically 143 00:07:01.400 --> 00:07:04.500 through a factor lens, right? That's right. And and 144 00:07:04.500 --> 00:07:07.300 I would also add Tom that's one advantage of 145 00:07:07.300 --> 00:07:10.600 the Symmetry platform versus maybe other tax loss 146 00:07:10.600 --> 00:07:13.700 harvesting options is that you know with with quantino 147 00:07:13.700 --> 00:07:16.600 involved we can add a modest long short extension 148 00:07:16.600 --> 00:07:19.300 to a strategy which gives it some 149 00:07:19.300 --> 00:07:22.400 unique advantages versus long only text less harvesting so 150 00:07:23.200 --> 00:07:26.800 And long only tax loss harvesting. You'll typically have a risk budget. 151 00:07:26.800 --> 00:07:29.500 So to speak, you know, there's only so much 152 00:07:29.500 --> 00:07:32.600 deviation versus The Benchmark the clients willing 153 00:07:32.600 --> 00:07:32.700 to take 154 00:07:33.600 --> 00:07:35.200 but with that risk budget 155 00:07:35.800 --> 00:07:38.300 If you do tilt toward maybe you're 156 00:07:38.300 --> 00:07:41.500 evidence-based beliefs would maybe value momentum 157 00:07:41.500 --> 00:07:44.900 you're taking up a little bit of that rich risk budget. So 158 00:07:44.900 --> 00:07:48.000 by taking up that risk budget, you're reducing the 159 00:07:47.800 --> 00:07:50.300 expected tax benefit because you're a 160 00:07:50.300 --> 00:07:52.400 little bit more constrained and tax less harvesting. 161 00:07:53.400 --> 00:07:56.200 So one disadvantage of perhaps long only text less 162 00:07:56.200 --> 00:07:59.800 harvesting with the long short extension that long 163 00:07:59.800 --> 00:08:02.500 short extension itself is the engine for tax benefit 164 00:08:02.500 --> 00:08:03.100 generation. 165 00:08:03.800 --> 00:08:06.300 So you can do a lot of created them things in 166 00:08:06.300 --> 00:08:09.100 the portfolio. You could tilt toward your your factors and 167 00:08:09.100 --> 00:08:12.900 your in your beliefs, but you're not giving up any expected 168 00:08:12.900 --> 00:08:13.600 tax benefit. 169 00:08:14.600 --> 00:08:17.400 If you're if you're employing that long short extension. 170 00:08:18.300 --> 00:08:22.300 Yeah, I kind of want to hang on that point Glen because we say 171 00:08:21.300 --> 00:08:25.100 and Phil I think would agree with with you 172 00:08:24.100 --> 00:08:27.000 that you know, there's no such thing as 173 00:08:27.100 --> 00:08:29.200 a perfect portfolio, right? Every portfolio is 174 00:08:30.200 --> 00:08:33.500 As it's trade-offs or is 175 00:08:33.500 --> 00:08:37.500 a compromise if you will and if you want tax efficiency 176 00:08:36.500 --> 00:08:40.400 as a main goal Factor investing 177 00:08:40.400 --> 00:08:43.200 might not be the best way to do it. It's a 178 00:08:43.200 --> 00:08:47.000 better way of doing it versus just a beta portfolio. But 179 00:08:46.100 --> 00:08:49.500 what I'm hearing you say Glens you get kind of The Best of Both Worlds 180 00:08:49.500 --> 00:08:52.500 by utilizing things like margin and 181 00:08:52.500 --> 00:08:55.400 short positions. Is that correct? I would 182 00:08:55.400 --> 00:08:58.900 I would agree that I would think the long short extension 183 00:08:58.900 --> 00:09:02.100 itself introduces more creativity in 184 00:09:01.100 --> 00:09:06.000 the portfolio because that 185 00:09:04.500 --> 00:09:07.800 engine of tax benefit generation 186 00:09:07.800 --> 00:09:10.900 is there it doesn't depend on the underlying portfolio 187 00:09:10.900 --> 00:09:13.500 for those strong and consistent text benefits. So, 188 00:09:14.400 --> 00:09:17.400 You have a lot more flexibility to implement the core part 189 00:09:17.400 --> 00:09:20.200 of that portfolio as you see fit. Sure. No, I think that makes 190 00:09:20.200 --> 00:09:24.000 a lot of sense. There's a lot of strategies that we're deploying now the 13030 191 00:09:23.300 --> 00:09:27.200 which you're alluding to Glenn I think is very interesting but filament 192 00:09:26.200 --> 00:09:29.400 in our experience, we've seen our new 193 00:09:29.400 --> 00:09:33.100 favorite word ossification, right which essentially means 194 00:09:32.100 --> 00:09:35.400 that when you own a a basket of 195 00:09:35.400 --> 00:09:39.300 security is whether it's ETS mutual funds are stocks at some 196 00:09:38.300 --> 00:09:42.000 point you get to an area 197 00:09:41.200 --> 00:09:44.300 over time where you can't do anything 198 00:09:44.300 --> 00:09:48.000 with that portfolio because of embedded gains, right 199 00:09:47.300 --> 00:09:51.100 and we've seen that over the years with our portfolios....
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info_outline
2022 Year-in-Perspective - Part Two
02/13/2023
2022 Year-in-Perspective - Part Two
Government bonds saw one of the single greatest drops since their inception and international stocks were adversely affected by foreign conflicts. It was a challenging year to say the least. But, we firmly believe that a well-researched strategy of diversification (across asset classes of all types) can help investors endure these down market periods. Listen to the second half of our "2022 Year-in-Perspective" for a detailed review of market performance last year, and, discussion of our hopes for 2023. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice. Show Notes/Transcript: 0 00:00:01.800 --> 00:00:07.300 Welcome back 1 00:00:07.300 --> 00:00:10.200 listeners. This is your host Tom romano, and thank you 2 00:00:10.200 --> 00:00:13.300 for joining us for part two of our 2022 year 3 00:00:13.300 --> 00:00:16.900 in perspective. Once again, we're joined by Casey Dillon 4 00:00:16.900 --> 00:00:19.700 to give us some insights on the markets and 5 00:00:19.700 --> 00:00:22.300 how they affected investors throughout the course 6 00:00:22.300 --> 00:00:25.600 of the previous year. Thanks for joining us again. Casey talked us 7 00:00:25.600 --> 00:00:28.400 a little bit. How did the markets react right? I mean we saw both 8 00:00:28.400 --> 00:00:32.200 equities and fixed income have negative 9 00:00:31.200 --> 00:00:34.900 performance for the year. And what 10 00:00:34.900 --> 00:00:37.400 are we seeing from rates of 11 00:00:37.400 --> 00:00:40.000 return from the US as well as abroad? 12 00:00:40.800 --> 00:00:44.200 Yeah, well the the sharp increase 13 00:00:43.200 --> 00:00:46.900 in rates reverberated across 14 00:00:46.900 --> 00:00:49.700 markets everything from stocks to 15 00:00:49.700 --> 00:00:51.300 bonds to real estate to commodities. 16 00:00:52.200 --> 00:00:55.300 And in what we observed was 17 00:00:55.300 --> 00:00:58.900 sort of some interesting things 18 00:00:58.900 --> 00:01:00.400 again threads that 19 00:01:01.300 --> 00:01:05.300 We'd seen coming into 2022 for instance. The 20 00:01:04.300 --> 00:01:08.400 the growth of tech stocks 21 00:01:08.400 --> 00:01:12.100 becoming a huge portion of 22 00:01:11.100 --> 00:01:14.600 the sort of the the US market, 23 00:01:14.600 --> 00:01:17.700 right? So if you you think about the Fang stocks Facebook 24 00:01:17.700 --> 00:01:19.600 Apple Amazon Netflix, Google 25 00:01:20.400 --> 00:01:23.700 They accounted for almost 25% of 26 00:01:23.700 --> 00:01:25.000 the market cap of the US. 27 00:01:25.900 --> 00:01:28.000 Coming into 2022 and they were 28 00:01:28.100 --> 00:01:31.400 the sort of those growth oriented tech stocks were the drivers 29 00:01:31.400 --> 00:01:34.600 of the tremendous returns 30 00:01:34.600 --> 00:01:37.000 that the market had given kind of the past five years. 31 00:01:37.800 --> 00:01:40.800 Or even ten and and to the 32 00:01:40.800 --> 00:01:43.100 point that there were a lot of folks who looked at that and said, 33 00:01:43.100 --> 00:01:47.200 hey, look are we out over our skis here this feels 34 00:01:46.200 --> 00:01:49.800 very much. Like we're entering into kind 35 00:01:49.800 --> 00:01:52.800 of frothy Tech bubble territory 36 00:01:52.800 --> 00:01:56.700 and there were sort of the Hallmark things 37 00:01:55.700 --> 00:01:58.300 trappings of 38 00:01:58.300 --> 00:02:01.200 that that were that felt very familiar to 39 00:02:01.200 --> 00:02:04.300 those of us who lived through the first tech bubble. So you saw things 40 00:02:04.300 --> 00:02:07.300 like the mean stocks right with games stop 41 00:02:07.300 --> 00:02:10.200 and Best Buy and sort of, you know day trading. 42 00:02:11.100 --> 00:02:15.300 To to the overuse of Leverage on these 43 00:02:15.300 --> 00:02:18.200 and a lot of that was kind of being driven by 44 00:02:18.200 --> 00:02:21.300 this idea that you know coming out of the pandemic these 45 00:02:21.300 --> 00:02:24.300 growth stocks. This was the story. These were the story 46 00:02:24.300 --> 00:02:27.700 stocks that people were gravitating to so so what happens people 47 00:02:27.700 --> 00:02:30.900 buy them up they to the point where the valuation 48 00:02:30.900 --> 00:02:33.200 no longer makes sense. If you 49 00:02:33.200 --> 00:02:37.300 take a step back and say well what am I buying right at 50 00:02:36.300 --> 00:02:38.000 the end of the day? 51 00:02:39.700 --> 00:02:42.700 Investing is about purchasing future cash flows. And 52 00:02:42.700 --> 00:02:45.600 so you arrive at a price today based on 53 00:02:45.600 --> 00:02:48.300 some assessment of what you think those future cash flows 54 00:02:48.300 --> 00:02:49.700 are and what you're willing to pay for those. 55 00:02:50.400 --> 00:02:54.300 If you get to a point where you're paying so much today for 56 00:02:53.300 --> 00:02:56.400 you know, this idea of 57 00:02:56.400 --> 00:02:59.400 heightened future cash flows at some 58 00:02:59.400 --> 00:03:00.800 point you enter into a world where? 59 00:03:01.600 --> 00:03:04.300 To to even substantiate the price you're willing 60 00:03:04.300 --> 00:03:07.900 to pay today. You have to have Perfection on those future casuals 61 00:03:07.900 --> 00:03:10.400 going forward and the world doesn't work that way right? You 62 00:03:10.400 --> 00:03:13.100 have a situation where Russia invades Ukraine, you have 63 00:03:13.100 --> 00:03:16.800 a situation where you have, you know pandemics and Avian flues 64 00:03:16.800 --> 00:03:19.300 and things like that. So the world is just in that 65 00:03:19.300 --> 00:03:23.200 need a place where you can predict Perfection 66 00:03:22.200 --> 00:03:26.000 for cash flows for things like yeah, Facebook 67 00:03:25.500 --> 00:03:28.200 Apple Amazon, and in fact what we see 68 00:03:29.100 --> 00:03:32.900 The the case for Perfection fell off the cliff in 2022 69 00:03:32.900 --> 00:03:35.200 because the the earnings for 70 00:03:35.200 --> 00:03:38.300 those companies started to turn around and go the other way and that 71 00:03:38.300 --> 00:03:41.700 caused Market participants to rethink the 72 00:03:41.700 --> 00:03:44.800 valuations that they were giving them and what 73 00:03:44.800 --> 00:03:47.600 we observed was the Fang stocks lost 74 00:03:47.600 --> 00:03:50.500 collectively over three trillion dollars in market 75 00:03:50.500 --> 00:03:53.300 cap over the course of the year. So that that 76 00:03:53.300 --> 00:03:56.700 was a homos 25% of the total market cap lost in 77 00:03:56.700 --> 00:03:59.400 the US was attributable to those handful of stocks 78 00:03:59.400 --> 00:04:02.000 right those those Fang stocks that you allude to. I mean 79 00:04:02.400 --> 00:04:06.200 at some point they were you know, collectively very 80 00:04:05.200 --> 00:04:08.800 large percentage of common us benchmarks 81 00:04:08.800 --> 00:04:11.300 like like the S&P 500, right they've been 82 00:04:11.300 --> 00:04:14.200 inflated and so when there is that correction, you're gonna 83 00:04:14.200 --> 00:04:17.300 feel it across the the industry across the all 84 00:04:17.300 --> 00:04:20.100 the markets rather. So I think that makes a lot of 85 00:04:20.100 --> 00:04:23.800 sense a lot of our investors are evidence-based investors, 86 00:04:23.800 --> 00:04:26.800 you know, Casey you and I share the same investment philosophy 87 00:04:26.800 --> 00:04:28.700 of buying hold. 88 00:04:29.500 --> 00:04:33.200 Long-term taking a factor approach to investment management. 89 00:04:34.800 --> 00:04:37.200 What how did factor-based investors or 90 00:04:37.200 --> 00:04:40.900 evidence-based investors fair in 2022? 91 00:04:40.900 --> 00:04:43.500 Yeah, so if you think about what what 92 00:04:43.500 --> 00:04:47.100 are you doing? If you're a factor investor? Well yours, you're 93 00:04:46.100 --> 00:04:49.700 lazing in on specific characteristics of 94 00:04:49.700 --> 00:04:52.200 risk to invest in and those 95 00:04:52.200 --> 00:04:55.600 character those risk factors those characteristics of 96 00:04:55.600 --> 00:04:58.200 risk that that you have 97 00:04:58.200 --> 00:05:02.300 been identified by way of academic research to have a 98 00:05:01.300 --> 00:05:04.800 premium or return 99 00:05:04.800 --> 00:05:07.600 associated with that that characteristics of risk. 100 00:05:07.600 --> 00:05:10.800 So you're trying to figure it 101 00:05:10.800 --> 00:05:13.500 out and say okay, you know, the the tech stocks 102 00:05:13.500 --> 00:05:17.000 is great example, the thing stocks if things become exceedingly 103 00:05:16.800 --> 00:05:19.300 expensive. Well, what does that 104 00:05:19.300 --> 00:05:22.300 do? Then to the cheaper stocks the stocks that aren't the 105 00:05:22.300 --> 00:05:25.800 thing stocks, right? How are they priced relative 106 00:05:25.800 --> 00:05:28.800 to these these growthier stocks? 107 00:05:29.500 --> 00:05:32.200 What historically we've observed is that 108 00:05:32.200 --> 00:05:35.700 there is a premium associated with valuation. Meaning 109 00:05:35.700 --> 00:05:38.700 the cheaper stocks tend to outperform the 110 00:05:38.700 --> 00:05:40.200 more expensive stocks over time. 111 00:05:41.300 --> 00:05:44.200 And so you enter into a world where the Fang stocks are 112 00:05:44.200 --> 00:05:47.800 ripping the cover off the ball and they're kind of the expensive growth stocks and 113 00:05:47.800 --> 00:05:50.300 by comparison, the the cheaper value 114 00:05:50.300 --> 00:05:54.100 stocks just aren't keeping up with that on the upswing and 115 00:05:53.100 --> 00:05:56.600 you got to a point where the 116 00:05:56.600 --> 00:05:59.100 market was collectively the one of 117 00:05:59.100 --> 00:06:02.900 the most expensive markets in history. Meaning that 118 00:06:02.900 --> 00:06:03.300 the 119 00:06:04.400 --> 00:06:08.200 thighs and weight of those Bank stocks across 120 00:06:07.200 --> 00:06:08.600 the market 121 00:06:09.400 --> 00:06:10.800 and how expensive they become 122 00:06:11.900 --> 00:06:13.100 lifted the whole market up 123 00:06:13.800 --> 00:06:16.300 But the spread between the growth stocks and 124 00:06:16.300 --> 00:06:19.400 the value stocks became as wide as we've 125 00:06:19.400 --> 00:06:22.400 seen really since the tech bubble right going back to 126 00:06:22.400 --> 00:06:25.200 that that the the value stocks were 127 00:06:25.200 --> 00:06:28.500 just so unloved and so beaten down my price relative to 128 00:06:28.500 --> 00:06:31.200 the tech stocks. So if you're 129 00:06:31.200 --> 00:06:34.400 a value investor rolling into a year like 130 00:06:34.400 --> 00:06:38.000 2022 when the the Fang 131 00:06:37.700 --> 00:06:41.000 stock bubble sort of starts to become deflated and 132 00:06:40.100 --> 00:06:44.500 those prices start to to come 133 00:06:43.500 --> 00:06:46.800 back to the mean if 134 00:06:46.800 --> 00:06:47.000 you will. 135 00:06:48.100 --> 00:06:51.400 One consequent of that is is that on a relative 136 00:06:51.400 --> 00:06:55.000 basis those cheaper value stocks start to perform better. Even 137 00:06:54.100 --> 00:06:57.700 if the market is going down as a whole the value 138 00:06:57.700 --> 00:07:00.400 stocks tend to hold up better because it's the 139 00:07:00.400 --> 00:07:02.900 top end of the market the expensive end. That's moving more. 140 00:07:03.700 --> 00:07:06.500 And so we we saw that and in 2022 value 141 00:07:06.500 --> 00:07:09.700 stocks actually did quite well, they did exceedingly well 142 00:07:09.700 --> 00:07:12.400 relative to grow stocks large 143 00:07:12.400 --> 00:07:16.100 cap value outperform large cap growth handily 144 00:07:15.100 --> 00:07:18.600 for 2022. And 145 00:07:18.600 --> 00:07:21.100 so if you're a value a factor investor with 146 00:07:21.100 --> 00:07:24.500 a tilt towards value that was really helping your portfolio in 147 00:07:24.500 --> 00:07:28.100 2022. We also saw factors like 148 00:07:27.100 --> 00:07:30.500 low volatility or 149 00:07:30.500 --> 00:07:33.900 associated with lower volatility stocks 150 00:07:33.900 --> 00:07:36.400 doing well across the 151 00:07:36.400 --> 00:07:39.200 board minimum volatility globally and 152 00:07:39.200 --> 00:07:42.500 also here in the United States. So those stocks that tend 153 00:07:42.500 --> 00:07:44.800 to be less volatile than the market in general. 154 00:07:45.500 --> 00:07:48.000 There's a return premium associated with that and of course 155 00:07:48.300 --> 00:07:52.000 in a year that highly volatile like 2022 those less 156 00:07:51.500 --> 00:07:54.400 volatile stocks had a premium associated with 157 00:07:54.400 --> 00:07:57.200 them relative to everything else. And if you're a factor investor who 158 00:07:57.200 --> 00:08:00.300 has a tilt towards minimum volatility you you reap the 159 00:08:00.300 --> 00:08:03.200 reward on that but it is as we sort of 160 00:08:03.200 --> 00:08:06.300 break out of kind of globally or looking at the US things like 161 00:08:06.300 --> 00:08:09.600 small cap stocks and Emerging Markets continue to do quite well. 162 00:08:09.600 --> 00:08:12.500 So if you had a tilt towards size in your 163 00:08:12.500 --> 00:08:15.500 Factor tilt that that paid off 164 00:08:15.500 --> 00:08:18.500 for you on a more broadly Diversified basis. 165 00:08:19.200 --> 00:08:22.700 And so you you started to see that these these 166 00:08:22.700 --> 00:08:26.000 Factor tilts in at 167 00:08:25.300 --> 00:08:28.100 a time when normally you would think a look 168 00:08:28.100 --> 00:08:31.700 if it's a risk off environment. Well Factor, it is 169 00:08:31.700 --> 00:08:34.700 a risk anyway, right? So you might 170 00:08:34.700 --> 00:08:37.800 expect for the factor exposures to 171 00:08:37.800 --> 00:08:40.300 be down it and to a degree you're 172 00:08:40.300 --> 00:08:43.700 right, but they're also relative to the other things that 173 00:08:43.700 --> 00:08:46.200 they're trading against and in that case they held up 174 00:08:46.200 --> 00:08:47.600 much better than the market in general. 175 00:08:48.300 --> 00:08:51.600 And so a broadly based a broad 176 00:08:51.600 --> 00:08:55.000 Diversified broadly Diversified Factor portfolio 177 00:08:54.100 --> 00:08:57.600 tended to do better on both a relative 178 00:08:57.600 --> 00:09:00.300 and absolute basis than the market in general 179 00:09:00.300 --> 00:09:03.300 did and certainly more so than the Contra points 180 00:09:03.300 --> 00:09:06.800 of that things like growth or more volatile stocks or you 181 00:09:06.800 --> 00:09:09.800 know, large cabs. So so being a factor investor 182 00:09:09.800 --> 00:09:12.500 really was beneficial in 183 00:09:12.500 --> 00:09:14.600 many regards in 2022. 184 00:09:15.300 --> 00:09:18.300 Yeah, we've seen that in the performance of a number of 185 00:09:18.300 --> 00:09:21.200 portfolios that that you and I have talked about over the 186 00:09:21.200 --> 00:09:25.200 years that you know, a diversified portfolio factors in 187 00:09:24.200 --> 00:09:27.400 2022 albeit was 188 00:09:27.400 --> 00:09:30.600 still in the red at the end of the year, but not nearly as as bad 189 00:09:30.600 --> 00:09:34.100 as some of those market like portfolios 190 00:09:33.100 --> 00:09:36.900 or benchmarks that we've seen. I do 191 00:09:36.900 --> 00:09:39.300 want to hang on the value conversation a little bit. Right? 192 00:09:39.300 --> 00:09:42.400 We you know value as a factor you and 193 00:09:42.400 --> 00:09:46.000 I share the the belief that investors should have exposure 194 00:09:45.200 --> 00:09:48.600 to value in their portfolios. And I know 195 00:09:48.600 --> 00:09:51.300 over the years Casey you and I have had shared a cocktail 196 00:09:51.300 --> 00:09:54.300 discussing. What was the underperformance of 197 00:09:54.300 --> 00:09:57.100 value for a number of years. We saw the rise 198 00:09:57.100 --> 00:10:01.300 of the things which we discussed earlier and for 199 00:10:00.300 --> 00:10:03.200 Value investors. I think that they were 200 00:10:03.200 --> 00:10:06.700 someone Vindicated in 2020 to but for 201 00:10:06.700 --> 00:10:09.900 those are out there listening, you know with this outperformance 202 00:10:09.900 --> 00:10:12.300 of value. Is there still room for Value to 203 00:10:12.300 --> 00:10:14.500 continue to outperform in 2023? 204 00:10:15.200 --> 00:10:19.200 You know, I love the quote history rare 205 00:10:18.200 --> 00:10:21.700 rarely repeats itself, but it often Rhymes because 206 00:10:21.700 --> 00:10:25.000 I think that that's incredibly true 207 00:10:24.600 --> 00:10:27.600 across markets in particular and I 208 00:10:27.600 --> 00:10:30.400 heard an a quote that I think shed some light on that and it's 209 00:10:30.400 --> 00:10:33.200 not that history repeats itself. It's that people 210 00:10:33.200 --> 00:10:36.600 repeat themself, right? And so if you think about markets are 211 00:10:36.600 --> 00:10:40.000 made up of people making purchasing and 212...
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2022 Year-in-Perspective - Part One
01/26/2023
2022 Year-in-Perspective - Part One
For most investors, 2022 has felt like a “terrible, horrible, no good, very bad” year. International conflict, inflation, and historically paced interest rate hikes, have made this a challenging year for markets. While finishing the quarter with positive returns, the gyrations of markets in the fourth quarter did little to assuage investors’ general unease moving into 2023. In this first half of a special two-part episode, we are joined by Casey Dylan, CIMA®, CEO, Founder & Director of Story Market Services, to discuss the most critical events of 2022 and their subsequent effects on the stock market. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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The Power of Efficient Markets - Part Two
01/12/2023
The Power of Efficient Markets - Part Two
While the efficient market hypothesis was derived from historical studies, we firmly believe that it is still applicable to our current approach to long-term investment planning. We are once again joined by Symmetry’s Brendan Kruh, Research Associate, to talk about current events such as, inflation, rising interest rates, the present war in Ukraine, political tumult, and other compounding difficulties posed by the current economy. To the surprise of exactly no one, we continue to trust that the market will endure these challenges. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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The Power of Efficient Markets
12/29/2022
The Power of Efficient Markets
Investors, and active money managers, rarely outperform capital markets on their own. The data to prove this point is both ubiquitous and vast. We believe that markets are efficient, and investors are best served with a well-diversified portfolio that owns the market for decades a time. In this episode of Unfiltered Finance, we are joined by Symmetry’s Brendan Kruh, Research Associate, to discuss the efficient markets theory and how its academic basis can be used to design investors’ portfolios. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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Understanding the Differences Between ETFs and Mutual Funds
12/15/2022
Understanding the Differences Between ETFs and Mutual Funds
Open-ended Mutual Funds and Exchange Traded Funds are both popular investment vehicles. They carry a number of similarities, including; their "basket-like" structure, and exposure opportunities. But, there are critical differences between the two, which, can impact the way you invest your hard earned money. Joining our own Tom Romano is Symmetry’s Kevin Scully, CFA, Senior Research Associate, Portfolio Manager, to discuss these key differences, and how you can determine which investment best suits your needs. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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Improving the Investor Experience
12/01/2022
Improving the Investor Experience
No investor wants to work with a financial advisor who is content with settling for less. In this episode of Unfiltered Finance, our own Tom Romano is joined by Symmetry’s Associate Director of Marketing, Andrea Loin, to explain why, and how, financial advisors should work to continuously develop their businesses. We’ll give you a hint, it can improve the client experience…for all involved. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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A Review of Summit 2022
11/17/2022
A Review of Summit 2022
For investors, the following statement is self-evident, “my portfolio is better off in the hands of a well-informed and skilled advisor.” This is the fundamental belief that led us to hold our educational conference - Summit 2022. From November 9th - November 10th, we covered any number of topics including marketing, client service, and direct indexing. In this episode of Unfiltered Finance, Tom Romano is joined by William Chettle, Symmetry’s Head of Advisor Relations & Client Experience, to discuss this year’s Summit and the potential benefit this sort of event can ultimately have for advisors’ clients. If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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Technology's Influence on The Investment Experience - Part Two
11/03/2022
Technology's Influence on The Investment Experience - Part Two
While some online technologies can prove to be valuable assets for investors, and their advisors, the internet is not exactly void of malicious actors. In this episode we are once again joined by Symmetry's Director of Operations and Technology, Robert Hawke, and our Director of Operations, Mark Longmore, for an in-depth discussion about cybersecurity and the online tools that can be used to protect your data. Click here and listen to our full episode: https://info.symmetrypartners.com/unfiltered-finance
#technology #operations #investmentservices #behindthescenes If you have any questions or would like more information, reach out to us at You can also find us on Facebook, YouTube, Twitter, and LinkedIn. As always, we remain invested in your goals. Symmetry Partners, LLC, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered, excluded or exempted from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. No one should assume that future performance of any specific investment, investment strategy, product or non-investment related content made reference to directly or indirectly in this material will be profitable. As with any investment strategy, there is the possibility of profitability as well as loss. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Moreover, you should not assume that any discussion or information contained in this material serves as the receipt of, or as a substitute for, personalized investment advice.
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