Wealth Actually

Puerto Rico is a jurisdiction that excites the imaginations of wealth planners. It has interesting attributes for American citizens that other non-U.S. jurisdictions don't. For instance it is the one place that American citizens can greatly reduce their Federal Income tax liability without having to renounce their citizenship. This has generated an enormous amount of interest.

There is good reason for that interest. 2020 and 2021 have thrown a lot of uncertainty at wealthy families trying to arrange their affairs. A worldwide pandemic, relative electoral chaos, an explosion of wealth in some sectors of the economy, the targeting taxation of the wealthiest families and all sorts of legislative uncertainty have foretold increasing tax and compliance burdens for most people.

With the chatter of Puerto Rico as a magic pill, I thought it was necessary to find out more about the benefits, the requirements, the traps for the unwary, and the best practices in using Puerto Rico as a jurisdiction for wealth planning.

Enter MARIA DE LOS ANGELES RIVERA, Tax Partner in Grant Thornton's Puerto Rico office.

In her role as tax partner, Maria engages in the design and development of tax planning and consulting strategies. This includes tax services in the area of mergers and acquisitions,business reorganizations, partnership transactions, tax incentives and exemptions, individual and corporate tax issues, personal financial matters, and others.

Mrs. Rivera is a summa cum laude graduate and holds a bachelors degree in business administration from Catholic University of Puerto Rico and holds a Masters degree in publicaccountancy from the University of Texas at Austin.

She is an expert in the ins and outs of Puerto Rico and a terrific resource as we dive into this topic.

Below is an outline of our discussion. Of particular use to those who want to dive into the details is a link to GRANT THORNTON'S 2021 PUERTO RICO TAX AND INCENTIVES GUIDE. This is extremely helpful in starting a Puerto Rico relocation analysis. (As with any tax planning, an analysis of an individual situation with the requisite legal, accounting, investment and business advice is mandatory- this podcast is for educational purposes.)

INTRODUCTION

Maria's background and tax training.

OUTLINE

Puerto Rico is getting a lot of attention as a planning situs for US Citizens- why?

Expatriation "lite"?  For U.S. Citizens that are willing to give up citizenship for tax or other reasons, they usually have to pay a hefty exit tax. In Puerto Rico, with the right structuring, you can maintain U.S. citizenship with reduced federal tax liability (with no expatriation tax).

It's not as easy as just renting a place and "moving down there". What kind of analysis should prospective "re-locators" go through? What are the family implications? What about thoughtfully leaving your previous state of residence?

Benefits

Personal Taxes- What are the benefits?  Tax Savings at the Income, Capital Gains, and Estate Level.

Business Taxes- What are the benefits for people locating their businesses there? What are the parameters?

Geography and Business features of Puerto Rico

Personal Tax Benefits

What is required? 

The Presence Requirement-

-Physical presence (Annual proof of living in P.R. for 183 Days +, what is the home purchase requirement?)

-Tax home presence - where you work from?

-Closer connection - where do you "live"? How do you prove it?

-Is there planning to think about during the year of the move? Forms?)

-What are the requirements for those who are anticipating a significant capital gains event?

Business Tax Benefits ?

What is the general rule for whom this could work for?

What are the traps for the unwary?

-Recordkeeping

-Audit risk

-What actually qualifies?

-Best practices- what should someone do if they are thinking about this route?

OUTRO

How do we stay in touch with Maria and developments in Puerto Rico's taxation climate?

GRANT THORNTON PUERTO RICO

MARIA'S LINKEDIN PROFILE

Useful links from Grant Thornton on the Benefits and Requirements of Puerto Rico Jurisdiciton

https://www.grantthornton.pr/insights/kevane-grant-thornton/puerto-rico-tax-and-incentives-guide/

https://www.grantthornton.pr/insights/kevane-grant-thornton/articles/08.15.18-tax-article-update-to-the-federal-qualified-opportunity-zone/

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

https://www.amazon.com/Soundbite-Admissions-Secret-College-Beyond/dp/0306874830/

Sara Harberson, America's College Counselor, is a nationally recognized authority on college admissions with formidable credentials: former Associate Dean of Admissions at the University of Pennsylvania, Dean of Admissions at Franklin & Marshall College, and Director of College Counseling at the Baldwin School. Sara is one of the only private college counselors who has led both an admissions office at a highly selective college and a college counseling office at an elite high school. She shares her expertise with a wider audience as the founder and CEO of ADMISSIONSREVOLUTION.COM, a free website available to all, SARAHARBERSON.COM, for personalized college counseling and free resources, and APPLICATION NATION, a private subscription-based Facebook group. She lives in Lancaster, PA.

Sara has appeared as a college admissions expert on HBO's Vice News, CBS Evening News, CBS This Morning, TODAY, and CNBC. She was most recently interviewed as an expert on the effects of COVID-19 on college admissions by POLITICO, Higher Ed Dive, Good Day Philadelphia, and KYW, among others. Her op-eds have also appeared in USA Today, LA Times, Chicago Tribune, and various other national publications.

https://www.youtube.com/watch?v=0v5yHnWCiLE&t=322s

Outline

A snapshot of the current college enrollment environment. What are kids facing?

How do you help kids (and their parents) not get overwhelmed by the process?

The concept of the Soundbite

What is different now than what I (graduating from college in the mid 90's) was used to?

Increased exclusivity, social media, kids more mature now than before, broader experiences?

What are Admissions Officers looking for?         

Surprise! Officers probably only look at an application for 4-6 minutes- there are just too many applications to get through.

Diversity is important – and at many levels- racial, geographic, socio-economic, first generation, rural among others.

Academic programs- Admissions directors have to meet targets and needs of individual programs

Sports, extracurricular activities - the well-rounded individual?

Admissions committees want what they don’t have or what they don't have a lot of

Show me the evidence that backs up a candidate's “major” preference

What role do finances play in the college's decision-making process?

Colleges are expensive right away just in terms of research and visiting schools!

How do they handle scholarships?

Holistic admissions

Need Aware- will factor in ability to pay.

Need blind – don’t care about pay

Merit scholarships

Has anything changed since Operation Varsity Blues?

Rick Singer - he had the game figured out and identified the holes in the admissions process

Sports were the key to get in non-standard applicants

What about Standardized Testing?

The trend: getting away from standardized tests-

Back door way to get increase in diverse numbers in applicants

How do we keep up with you and where can listeners buy your book?

SaraHarberson.com

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

*(5/30/21 UPDATE: A FULL TRANSCRIPT IS UNDERNEATH THE OUTLINE).

In this podcast, I spend some time speaking with wealth management industry expert, Brittain Prigge, about the role of communication and expectations with wealthy families. We both agree that broadening communication within wealthy families is the surest way to reduce the risk of wealth destruction across generations. Brittain brings many real world examples and wisdom to this important topic. She has unique insight into the art of getting these (often difficult) conversations started and how to keep them productive.

BRITTAIN PRIGGE, CFA is BALENTINE'S President and Head of Relationship Management. Balentine is the Atlanta-based RIA with over $4B in AUM. A founding partner, Brittain also sits on the Management Committee, helping steer the strategic direction of the firm. In 2014, Brittain was named one of the Top 100 Women Financial Advisers by the Financial Times in its inaugural list, and in 2020 Atlanta Business Chronicle honored Brittain as a Women Who Mean Business honoree.

As a reminder this conversation is for educational purposes and is not investment advice- enjoy the conversation- there are lots of useful points here.

Your Background

What are the misconceptions around discussing Wealth in the Family?

Is this a one-time event or more of a culture that needs to be built?

Importance of Alignment at the Head of The Family-

The Danger of Assumptions

The Importance of Historical Context

Immigrants / or Natives?

Birth order / Blended Families?

How Do You Start the Conversation?

Example Questions:  Defining wealthy

Legacy:

Who are you beyond your wealth?

How do you wish to be remembered?

Defining Legacy:

Who are we beyond wealth?

What features/values do we want to persist?

Other Questions-

Documenting Legacy:  There is no ONE way to do it

Letter of Wishes

Personal Histories

Creativity- Video, Social Media tools

Include Detail

Timing?  Family meetings?

How Often?  Where?  Who has input?  Who is moderating?

Education- how do you make sure everyone starts out from the same place?

Preparing for Asymmetries of Knowledge, Interest, Attention

Dealing with Conflict

Complex Family Systems

Siblings- dealing with baggage, galvanizing for the future

Blended Families- Unique Issues

In-Laws- Bringing together Diverse Backgrounds, Making them Involved

Ultimately the most difficult question: Fair vs Equal

How do we stay in touch with you and follow what Balentine is doing in the space?

BALENTINE.COM

BRITTAIN PRIGGE

INTRO: Welcome back to the “Wealth Actually” podcast, the show that features artists, entrepreneurs, experts and commentators that will give you the right knowledge, planning and guidance so you can preserve your assets and enjoy your wealth, learn more and subscribe today at weatlhactually.com.

And now here's your host, Frazer Rice.

FRAZER RICE: Welcome back to the “Wealth Actually” podcast, I'm Frazer Rice. Today, we're going to be talking about having difficult conversations with wealthy families and we have a noted expert in the field. Britain is a CFA and the president and head of relationship management for Balentine. In 2014, Britain was named one of the top 100 women financial advisers by the Financial Times in its inaugural list. And in 2020, the Atlanta Business Chronicle honored Britain as one of the women who mean business honorees. As a reminder, this conversation is for educational purposes and is not investment advice.

Brittain, welcome aboard.

BRITTAIN PRIGGE: Thank you so much, Frazer.  I'm honored to be part of your podcast. I've listened to you a lot.

FR: Well, we're thrilled to have you and it's terrific to have your viewpoint on. What I would describe is really tricky discussions that wealthy families are having. Maybe to start, though, could you take us through your background a little bit and how you ended up at Ballantine and working with some of these higher level families?

BP: If you want to go all the way back, I am from Alabama. I grew up playing tennis. I went to Vanderbilt on a tennis scholarship and ended up in Atlanta solely because of friends, but started getting interested in the stock market and got a job just to get a job, but ultimately decided dealing with the institutional-type wealth was what I wanted to do. And it got more and more interested in families and adding value in ways beyond investments. Pretty early on, I would say I've been a relationship manager for about 30 years and that's the core of who I am and what I do.  Though I also manage a four billion dollar firm!

FR: As we start to horn in a little bit on the difficulties that families have in discussing money within and among themselves. What are some of those first major misconceptions around wealth discussions that you've seen in your experience?

BP: I think the assumption that you understand how the patriarch matriarch, whom we also call G one feels as well as how G1 to G3 feel, I think there's so many different types of feelings about wealth and the expectation to be a good steward of wealth and often G1 to G3 are insecure and sometimes there is some guilt there being what we call the trust fund child.  And sometimes there's an assumption that people feel a certain way. So I think not assuming that any situation is like the other, especially when you're on our side of the table, is a mistake.

FR: One of the things that I've seen, too, is that many families, patriarchs, matriarchs in particular, sort of think the wealth discussion is a one time event, not unlike some misconceptions around estate planning. I built this structure. I'm good to go. Don't have to think about it anymore. Do you see that a lot where families come in and say, I want to check the box, I will impart information to the next generation and then we're off and running?

BP: What I see is two things.

One is often these entrepreneurs that we deal with that often have a net worth that is and could be in the hundreds of millions, tens of millions is very different when it's on paper or in the company as opposed to when it becomes more liquid. So I think there's an assumption sometimes that you don't need to do any of this planning unless you have liquidity, which I think is wrong. And there's also an assumption, as you said, we're going to have this discussion.

We're going to go in with his day planning attorney. We're going to make all these decisions and have these solutions in a one time deal. And often that is a difficult process and B, don't necessarily come out with the solutions that are the right ones. I think what I found over time is estate planning, wealth and legacy. Any kind of governance is a process. And if you try to go to a solution too quickly, you're probably not going to come out with the best outcome when you get to that sort of solution.

FR: A quick issue, where do you see problems when maybe the matriarch and patriarch, the generators of the wealth or the sort of stewards of the family wealth currently when they aren't aligned? What happens if one message from one side is a little bit different from the other? You see that causing lots of issues as it steps down generations.

BP: Absolutely. And I actually won't have a conversation, a full family conversation until I feel real comfortable that the patriarch and matriarch are on the same page I will find in our business. It still is a male dominated industry and often the male. The patriarch has more of the decision making power always has, which is often a mistake. And a lot of times the matriarch has not even been talked to about it. How do you feel? And often if you do it right, you could have a year's conversation with the patriarch matriarch or maybe just one or the other to really understand how willing they are in order to give up some of this decision making power.  And if there are two people, there has to be compromise. So is the assumption that everybody feels the same way. It's just not right.

FR: And you talk about the danger of assumptions. What do you do to kind of break that down and to get everyone on the same page? I mean, there's sort of the assumptions around how people feel, which is by no means a small component of it. But there's also the assumptions as to what people know and what they're educated about regarding wealth and even how members of the family think or interact with each other.

BP: I have probably the greatest coach, I would say, in the world on the whole aspect of wealth and legacy and how you talk to clients. And that's a man named Dr. Jim Grubman. And the first several sessions we had, he would stop me and say, you're doing it again, you're doing it. So if you make assumptions, the family is going to make assumptions. You must take the time to go through the process and not try to get there too quickly.

And that is I find that most of these people, a lot of them have built businesses and they're used to making decisions. And you just find it is a process that takes a lot of questions and asking the questions and then actively listening is imperative for someone on our side of the table.

FR: If you are going to try to consult in this way, how do you think about building mutual context among family members, whether it's historical or, you know, the idea of whether the family is first generation American or whether they've been here for six or seven generations or, you know, issues around birth order or blended families or even just the history of how the wealth was built. How do you think about that in terms of getting everyone on the same page knowledge wise so that people break down those assumptions?

BP: All those different aspects are important culture. Is hugely important, understanding and acknowledging the difference in the different generations,...

This was an opportunity to speak with an amazingly accomplished portfolio manager and entrepreneur. Right now, the specter of interest rate volatility, market volatility and inflation risk have investors' full attention. Nancy Davis's fund, IVOL, was built on her experience dealing with these issues and has received a lot of positive recent notice. Nancy began her career at Goldman Sachs where she became the Head of Credit, Derivatives and OTC Trading. She went on to be a portfolio manager at HighBridge and taking on management responsibilities at Alliance Bernstein before taking the leap and founding her firm, QUADRATIC CAPITAL LLC in 2013. It is there that she has built a unique business around her expertise. In this episode, we talk about her background, what problems her strategies try to solve and how she does it, and the decision to structure her fund as an ETF.

Outline

Describe your background and what led to the founding of Quadratic-

The experience at Goldman Sachs, HighBridge, Alliance Bernstein

Getting back to being a Portfolio Manager and forming your own firm

What Investment Issues does IVOL try to address? 

Interest Rate Volatility

Increased Inflation

Investment expectations and market volatility;

Where would IVOL normally fit in an asset allocation?

Dealing with Interest Rate Volatility 

Generationally low interest rates vs the Federal Reserve with its foot on the interest rates 

Interest rate jumps that are big on a percentage basis but not that big in terms of actual BPS

Financial industrial complex where expertise in dealing with rising interest rates is retired or dead

What is the difference between interest rate volatility and equity volatility- how do you exploit this? Recent examples

What is the difference between CPI and "actual inflation"?

How does your strategy try to address that?

The fund is made up substantially with TIPS, but also with other securities and options- Why are TIPS not fully adequate?  How does being invested in OTC rates improve upon other methods?

How does the IVOL implement its investment strategy (TIPS + other options/FI)- Why is this preferable?

Enhancing other allocations 

Traditional Fixed Income - IVOL holds TIPs and is long-volatility, which can act as a potential diversifier to a fixed income portfolio centered on the Barclays Agg.

Real Estate- IVOL may help hedge the risk of falling real estate prices brought on by rising long term interest rates.

Equities- IVOL owns fixed income volatility and may act as a market hedge since volatility has historically increased during large equity sell-offs.  IVOL is potentially defensive for an equity portfolio given its use of US Treasuries. Further, its options potentially benefit from a steepening of the yield curve, which historically has often occurred during equity market declines.

TIPS- IVOL owns TIPS, but they are enhanced using TIPS with options. These options function as options on inflation expectations, because the yield curve is largely a result of inflation expectations.

Floating Rate Notes- IVOL has the potential to appreciate when the interest rate curve steepens and long dated inflation expectations move higher, giving investors a similar benefit to the one they are expecting from their FRN without the credit risk.

Short Duration Bonds- IVOL may help hedge during bond market sell-offs should the yield curve steepen and volatility increase while providing potentially enhanced distributions.

Factors that impact IVOL

TIPS Bond Price- Rising prices are usually good for the fund

Volatility- Rising volatility is usually good for the fund

Expectations for rate cuts- Increased Expectations are usually good for the fund

Long Dated Yields - Rising yields are usually good for the fund

What are the couple of pieces of news that you are following intently that many investors aren't focused on?

The decision to go ETF vs a traditional hedge fund partnership-

What went into that choice? Were there drawbacks?

The benefits of transparency, tax efficiency, lower costs for investors

Finally, how best do we follow IVOL and Quadratic? 

Materials: https://www.ivoletf.com/ivol-materials/

Presentation: https://www.ivoletf.com/wp-content/uploads/2021/01/IVOL-Presentation.pdf

Fact Sheet: https://www.ivoletf.com/wp-content/uploads/2021/01/2020_12_31_ivol_factsheet.pdf

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

I think direct indexing is going to be a major innovation in the world of wealth and asset management. It will help the RIA and wealth management world deliver on the promise of financial planning. It will also help rationalize the business model of many advisors as clients request more specialization around their affairs. The impacts could be enormous and many players are entering the space. To help us understand the concept of "Direct Indexing", I spoke with LISA GOLDBERG, PhD.

Lisa is the Head of Research at APERIO- a $41B asset manager with 21 years of experience in the space. Aperio was recently acquired by Blackrock. Lisa is the Professor of the Practice of Economics at the University of California, Berkeley, where she directs the Consortium for Data Analytics in Risk (CDAR).

We talk about what "Direct Indexing" is, how it works and why it will be important for investors.

(DISCLOSURE: This podcast is meant to educate around the topic of "Direct Indexing" and is not specific investment advice.)

The Framework of Direct Indexing

In your experience, how are portfolios typically implemented in the wealth management industry and what could be improved?

Describe the concept of Direct Indexing- (1.0 Beta portfolios with fewer positions than the index. This allows buy/sell customization around other metrics like tax lost harvesting, ESG considerations or concentration management) 

Why is this important?

While this isn't a new concept, why is this a step forward and what allows this powerful tool to be available for more investors? 

Direct Indexing vs Index Funds, ETFs, Mutual Funds

How does this work?

(Without revealing the secret recipe!) What goes into the investment process for your direct indexing solutions?

How do your programs systematize prudent tax loss harvesting?

What factors do you focus on?

Issues:

Certain sectors and securities often make up the lion's share of out-performance- what is the process to ensure proper sector representation? 

How do you make sure that the portfolio does not fall too far out of whack?  

What happens when a clients' preferences or situation doesn't intersect well with your process?

Benefits

Focusing on tax alpha (and knowing that each person's tax situation is different)-

Is there a consensus on how much return on a tax-loss harvested portfolio can add?  Or put another way, how much do investors leave on the table with "non-tax aware" investing?

How does this help deliver on the promises of financial and tax planning?

How does this help clients?  

Are there any long-term projections you can share on how much clients could benefit?

How does this help client advisor's that implements asset allocations?  

What is the best way for people to find out more?

How does APERIO work with advisors and clients?  At what asset sizes does it make sense?

Links to Useful Articles

Here is the mentioned "Active Management Tax Insult to Injury" link :

https://www.aperiogroup.com/Resources/Papers/Adding%20Insult%20to%20Injury%20-%202015%20Tax%20Penalty%20for%20Active%20Mgmt.pdf

Why loss-harvesting has worked so well:

https://www.aperiogroup.com/blogs/highfliers-drive-market-returns-losers-drive-tax-alpha

Ken Lassner writes about optimal gifting from a direct indexing account:

https://www.aperiogroup.com/blogs/optimal-gifting-for-financial-and-philanthropic-return

Here’s a user’s guide to separately managed accounts:

https://www.aperiogroup.com/Resources/Papers/ETFs%20vs%20SMAs-A%20Users%20Guide.Paper.pdf

Fun question: Lisa- what do you like to do in your spare time?

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

This podcast is off the beaten path from the usual wealth topics, but it's no less a story of perseverance and vision. It's a thrill to talk to my friends about their successes. In this case, it has been a long time and a lot of hard work in the making.

Born and raised in Watertown, NY, JIM HARBERSON (TWITTER, INSTAGRAM) has a Masters in Religion and was a lawyer before embarking on his writing career. He has published many horror and sci-fi stories including podcast projects for "Chilling Tales for Dark Nights" and the co-writer of the graphic novel, Stay Alive. Against that backdrop, his new horror compendium is out now via MARKOSIA and can be found on Amazon and Barnes and Noble.

https://www.amazon.com/Disgusting-Supermarket-Death-James-Harberson/dp/1913802248/

(Cover by STEPHEN BASKERVILLE- his work is here: https://baskervillecomics.carbonmade.com/)

We catch up on a variety of topics surrounding the book, his writing and growing up in the Horror/Sci Fi genre.

We also talk about his foray into graphic novels. His co-authored (with me!) "Stay Alive" was nominated for the prestigious Rondo Hatton Classic Horror Awards (Category 22:  Best Graphic Novels or Collections)  

You can vote for it here:

https://rondoaward.com/rondoaward.com/blog/

https://www.amazon.com/gp/product/B082H3S64D

Art by STEPHEN BASKERVILLE

Jim was also nice enough to furnish a list of his favorites in the HORROR MOVIE/BOOK space.

Here they are:

Horror Movies

Freaks (1932)

The Bride of Frankenstein (1935)

Vertigo (1958)

Psycho (1960)

Night of the Living Dead (1968)

Salem’s Lot (1979)

An American Werewolf in London (1981)

Creepshow (1981)

Halloween II (1981)

The Thing (1981)

Basket Case (1982)

A Nightmare on Elm Street (1984)

Fright Night (1985)

Lifeforce (1985)

Night of the Creeps (1985)

Re-Animator (1985)

Return of the Living Dead (1985)

Aliens (1986)

Manhunter (1986)

Evil Dead II (1987)

The Lair of the White Worm (1987)

The Hidden (1987)

Robocop (1987)

Beetlejuice (1988)

Dead Heat (1988)

Hellraiser II (1988)

Phantasm II (1988)

Bride of Re-Animator (1990)

Robocop II (1990)

The Silence of the Lambs (1991)

Army of Darkness (1992)

Basic Instinct (1992)

Dead Alive (1992)

Natural Born Killers (1994)

From Dusk Till Dawn (1995)

Lord of Illusions (1995)

John Carpenter’s Vampires (1998)

Drop Dead Gorgeous (1999)

From Dusk Till Dawn II:  Texas Blood Money (1999)

Hannibal (2001)

Resident Evil (2002)

Darkness Falls (2003)

House of 1000 Corpses (2003)

Fido (2006)

Halloween (2007)

Planet Terror (2007)

Nurse 3D (2013)

Halloween (2018)

Horror Books

Fiction (H.P. Lovecraft, 1908-1935)

Cartoons (Charles Addams 1942-1988)

Animal Farm (George Orwell, 1945)

1984 (George Orwell, 1948)

The Haunt of Fear (EC Comics, 1950-1955)

Shock Suspenstories (EC Comics, 1952-1955)

Tales from the Crypt (EC Comics, 1950-1955)

The Vault of Horror (EC Comics, 1950-1955)

Amphigorey, Amphigorey Too, Amphigorey Also, Amphigorey Again (Edward Gorey, 1972-2006)

Creepshow (Stephen King, Bernie Wrightson, 1981)

Batman: The Dark Knight Returns (Frank Miller, Klaus Janson, Lynn Varley, 1986)

Arkham Asylum: A Serious House on Serious Earth (Grant Morrison, Dave McKean, 1988)

Batman: The Cult (Jim Starlin, Bernie Wrightson, 1988)

Batman: The Killing Joke (Alan Moore, Brian Bolland, 1988)

Judge Dredd: Necropolis (John Wagner, Carlos Ezquerra, 2000 AD, 1990)

Contact Information

You can find Jim on Twitter: @NovelStay and IG: @stayalivegn

Markosia pages:

A Disgusting Supermarket of Death:  https://markosia.com/a-disgusting-supermarket-of-death-2/

Stay Alive: https://markosia.com/books/worlds-of-horror/stay-alive/

B&N:  https://bit.ly/ADSODBN

Chilling Tales Podcasts:

https://www.simplyscarypodcast.com/podcasts/chilling-tales-for-dark-nights/3x05/

https://www.kickstarter.com/projects/craiggroshek/chilling-tales-for-dark-nights-a-scary-stories-col/posts/3129712

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

On the referral of a colleague, I interviewed the Nashville-based, LEONORA WILLIAMSON. She is an expert in family business dynamics, corporate citizenship and executive coaching and she has unique insights into the world of family business succession. Aside from advising families on the myriad issues, she has lived them herself with her family's own business.

She is the founder of PLATINUM RULE ADVISORS and a Lecturer at Vanderbilt University on the topics of Negotiation and Corporate Social Responsibility for their undergraduate business program. She is also a board member of Sabre Yachts and has uniques insights into the running and transition of this family business.

This was another episode where we scratched the surface of the issues we have seen and the lessons to be learned. I'll have to have her on again!

Introduction

What were some of the lessons you took from this when forming Platinum Rule?

Getting the "Human" part of Human Resources right

Using assessments and analytics to get a hold of the full family picture

The Three Big Parts of the Venn Diagram

Frameworks for getting one's arms around a big and complicated situation

The Business - Is it healthy? Where is it Going?

The Governance - How are decisions made in terms of ownership and operation? Who is in charge of strategy and who implements that strategy?

The Family - How are decisions made at the family level? How does this intersect with the business?

Intersection of "Family Wealth" and "Executive Coaching"

In family enterprises, the "Human" component can be complicated by family dynamics. What issues do families need to be aware of ? Are there warning signs?

How do you counsel families and businesses on information asymmetry (need to know vs want to know) when transparency is a goal, but some won't have the tools/discretion to deal with the important information?

What happens when wealth and ownership structure doesn't interact well with operational structure? 

Developing Human Capital

How do you help executives that work in family organizations deal with change when it's clear that there is a personality clash or obvious performance problem?

What happens if geography limits the talent pool?

What if you have a leader that has the "raw material", but is new to being an executive or comes with a different leadership style? 

Human Capital Trends?

How do family businesses think about the important benefits of diversity and inclusion?

Where do you think "Work From Home" fits in?

Are relationships even more important in this landscape- how do you foster them in this new world? 

How do you identify / develop talent via zoom?

Contact Information

www.platinumruleadvisors.com

https://www.linkedin.com/company/platinum-rule-advisors/

https://www.linkedin.com/in/leonora-zilkha-williamson/

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

I'm thrilled to have Ted Seides on the show to discuss his new BOOK, his wildly successful PODCAST, his FIRM'S media and coaching focus and the world of capital allocation. Ted has a unique perspective in the asset management world, having worked for the legendary David Swensen at the Yale Endowment, having conducted thousands of interviews with portfolio and investment managers and having capital allocation responsibility both for others (at Protege Partners) as well as himself. He takes a look back at what he learned and peers into the future of a space that has many challenges.

https://www.amazon.com/Capital-Allocators-worlds-managers-invest-ebook/dp/B08N56SPN6/

Introduction

Ted's Background-

His experience at the Yale Endowment with David Swensen and lessons learned.

What does your BUSINESS do today?  Any particular lessons going strictly from the allocation industry into more of a media focus? How have you taken the amazing access you have to the capital allocation system and used it to build your media focus?

With this being your second book (the first is "So You Want to Start a Hedge Fund"), take us through the book writing process- how did you use the podcast to source material and whom were you writing the book for?

(As an aside, David is famous for having a [losing] bet with Warren Buffett that his allocation to hedge funds would beat an S&P 500 Index- he has talked about that frequently in other venues and WROTE ABOUT IT HERE.)

More specific questions on the Asset Allocation Space-

In synthesizing lessons from your interviews and balancing against your own experience, what was the most surprising common theme that resonated through them? 

Overcoming adversity (Pulling the plane out of the death spiral) . . . in the interviews and your experiences, how do allocators stop negative momentum?  Does career risk act as a natural stabilizer?  How big a threat is career risk for the asset manager and the allocator and how do you minimize that in the decision-making?

Manager selection as "predicting evolution" . . . how do you diagnose skill in a snapshot of time vs a culture of process evolution that will continue to persist?

The job description of CIO . . . (A question I didn't ask, but should have was "Have you ever had anyone from the search industry on?" . . . how do they navigate this insular world where neutrality and discretion is often pried?)

The Impact of ESG, not on investments necessarily, but the managers themselves?  What percentage of asset managers are people of color?  Women?  

It is six times more difficult for a manager to get a face-to-face meeting with an institutional allocator than a high school senior to gain acceptance at Yale or Harvard.  What is the future for new and emerging managers in this environment?  Who is doing good work on manager inclusiveness?

How does politics impact decision-making at the Board Level, Allocator Level, Portfolio Manager level?

Is there a study on the impact of life events on investment performance / process?  Is there a correlation?  Character- What percentage of CIO’s / managers are divorced/getting divorced?  Death in the family?  Have you hired private investigators to “peer under the hood”?  How prevalent are questionable practices / fraud?  How does that information get whispered?

Do you have a couple of trends in the allocator/asset management space that we should watch out for?

I thought your end section compared well with Jon Winokur’s book "The Portable Curmudgeon" on famous quotes (I loved it- particularly Greg Fleming's "Optimism is Moral Courage") . . . What were your favorite quotes from experts on various topics?

How to find Ted: www.capitalallocators.com

TWITTER: @tseides

https://capitalallocatorspodcast.com/

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

I see the concept of locating wealth and assets at the state level all the time for a variety of reasons . . . There has been only occasional talk of U.S. citizens exploring other citizenships.

At the federal level, US citizens are taxed on worldwide income no matter where they live. However, with a new regime in Washington (and wealth tax initiatives) , there seems to be more interest in foreign citizenship options.

To help make sense of the myths and the current climate, I spoke with David Lesperance. He is a top International Tax and Immigration Advisor with his Gadanz, Poland based firm, LESPERANCE AND ASSOCIATES.

Citizenship Diversification

-Who should be interested in this and why?

-How prevalent is it?  6045 in 2020 (How many estate tax returns were there?)

Jurisdictional Arbitrage

-Why would you do it?  Taxes, ideology, other reasons?

-If you are a US citizen, what's the process? 

-How much does it cost? (Including the calculation of exit tax of 40 pc of net worth)

-What are the usual places to "go"?

-What are the rules of engagement once you're "out"?

-What is the concept of "back-up citizenship?"

Future legislation-

-Are you putting yourself on "Bad Lists"?

-The Dangers of a Wealth Tax for wealthy people . . .

-Step Up in basis removal?

-The increasing cost of "Citizenship Insurance"

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

The 75th "Wealth Actually" Podcast . . . Wow . . . it seems like I just started this project a few months ago. It has been 4 and a half years since the first one . . . it's alarming how fast time flies. Hopefully, I have improved over time!

This 75th recording is an industry specific interview, but it has wide ramifications. In getting up to speed on a different project, I stumbled across the book "Ethics for Trustees 2.0" by MARGUERITE LORENZ. Based in California, Marguerite is a Master Trustee and the Managing Partner of LORENZ PRIVATE TRUSTEES.

https://www.amazon.com/Ethics-Trustees-2-0-Guide-Trustee/dp/172837278X/

Ethic for Trustees 2.0 is a quick and extremely informative read on the roles and responsibilities of a trustee and the establishment of good practices around decision-making that involves judgment and discretion. It also went into some detail about the California licensing component of individual trustees- something I knew little about. So in typical "me" fashion, I called up Marguerite to find out more about the book and her firm's unique practice. That led to her gracious appearance on the latest "Wealth, Actually" podcast.

We covered:

-Her unique background and the formation of her private trustee business. (It has its own unique succession story too!)

-Marguerite's rationale and experience in writing the book

-The Definitions of a Trust, their uses and some of the nomenclature

-The Duties of a Trustee/Fiduciary- (many of which trustees aren't aware of)!

-What makes a good trustee?  How does one deal with arguing beneficiaries? Tricky assets?

-The Origin of CALIFORNIA LICENSING FOR PROFESSIONAL TRUSTEES (and why it may be important for normally exempted attorneys and CPAs to get licensed.

-When does advice graduate from being to transactional to ongoing and how does it relate to administration of structures and discretionary decision-making?

-Traps for the unwary trustee 

-What functions or areas of trustee responsibility are good to ask for help? When do you bring in outside experts?

-Useful Resources and Groups:

INDEPENDENT TRUSTEE ALLIANCE

ESTATE PLANNING GROUP NETWORK

-How do we stay in touch?

MARGUERITE LORENZ LINKEDIN

LORENZ PRIVATE TRUSTEES (WEBSITE)

MARGUERITE LORENZ TWITTER

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/