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Daniel de Visé

A great way to make a household budget for 2024, financial planners say, is to look at how you spent money in 2023.

You might call it data-driven budgeting: Before you create a spending plan for this year, analyze how you allocated funds last year, to see where your money actually went.

“You need to figure out what happened in the past to have a roadmap going forward,” said Lili Vasileff, a certified financial planner in Greenwich, Connecticut.

Some financial experts term the exercise “backward budgeting,” or “reverse budgeting.”

(Confusingly, a quick internet search reveals another budgeting technique that bears those names. It’s based on the principle that you pay yourself first, assigning money to savings before you pay other expenses.)

‘Data-driven budgeting’ can be daunting: A budget app can help

Whatever you call it, data-driven budgeting is a daunting exercise. To do it right, you must pore over hundreds or thousands of expenses and assign them to categories: Streaming services. Take-out coffee. Meal deliveries. Out-of-pocket medical expenses. Housing costs. Veterinary bills.

A budget app can help. As NerdWallet explains, the purpose of budgeting software is to categorize and track spending and to show where your money is going.

Randy Bruns, a certified financial planner in Naperville, Illinois, used a budget app to track his spending last year. He and his wife felt that they were overspending, but they weren’t sure for what.

“We figured out we were spending a ridiculous amount going out to dinner,” he said. “It was absurd: Thousands of dollars a month, just going out to dinner. And we figured out that the big spike was in summer” when warm weather lures suburban Chicagoans out of their homes.

Many of us set budgets based on how much we would like to spend, with little regard for how much we actually spend. Such budgets might be termed aspirational or “forward” budgets.

An ‘aspirational budget,’ not based on actual spending, can swiftly fail

An aspirational budget can be great for ratcheting down expenses, experts say, by challenging you to spend less on things you don’t really need. But it can also meet with swift failure.

“If you’re budgeting without looking at, let’s call it the historical data, you’re starting from a place that isn’t tethered to anything,” said Jonathan Duggan, a certified financial planner in Frederick, Maryland.

Duggan recently examined his own spending and found that it varied dramatically from month to month.

“I have three cats,” he said. “I take them all to the vet basically one time a year, and so in December, there’s going to be a big vet bill coming up. I play a lot of golf in summertime, so my summer months are going to have a bigger recreational budget than my winter months.”

With clients, Duggan said, “what I tend to see is that most people’s spending is too lumpy to really get an accurate picture when one is only looking over a one-month period. What I mean by ‘lumpy’ is things like vacations, doctor’s visits.”

Duggan recommends that consumers review their spending over an entire year to capture the full picture.

“An ideal time to do this is either the end of the previous year or the start of a new one,” he said.

Melissa Cox, a certified financial planner in Dallas, said she is taking on more and more clients who “are not really sure where money goes.” She helps them comb through transaction records to better understand their monthly spending.

Some clients didn’t realize how much they were spending on Amazon impulse buys or Starbucks coffee. One woman had no idea she was shelling out $500 a month for in-app purchases in online games.

“A lot of the time, there’s going to be fat to trim,” Cox said. “Let’s maybe limit it to $200 in-app purchases for the first month. Maybe they realize they can make Starbucks at home.”

Tracking our spending has never been more important

Tracking our spending has never been more important, finance experts say, because so much of it plays out in automatic payments and one-click purchases, transactions we might barely notice.

“It was never easier to spend money without realizing it,” said Christopher Lyman, a certified financial planner in Newtown, Pennsylvania. “Every company wants you on an automated subscription, and there’s a reason why. It continues to draw money out of you without you realizing it.”

All of those auto-pays make it easy for people to lose track. One of Lyman’s clients estimated his spending at about $4,500 a month. Lyman ran some numbers and determined the client was spending nearly twice that much.

“Knowing how much you actually spend is very eye-opening for people,” he said.

Lyman sits down periodically to review his own spending. He stores his transaction records and monthly budget in Quicken, the personal finance app.

A middle-age Millionaires’ Row:Average 50-something now has net worth over $1 million

The last time he reviewed the numbers, Lyman decided too much of his budget was going toward the supermarket. “We were spending $2,400, $2,600 a month just on groceries,” he said. “That’s not even dining out.”

His family resolved to “empty out our pantry, empty out our freezer.”

After that, he said, “we really just focused on one grocery store, signed up for the rewards program. We’ve cut our grocery bill essentially in half, just by being cognizant of what we’re buying. If this item’s 50% off because they’re clearing out the shelves, stock up. We just bought 20 bottles of olive oil.

Procyon Partners has brought on Harry Kirkpatrick to serve as chief revenue officer.

Procyon Partners, the $6.5bn RIA backed by Dynasty Financial Partners, has hired a chief revenue officer, the firm revealed on Wednesday.

Harry Kirkpatrick is joining Procyon from NEIRG Wealth Management, where he’s served as chief operating officer since May 2023, according to his LinkedIn profile.

‘Over the course of my career, I have been proud to help financial advisors hone their skills and mature in the industry, so that they in turn can offer their clients superior service,’ Kirkpatrick stated. ‘I am excited to work with Phil and the team to design a development program to further enhance the talents and expand upon the services at Procyon.’

Procyon chief executive Phil Fiore told Citywire that Kirkpatrick’s primary responsibility will be working with the firm’s financial advisors to get the best out of them.

‘It’s no different than bringing in a trainer or coach for professional athletes,’ Fiore said. ‘I think of our financial advisors as professional athletes. Our skills have to continually be refined. They’re literally going to have an exec at the firm at their disposal to be able to spread their wings as far as they want to spread them.’

Prior to his time at NEIRG, Kirkpatrick spent six years at financial planning platform Facet, where he last served as chief revenue officer. He was also chief case designer at Pinnacle Financial Group from 2015 to 2017, his LinkedIn profile shows.

Employee-owned Procyon has been  affiliated with Dynasty since 2017. In 2021, the firm merged with New York-based Pivotal Planning Group, the first time two Dynasty RIAs combined.

Fiore said Kirkpatrick’s hiring kicks off what he expects to be a strong year for Procyon.

‘We’ll celebrate seven years in June,’ he told Citywire. ‘I really believe ‘24 could be one of our breakout years. Not only from an organic growth standpoint, but inorganically, too. The pipeline is certainly robust.’

Lead generation platforms are ‘worth exploring’ but advisors prefer other approaches.

If you’re looking for new ways to prospect for new clients this year, be prepared to be disappointed.

It seems most advisors prefer to stick with what they’re already comfortable with – networking and referrals.

Even though there are several lead generating platforms that assist advisors with identifying prospective clients, from SmartAsset to Catchlight and FP Alpha’s Prospect Accelerator, several advisors say the platforms aren’t working the way they’re supposed to.

“I have used a couple of different leads services in the past and found that they were not very helpful because they would not segment by gender, and my clients are women,” Liz Windisch, certified financial planner at Aspen Wealth Management, wrote in an email. “I didn’t feel that there was as good of an ROI as I would like since I had to pay for prospects that I was uninterested in. I asked to only have women sent to me, and the were not willing to do that, so I no longer use leads services.”

Some advisors who do use the services, like Jeff Ferrar, chief operating officer and managing director at Procyon Partners, say they provide OK-quality leads.

“I describe it a little bit like fishing with a gill net,” he said. “You can be doing other things, while SmartAsset (or Catchlight) is out there trying to find you leads, and they’ll let you know when there’s a fish in the net or prospect.”

The two biggest areas his firm gets leads from, Ferrar says, are good old-fashioned referrals from happy clients and referrals from professional centers of influence.

“Referrals are probably still the No. 1 generator of clients,” said Sean Lovison, financial planner and founder of Purpose Built Financial Services. “If you get a referral from somebody, those leads tend to turn into actual clients at a much higher rate.

“The main way that I’m prospecting for new leads is a combination of tried-and-true networking locally, and leads generated from just seeing my name in the news. Two of the leads that I’ve just talked to within the last two weeks were both generated that way,” he said.

Catherine Valega, financial advisor with Green Bee Advisory, said prospecting is all about taking great care of her current clients.

Valega plans to incorporate tax planning into her practice this year, as a new IRS enrolled agent, which allows her to do tax prep and expand her client service offering, hopefully attracting more clients as well.

At the very least, Chuck Failla, president and CEO of Sovereign Financial Group, says lead generating platforms are worth exploring but he also offers a fair warning. “There’s a valid business proposition to be had by those companies,” Failla says. “Just make sure your expectations going into it are good because you need to give it a good six to 12 months before you start really seeing some results. Don’t expect each lead to turn into a client. Sometimes you have to work a good number of years to get those numbers to come to fruition.”

Advisors say the age at which people retire and the definition of retirement are changing.

December 14, 2023 By Josh Welsh

Many Americans’ lives consist of going to school, getting a job, buying a home, having a family and saving for a nice retirement. For Gen Xers, on the other hand, that doesn’t seem to be the case – at least when it comes to retirement.

As the cost of living continues to go up, so do the dreams of Gen Xers who would like to retire, according to the latest survey from Schroders.

Schroders found that Gen Xers – non-retired Americans between the ages of 43 and 58 – on average think they need $1,112,183 in savings to have a comfortable retirement, yet they expect to have just $661,013 saved.

While these results may paint a grim picture, advisors say it’s anything but.

“Most clients I’ve talked to, they’re not looking to do a hard stop in retirement, like hit a certain age and be 100% done, they’re just looking to downshift,” said Jeff Farrar, chief operating officer and managing director at Procyon Partners.

Ferrar, who’s considered Gen X himself, said the definition of retirement is changing and so is the age.

“If you’re still working, even if it’s part-time or a different job, that helps the retirement goal, because you’re still bringing in some cash flow with the longer ability to save,” Ferrar said.

Liz Windisch, certified financial planner at Aspen Wealth Management and also a Gen Xer, said it’s OK for Gen Xers to seek assistance with retirement planning.

“It’s time for them to get professional help,” she says. “I’m not just saying that because those are my clients, but you’re running out of time, and having a professional help you can make a huge difference. It’s time to buckle down, figure out what they need to do.”

The study also found 61% of non-retired Gen Xers aren’t confident in their ability to achieve a dream retirement, compared to 49% of millennials and 53% of non-retired baby boomers.

Generation X – also known as the latchkey generation given their independent childhoods since both parents were working – is preparing to take care of themselves, Ferrar said, with less support from Social Security in retirement.

The Schroders report found just 11% of non-retired Gen Xers say they will wait until 70 to receive their maximum Social Security benefit payments, with 47% concerned Social Security will run out.

“Waiting until they’re 70 to claim Social Security would be a tremendous help if they’re able to do that. It’s something that they should very seriously consider,” Windisch said.

Additionally, 45% of non-retired Gen Xers say they have not done any retirement planning, compared to 43% of millennials and 30% of non-retired baby boomers. With 84% of Gen Xers saying they’re concerned or terrified about the idea of no more regular paychecks in retirement, many still feel the need to keep working.

“I actually have a lot of clients who are very well prepared for retirement,” Windisch said. “They’re terrified of not having a paycheck. They’re still working, even though a lot of them probably could retire or retire soon.

“It’s a long time to live,” she added. “If you retire at 58, you might have 40 years in retirement and that is just a really scary thought.”

The Accenture Life Trends 2024 report found that with the average life expectancy increasing to 78, funding retirement is very different now than it was even 20 years ago. This also comes with long-term planning. 48% of respondents surveyed make plans less than a year ahead, or don’t at all.

“As people are living longer, retirement income products haven’t evolved very well,” said Scott Redell, managing director at Accenture. “Advisors often aren’t really equipped to talk about that with investment and kind of plan in the right way.

“Product-wise, there’s a lot of gaps and silos as well,” he said.

For those Gen Xers who want to start saving for retirement, Ferrar advises clients to “spend less than you earn and invest the difference wisely.

“I’d say the generation is not pessimistic, they’re optimistic,” he added. “They’re in their prime earning years. Their families are growing, kids are graduating from college. They’re just getting ready for the next chapter of their life.”

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In honor of Veterans Day and National Veterans and Military Families Month, we’re pleased to present ThinkAdvisor’s 12th annual Advisors Who Serve(d) compilation, in which we highlight stories of veterans in the advisory world, told in their own words.

Advisors Who Serve(d) highlights financial advisors and other industry professionals who have served or are serving in the military.

This year’s compilation of advisors’ stories debuted on The Fourth of July.

This group of eight stories and photos is arranged in alphabetical order so you can keep track of advisors as you scroll through. Maybe you’ll even recognize a few faces along the way.

Michael Ball

Title/company: Financial Advisor / Edward Jones

Branch: U.S. Navy

Rank held at beginning of service and at end: Ensign / LT Commander

Service dates: 1999 – 2019

Work you did: Surface warfare and retired out of U.S. Special Operations Command

Brief story that stands out from your service time: There is nothing better than returning from deployment with everyone safe and sound. A highlight was always seeing the new fathers who were meeting their little ones for the very first time and all those who were reunited with families after being deployed to the combat zone. No matter if it was my first deployment or my last, the feelings were always the same, with the same intensity of love, joy, and comradeship.

Chuck Carrick

Title/company: Managing Director / Beacon Pointe Partner

Branch: U.S. Army

Rank held at beginning of service and at end: Private E-1 / E-5 in the National Guard, upon later graduating from college and achieving 2nd Lieutenant status

Service dates: 1977 – 1981 Regular Army, 1981 – 1984 National Guard and Reserves

Work you did: 3rd U.S. Infantry Regiment (The Old Guard) Ft Myers, Virginia, spending 2 years as a Sentinel at the Tomb of the Unknown Soldier

Brief story that stands out from your service time: I was fortunate to serve in a time of peace, however many of the leaders I served under were Viet Nam veterans. They taught me about dedication, honor, sacrifice, and teamwork. These soldiers helped to ensure that we truly understood the incredible honor we had to be sentinels at the Tomb of the Unknown Soldier. A place where families from across the country came to connect and honor those who sacrificed everything so that we could enjoy our freedoms.

David Chepauskas

Title/company: Senior Wealth Management Adviser / Summit Financial, LLC

Branch: Field Artillery branch

Rank held at beginning of service and at end: 2nd Lieutenant / Major

Service dates: 1977 – 1990

Work you did: I graduated from the US Military Academy at West Point in 1977, as a Second Lieutenant choosing to enter the Field Artillery branch. After attending officers’ basic artillery course (OBC) in Fort Sill Oklahoma, I was stationed with the 101st Airborne Division in Fort Campbell Kentucky for five years.

Brief story that stands out from your service time: I commanded a field artillery firing battery for two of those years as a first lieutenant. After completing the field artillery officers advanced course (again at Ft Sill), I had the privilege of commanding the largest artillery battery in the US Army, stationed in Berlin, Germany.

This was a unique assignment, living in a walled in city over 100 miles inside a communist country (which most Americans did not realize), during the Cold War. The city of Berlin was surrounded by multiple Soviet Divisions, and we had a single Brigade; we were outnumbered many times over. Interestingly, we were able to travel through Checkpoint Charlie into East Berlin.

I often say that seeing a communist country in 1990 during the Cold War was perhaps the best advertisement for capitalism one could imagine. Crossing through Checkpoint Charlie from West Berlin, a bustling metropolis like Manhattan or Paris, into East Berlin, was like walking into a black and white movie from the early 1900s. The city buildings still had not repaired many of the bullet holes 45 years after World War II ended. The seeming attraction of an 11 to 1 currency exchange rate would presumably enable a 28-year-old to purchase things we normally couldn’t afford on a Captain’s salary. To our surprise, it apparently didn’t matter how much money we had available; there was virtually nothing to be purchased. The department store front windows would display fine German crystal and dishware, collectibles, cameras, etc. But when we went inside to purchase, we found that they were only there for show; nothing was actually available for purchase. People would wait patiently on long lines to buy rotten fruit. Shabbily dressed citizens drove East German-made vehicles which seemed too small to fit into. The primary source of heat was coal, giving one a headache from the fumes by the end of the day.

Upon completion of my German tour, I was accepted to teach on the West Point faculty, so I was sent for a master’s degree at the University of Georgia. As a faculty member at West Point, I attended night classes for a second master’s degree in business. It was there that I took a finance course, deciding that I wanted to make a career in finance.

Sandra Cho

Title/company: President / LPL-affiliated Pointwealth Capital Management

Branch: U.S. Navy Reserve

Rank held at beginning of service and at end: E03 (Petty Officer 3rd Class) / E02 (Petty Officer 2nd Class)

Service dates: 2002 – 2005

Work you did: Journalist, now it’s considered Mass Communications

Brief story that stands out from your service time: At the end of boot camp, Chief said to all the female recruits that we could pick out a movie to watch at the end of our last night. He read out loud the names of 30 videos. After hearing the last movie name we all screamed and cheered and picked that one unanimously. He threw his cap on the ground and said, “Damn! I’m sick of watching G.I. Jane!”

Richard Dickson

Title/company: LPL-affiliated Financial Advisor / Galene Financial

Branch: U.S. Army

Rank held at beginning of service and at end: Private / Captain

Service dates: 1990 – Oct 2000

Work you did: 734th Company EOD

Andy Leung

Title/company: Private Wealth Advisor / Procyon Partners

Branch: U.S. Marine Corps

Rank held at beginning of service and at end: 2nd Lieutenant / Captain

Service dates: 1990 – 1997

Work you did: Combat Engineer and Executive Officer of Marine Corps Security Forces

Brief story that stands out from your service time: The Dayton Accords were signed in 1995 signaling the end for the war in Bosnia. NATO immediately deployed as the peace keeping forces in Sarajevo. Our Marine company in Naples was the most forward deployed US units and were attached with days notice to the NATO Headquarters being established in Sarajevo. We worked jointly with units from the other NATO members to include French, British, Turkish, Italian Greek and others to stabilize the area. The lessons learned was always be prepared, be flexible and work together to get the job done.

Gregg Shallan

Title/company: Managing Director – Investments / Wells Fargo Advisors
Branch: U.S. Navy

Rank held at beginning of service and at end: Ensign / Commander

Service dates: 1981 – 2001

Work you did: Naval Special Operations Officer (EOD)

Brief story that stands out from your service time: I spent 20 years as a Navy Special Operations Officer (EOD). As an EOD Technician, we were responsible for rendering safe all types of unexploded ordnance, from mines to IEDs to nukes, around the world, on land or underwater. I experienced the joy of traveling around the world, the wonder of new cultures and the responsibility of serving as a Commanding Officer. But to me, the most special takeaway from my service was the privilege of being part of the Specops/EOD community This was an all-volunteer outfit that accomplished amazing missions in an inherently hazardous environment. As a young officer, I learned to keep my mouth shut and ears open. I learned to trust my teammates in high-pressure situations, and to work harder than I had ever done before, just to keep up. I learned that every person had a talent, and it was up to us to discover it, nurture it and refine it, which would invariably lead to a much stronger organization. To look back on my career, and know I was a part of this elite force, gives me the confidence that I can handle anything that life throws my way.

Daxs Stadjuhar

Title/company: National Managing Director LPL-affiliated Mariner Advisor Network

Branch: U.S. Army

Rank held at beginning of service and at end: 2nd Lieutenant / Captain

Service dates: 1995 – 2002

Work you did: Infantry Officer – Over my 7 years I was a Heavy Weapons Platoon Leader, Rifle Company Executive Officer, Aide-de-Camp to a Brigadier General, Support Platoon Leader, Strategic Plans Officer, and a Air Assault Company Commander for Charlie Company, 2-502nd Infantry, 101st Airborne

Brief story that stands out from your service time: My time in the Army and the mentorship by great leaders is one of the things that has made me who I am. I could tell stories of “close calls” and “what if’s” but the best part of the Army was meeting my wife when I was serving in South Korea between 1995 and 1999. She was serving as a Military Intelligence officer and after our first date I knew she was the one. I proposed after only 4 months and we were married several months later when we took our mid-tour leave. No one can deny that marriage is hard, but it can be even harder in the military when you are trained to put the Army first. During those tough times we always fell back on the fact that you never quit at anything. We were trained to always keep running, always do more pushups, to keep climbing the hill even though you were exhausted. While those brute strength approaches can work in training and deployments, they don’t always work in a marriage; unless you flip the script. You can learn to listen harder and you can learn to close your mouth longer. I look back on those early years and the fact that we continued to tell each other that we were not going to quit on our marriage. That same attitude has helped both of us in our education, raising our children, and building businesses. You have probably never heard of someone saying the Army saved my marriage, but it sure did in my case, and much more. 

Affluent investors have been pouring money into separately managed accounts and turning slightly away from mutual funds, a new consumer research report shows.

As of 2022, 22% of U.S. households that invest had SMAs, up from 13% in 2020, according to data published Thursday by Hearts & Wallets. Meanwhile, mutual fund ownership went from 38% to 39% during that time frame.

“I look at the decline of the mutual fund with sadness, but it’s getting replaced by other vehicles that are much more modern and accomplish the same things,” said Laura Varas, CEO of Hearts & Wallets.

“I’m a fan of the mutual fund as a way to get mass access to capital markets,” Varas said. “It initially was quite democratizing, in terms of bringing managed products, the expertise of portfolio managers and knowing someone was watching over your investments, to millions and billions of Americans.”

But SMAs aren’t taking the entire financial advice business by storm — the increase in ownership is rising most among households with $3 million or more to invest. For those investors, use has doubled over two years, going from 22% in 2020 to 41% in 2022, the Hearts & Wallets data show. And those investors are funneling their money into SMAs, allocating 29% of their overall portfolio to them last year, up from 22% in 2020.

“In the past, people said SMAs were sold, not bought,” Varas said. “I’m not sure that’s true anymore.”

Interest among clients has been mixed, several financial advisors said.

“Clients are perfectly happy still being in mutual funds, but I am seeing increasing interest in SMAs” as the latter “are becoming more affordable/lower cost and having lower account minimums,” Carla Adams, founder of Ametrine Wealth, said in an email.

Investors’ use of environmental, social and governance considerations has been a driver of SMAs, Adams said. Since people can disagree about what “socially responsible” is, mutual funds are not always the right fit.

“I have a client who does not want to be invested in ‘junk food companies,’ which is not a screen for ESG mutual funds,” Adams said. An SMA allows the client to choose which companies they are OK with holding, she noted.

The use of SMAs has risen along with the switch to fee-based accounts over the past two decades, said Brian Clarke, owner of Clarke Financial Counsel, who charges clients through an hourly rate. The ongoing charge can also be preferrable to the front-end charge on mutual fund A shares, which can be as high as 5%, he noted.

“An advisor might have decided to change their business model to build up a stream of recurring revenue. The SMA provides this,” Clarke said in an email.

Another advisor, Jeff Farrar, co-founder of Procyon Partners, said that ETFs are winning clients’ interest over mutual funds, while SMAs remain flat.

“But the fees and other deltas between all three investment vehicles are converging,” Farrar said in an email, noting that the firm is “agnostic between the three and use what makes the most sense for each client and their preferences.”

The new Hearts & Wallets report is based on responses from nearly 6,000 people surveyed last year, and it includes data in the firm’s existing database on consumer buying patterns for more than 70,000 households.

A separate but encouraging finding from the survey is that more people are aware of what they’re invested in, Varas said. Ten years ago, 55% of people said they knew what investment vehicles they owned, and that rate increased to 77% as of last year, she said. “The product awareness gap has almost disappeared.”

Interest in SMAs may also have had an effect on clients’ engagement, Varas said. “I think the rise in engagement with taxable accounts is related to SMAs, because SMAs are the perfect vehicle for taxable accounts.”

But something that may have helped boost SMAs was the pandemic and the need for liquidity, she noted.

“If Covid taught people anything … it’s to be prepared for a big [financial] shock,” Varas said.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

I came to know a gentleman who, years before we met, sold the business he and his late father had operated for more than three decades.

He did very well in the transaction but failed to prepare his family for the “sudden wealth” that poured into their lives. Lacking adequate guidance, some family members spent too much, and others made impulsive financial decisions. Soon enough, rifts developed as a lack of sound financial planning and management. The mistake resulted in missed opportunities, squandered resources, and hurt feelings.

Life changing

1. The need to focus your time and effort on finding a buyer and executing the deal; and

2. The need for continuous personal and family wealth management – a process that can foster an enduring legacy of multi-generational prosperity.

Other financial considerations in and around the sale of a family business include doing right by employees and weighing the best U.S. locations for owners to reside before and after the deal is done.

Steps to take

A successful business sale stems from meticulous preparation – which includes these six tasks:

1. With help from accountants, lawyers, and business brokers, owners must gather and organize financial records, contracts, and other vital documents. In this, and at every stage leading to the actual sale, confidentiality is paramount. To keep from unsettling employees, suppliers, and customers, share sensitive information exclusively with trusted advisors and, eventually, with qualified buyers who have signed non-disclosure agreements.

3. As a seller, work closely with your financial advisors and accountants to:

    • Ensure that your financial statements are accurate; and
    • Identify areas for improvement.

4. Another task on the way to a business transaction is a 360-degree checkup on business insurance, employee benefits, and retirement plans to ensure everything is optimized for sale.

5. Next up (and perhaps most important) is crafting a narrative. You can call this a “targeted marketing strategy,” but it boils down to telling a truthful and compelling story that highlights the strengths, competitive advantages, and growth potential of your business. Work with confidential advisors to craft a clear story designed to resonate with would-be buyers.

It can be difficult, but securing a great sale requires maintaining your patience and composure through the inevitable ups and downs of working toward a deal.

The sale of a family-owned business can result in substantial financial gain and should be planned for years in advance. Working with wealth-management professionals with experience in sudden-wealth transitions is the best way to prepare. Collaborating with you, these experts can help you:

  • Craft a comprehensive financial plan that addresses long-term goals, risk tolerances, and family values;
  • Educate family members on responsible money management, including the psychological impacts of sudden wealth, and the need for open and frank communication;
  • Embrace a legacy mindset by developing a plan for passing wealth, values, and wisdom to future generations;
  • Establish effective family governance structures to ensure communication, decision-making, and wealth transfer across generations;
  • Build a reliable support network of trusted advisors – perhaps in the context of family office services associated with ultra-high-net-worth families;
  • Preserve and grow wealth through diversification, risk management, and other protective measures;
  • Adapt lifestyles – including optimal places of domicile – in ways that balance prudent financial management with the business of enjoying life;
  • Explore philanthropic opportunities aligned with family values, establishing a lasting legacy – and a source of family cohesion in the absence of an operating business;
  • Prioritize family members’ emotional well-being and make support available when and as needed. New wealth can cause great stress for some; and
  • Safeguard privacy and physical security.

Defining characteristics

In my experience, family business owners who thrive after selling the enterprise have these three traits in common:

1. They keep their egos in check enough to seek second, even third, opinions from independent experts.

2. They choose capable professional advisors: Experts who can see beyond their expertise and are happy to function as members of a team working on their client’s behalf.

3. They entrust oversight of their team of professionals to a qualified fiduciary advisor who can coordinate accountants, attorneys, insurance agents, business brokers, etc.

Selling a family-owned business ushers in new priorities. By adhering to best practices for the sale and addressing wealth-management considerations before and after the deal is inked, families can confidently navigate a new world of wealth.

Selling a business and managing sudden wealth calls for guidance from trusted advisors and a consistently mindful approach. Striking this balance bodes for a prosperous future where the legacy of your family is secured, and future generations can thrive.

Daniel de Visé

Once upon a time, banks rewarded customers who opened savings accounts with stuffed lions, canvas totes – and interest. Lots of it.

Those days are gone. The average savings account now yields about 0.45% annual interest, according to the Federal Deposit Insurance Corp.

Rates remain stubbornly low for savers even as banks charge ever-steeper rates to borrowers: The prime lending rate – the interest that banks charge their most creditworthy customers – stands at 8.5%, its highest mark in two decades.

“Most consumers have not realized that they’re being taken advantage of,” said Odysseas Papadimitriou, CEO of WalletHub, the consumer finance site. “Unfortunately, the bigger the bank, the higher the likelihood that you’re not getting a fair interest rate.”

But that system has broken down in the last 18 months. The Fed raised the benchmark Federal Funds Rate from effectively zero to over 5%, a two-decade high. Banks did not follow suit.

“The banks have not kept up,” said Jeff Farrar, a certified financial planner and managing director of Procyon Partners in Connecticut.

Why not try to attract new customers and their money?

Because big banks are flush with deposits. That is partly a result of the pandemic and federal stimulus campaign, which encouraged the nation to save. And it’s partly consumer inertia. Bank customers trust the big brands, and they tend to stay put.

Customers don’t change savings accounts

“We found that, on average, Americans have had the same checking account for 17 years,” said Ted Rossman, senior industry analyst at Bankrate. “And banks know it well. It’s a very ‘sticky’ business.”

In a 2023 survey of 3,674 adults, Bankrate found that only 1 saver in 5 earned an interest rate of 3% or higher, he said. “And 3% is a pretty low bar.”

Some options leave investors free to withdraw the funds at whim, just like an ordinary checking account. Others require leaving the funds untouched for a few months or a year.

“We’re talking the best savings rates we’ve seen in a long time,” Rossman said. “A lot of people could be doing a lot better.”

Older Americans remember when banks competed for their savings, offering premiums, perks and serious interest. Rates on ordinary savings accounts reached 8% in the Reagan ‘80s when the prime rate soared into double digits.

Since the Great Recession, by contrast, savings accounts have yielded less than 1% a year, on average. Those rates mirrored the Federal Funds rate, which was effectively zero for many of the past 15 years.

Fallout from SVB banking crisis:Banks may be hiking savings rates to hold on to customers

That fact may partly explain why many people don’t save much in banks. The median American family held only $5,300 in checking, savings and money market savings in 2019, according to the most recent data from the federal Survey of Consumer Finances.

Here, then, is the good news: Higher interest rates are only a few clicks away.

Look into the best high-yield savings accounts

A quick online search yields dozens of offers for bank savings accounts that pay annual interest in the 4% to 5% range. Motley Fool Ascent and WalletHub, among others, offer regular roundups.

Many offers come from banks that aren’t quite household names: UFB. Valley Direct. Bask.

The feds cover up to $250,000 per depositor, per bank. As long as the offering bank has FDIC backing, experts say, it should be a safe home for your money.

Many high-yield accounts sit in banks that are online-only. There’s no way to drive to a branch and meet with a teller.

If you’re change-averse, consider keeping that checking account you’ve had for 17 years and opening a new high-yield savings account.

“You can open one of these accounts, seriously, in just a few minutes online,” Rossman said.

Other options abound.

Money market accounts

One is the money market account. They are offered by banks and credit unions with the backing of the FDIC or National Credit Union Administration. They generally aren’t as flexible as savings accounts: You may not be able to move money in and out quite so easily.

“They’re kind of a step above a savings account,” said Ed Snyder, a financial adviser in Carmel, Indiana. “Still very liquid,” meaning that funds can easily be converted to cash.

Check out the best CD rates

Savers who don’t expect to withdraw their money in the near future might consider certificates of depositBanks offer CDs at comparatively attractive rates, with FDIC backing. In return, the depositor agrees to leave the money in the bank for a set time: a few months, a year, or 10.

In the past, banks generally rewarded customers with higher rates for CDs with longer terms. In 2023, however, rates favor the shorter-term investor. Short-term rates are high because investors expect rates to fall over the long term.

What makes all of these options so appealing, experts say, is that they carry almost no risk.

Amassing generational family wealth often takes years of discipline, planning, and sacrifice. Yet, it is widely reported that 70% of families who have the attributes needed to build wealth will lose it all by the second generation (fortune recommends, Dec. 14, 2022).

How could this happen?

No two families are the same. Naturally, families have a variety of quantitative and qualitative differences that dictate how decisions are made for the benefit of the family and future generations. However, all families face similar challenges in managing their wealth and creating legacies. And, all families need processes in place to control emotions and mitigate drama while making family decisions. Without these backstops, families put themselves at risk of making a number of common mistakes.

This primer is an overview of the risks associated with common issues high-net-worth (HNW) families face and how to navigate them.

Family education

Educating the next generation on how to manage wealth is the most critical aspect of leaving a multi-generational legacy, making the lack of financial education the biggest risk to the family. It is estimated that 70% of families lose their wealth by the second generation and 90% by the third. Clients need to be forward-thinking about how to build knowledge around financial education within the family, what topics to discuss and when, how to spend money, how to invest, and how to make financial decisions.

I encourage clients to invite their kids to conferences and leverage relationships to obtain different internships to build foundational knowledge across industries. Families can use various tools, from flashcards to bring up different topics, to hiring experts to guide the family through different family planning dynamics.

Particularly after a year like 2022, it is not a secret how volatile public market can be. Over the last ten years, S&P Index Proxy (SPY) has returned +12.16% per year with a 14.81% standard deviation. When constructing a portfolio, I believe in utilizing a version of modern portfolio theory (MPT). Developed by Harry Markowitz in the 1950s, MPT is a mathematical framework used to weigh the exposure within the portfolio such that the expected return is maximized for the given level of risk. I prefer to partner with top-tier investment managers across all asset classes, but MPT works with core satellite approaches as well (more passive core exposure) if implemented correctly. The key is understanding the risk you are taking within the markets and ensuring you are getting the maximum return possible for that level of risk. All public market portfolios should be supported by back-testing and scenario analysis for potential crises.

In addition, families who hope to perform well investing in public markets should have a rebalancing process. Markets are efficient, meaning they digest information quickly and reflect an opinion of a sum of all the data, but at times, the degree of efficiency can oscillate, causing dislocations. Families who have an unemotional rebalancing process can take advantage of those dislocations and compound significant wealth over time.

Private Markets

HNW families are usually involved in private markets to some extent, either through a family-owned business or by being invested in private equity, hedge funds or other alternative investments. Generally, alternative investments can offer diversification and balance the risk of a public market portfolio, but they are usually more expensive and illiquid, and it can be challenging to understand the risks associated with the investment.

In many instances, a family business created most of the family’s wealth. Often, families know their business extremely well but have challenges diversifying their wealth away from the family business because the family business is all they have ever known. I always say, ‘trade what you know,’ meaning it is okay to utilize the knowledge from your specific industry or expertise, but one can easily become overexposed to risks specific to it. Being realistic about the risk of the family business in current and future economic backdrops is vital to a family’s legacy. Establishing a process in which the family makes business and investment decisions will help reduce associated risks and set the foundation for decision­ making as the family evolves.

Real estate

The concepts highlighted thus far also pertain to a family’s real estate portfolio. Real estate can be an uncorrelated asset in a family’s overall portfolio, providing tax-advantaged income and diversification from other asset classes, and it is less volatile than most other investments.

That said, a family should look to build their real estate portfolio with an understanding of the associated risks with each property and location. All properties inherently have different factors that affect the income they produce, possible appreciation, and general risks. Families get comfortable with one location or one type of property, such as industrial buildings or student housing, usually because they get comfortable with a real estate sponsor in a specific location or who has specific industry expertise.

A real estate portfolio should be diversified across regions, with different demographics supporting the properties. The portfolio should have a diversity of stabilized, improvement and development projects. A family should create a process around vetting new real estate sponsors and doing their own due diligence on the projects. The family should have a vision of what the real estate portfolio should look like and understand any idiosyncratic risks to their strategy.

Hire Experts

“Risk varies inversely with knowledge.”

~David Swenson

A HNW family will naturally encounter various challenges and opportunities. It is paramount to have the right team (either internally or externally) to navigate them intelligently. Understanding your advisors’ backgrounds, experience, and expertise is vital to how and when a family leverages them. An experienced advisor can help you quickly conceptualize risk and recognize the intrinsic value of an opportunity. Your family should build a circle of advisors with different expertise to help with various projects and situations that your family will ultimately experience.

Jerry is a highly accomplished Senior Vice President and Senior Private Wealth Advisor at Procyon Partners, where he specializes in managing an exclusive clientele consisting of ultra-high-net-worth and high-net-worth individuals and families across the United States. His expertise lies in implementing an innovative and comprehensive approach via an outsourced family office model.

With his extensive knowledge of capital markets and risk management, Jerry adeptly guides his clients through the complexities of the financial markets. Prior to joining Procyon, he served as a Partner at Baker Tilly US, LLP, and was the Co-head of Baker Tilly Wealth Management, a Registered Investment Advisor (RIA). Before his tenure at Baker Tilly, Jerry held the position of Vice President and Wealth Advisor at Merrill Lynch.

Jerry’s professional background extends to his experience as the Chief Investment Officer (CIO) of a family office, where he assessed and advised on various investment opportunities, including real estate, venture capital, and private placements. Additionally, he served as the Director of Business Development for a payments company in the Midwest, where he actively participated in financial and operational due diligence for potential mergers and acquisitions within the payments industry. Early in his career, Jerry was the lead Cross-Asset Strategist and Senior Trader at the Private Bank of Credit Suisse in New York.

Jerry holds an MBA with a focus on portfolio management from the Gabelli School of Business at Fordham University in New York City. Additionally, he earned a Bachelor of Science degree with a concentration in Investment Management and Economics from Johnson and Wales University in Providence, RI. He is also a CFA Charterholder and CAIA Charterholder.

Outside of his professional pursuits, Jerry enjoys engaging in activities such as golfing, fitness, and cherishing quality time with his wife, two daughters, and their dog.

When I succeeded Alex Rosenberg as editor of Citywire RIA, I admit that one of the things that made me nervous about the role was the annual 50 Growers Across America report, which was his brainchild and had been his pride and joy since 2020.

Alex crunched the numbers we got from Discovery Data himself, creating a hefty Excel file that would frequently crash my laptop when I tried to open it. But as we got to work on this year’s 50 Growers project, I found out that my fears were largely unjustified. Sorting through the data to identify the fastest-growing firms in each state wasn’t a chore. In fact, it was pretty darn fun. As you read on, you’re guaranteed to find names both familiar (Creative Planning, Procyon Partners, Moneta Group) and unfamiliar (like Geometric Wealth Advisors, the RIA in Washington, D.C. that specializes in working with partners at Bain, McKinsey and BCG). The project got my team and I talking to RIAs all around the country. I’m happy to say we learned a lot. One fear was unfortunately realized: this year’s Excel file was, once again, a laptop crasher. Allow me to give you a brief refresher on how this project works before you dive into our interactive map. We use historical Form ADV data compiled for us by Discovery Data, then we run it through a layer of screens. We screen out RIAs that don’t include financial planning as one of their core services, as well as firms that are offshoots of broker-dealers and banks (firms whose advisors may be dually registered with a broker-dealer but maintain their own RIA entity are in bounds). Lastly, we screen out firms that primarily function as back-end service providers for advisory teams. Once we’ve done all that, we look at the eligible firms’ performance in 2022 across three categories: percentage growth in AUM, monetary growth in AUM, and percentage growth in employees. We crunch those numbers into a single figure known as the ‘growth factor’: the end result is what you can see here. As you’ll see, the competition is tougher in some states (New York, California, Texas) than in others (North Dakota, Hawaii). We take pride in our legwork on this: We reach out to firms for this report, they don’t contact us. Firms may not want to appear on this list (we have had angry emails in the past), but the numbers are the numbers. No one is paid or compensated for their appearance, nor are we. It’s all based on cold, hard numbers (which is particularly appealing for a statistics-obsessed baseball fan like myself). Deputy editor Andrew Foerch, senior reporters Sam Bojarski and Payton Guion, and myself reached out to every single firm that topped the list in each state. As you’ll see, not everyone was particularly eager to talk. But we did our best to give you a little bit of insight into how these firms tick and what might be behind their growth. Lastly, I’d be remiss if I didn’t thank Discovery Data for their assistance, as well as our former Citywire colleague Lara Mullen, who put together the laptop-crashing Excel document. Most importantly, I’d like to thank you for reading.

Ian Wenik

In July of 2021, Moneta chief executive Eric Kittner hired Matt Harlan to help his firm do something unusual.

Moneta, a $31bn RIA based in St. Louis, Mo., had recently chartered a new trust company in Kansas and needed someone to head up the business unit. Moneta had previously worked with a third-party trust services provider, which ‘was fine, and they did a nice job,’ according to Kittner. ‘But at some point, we needed more control over the service offering. We needed them to work with assets that were illiquid and real estate and more complex situations.’

‘The outsourced solutions just didn’t work the way we really wanted to,’ Kittner said. ‘We effectively started from scratch because that was the best way to really build a service model that we thought was going to work best for our clients.’

Harlan had spent the previous 19 years as the principal of the St. Louis Trust Company, and before that worked as a trust officer with Bank of America and Mark Twain Bank. Kittner tasked him with bringing Moneta’s new trust company, a wholly owned subsidiary, online.

And so he did. Moneta Trust has since gathered several hundreds of millions of dollars in assets, some from existing clients looking to replace their trust administrator and some from new clients looking to work with the firm for the first time.

Moneta’s effort to build a trust company from the ground up makes it something of a standout among its peers, but the firm is not alone in its ambition. Large, national RIAs are increasingly moving to bring trust services in-house, sensing that the line of business is a crucial component of the ‘holistic,’ multi-generational wealth management ecosystem that they aspire to offer.

Many, including Hightower, Mercer, Pathstone and Lido Advisors — all of which are backed by at least one private equity firm — have acquired trust companies to that end. Firms that aren’t quite ready to invest in bringing trust services in-house are bolstering their partnerships. Allworth, Carson Group and Procyon Partners — also all private equity-backed firms — have struck new deals this year with outsourcers and white-labelled trust providers.

‘This move towards trust and adding trust companies or trust services — either in-house or getting better with the outsourcing — is an evolution in how wealth management is done,’ said Carla Wigen, chief operating officer and head of trust at $13bn Seattle-based Laird Norton Wealth Management (LNWM). LNWM reverse engineered the trend, having started in 1967 as a trust company and since evolving into a full RIA. The firm last month opened a new trust office in South Dakota, which has among the most favorable trust-related tax laws in the country.

‘Wealth management is broader than just investing,’ Wigen said. ‘Trust is an integral part of that. If you don’t do that, are you really managing somebody’s wealth?’

Not (necessarily) about the profit

While trust services make sense as a piece of the service puzzle RIAs want to offer, it’s a complicated business model with its own host of regulatory issues, and requires specialized experience that generally falls outside of an RIA’s core competencies. Buying, hiring or developing that talent is a big expense, especially to ramp up a business that applies to a small segment of the average RIA’s clientele and doesn’t make as much money as investment management and financial planning.

This dynamic has led some RIAs to stick with their outsourced solutions — at least for now.

‘Right now, we just can’t make the business case to specifically be in the trust business,’ Captrust head of wealth management Eddie Welch recently told Citywire. ‘Can we be profitable at it? Are the margins right for us? Can we really be good at it? … We have outside partners who serve clients really, really well, and that’s all they do.’

RIA executives that have invested to bring trust services in-house assure that it’s not about opening up a new revenue line.

‘If it’s about retaining clients and growing the business and adding new, I don’t really care if the trust company generates a profit,’ Kittner said. ‘It’s not about that. It’s about enhancing the client experience and being in a position where we can continue to serve the clients the way they need.’

Lido Advisors president Ken Stern, whose Los Angeles RIA acquired $800m Enterprise Trust & Investment Company in August 2022, said that the value of an in-house trust business is that it helps boost client retention across generations and exposes the firm to a new pool of clients.

‘As far as the margin, you’re able to work with that client for a much longer period, and you have a deeper relationship with the family,’ Stern said. ‘Just take your numbers out a couple more years, and the business case, the value add, is very apparent.’

Matt Fleissig, chief executive of $100bn Englewood, N.J.-based multi-family office Pathstone, said an in-house trust business is a necessary feature of a truly enterprise-level wealth management firm. With that goal in his sights, Pathstone acquired $35bn Wyoming trust company Willow Street in December 2022.

‘You’re starting to find that these clients are looking at these firms and saying, “I don’t want to join a practice. I want to join something that can be multi-generational,”’ Fleissig said.

Laird Norton’s Wigen added that the opportunity cost for late movers could be severe: ‘If you spoke with some RIAs and they were honest with you, they would say that they have lost business because they did not have trust services or they didn’t have an integrated offering that included trust services.’

New conflicts

The addition of a trust business isn’t without risk for RIAs. The business brings new conflicts of interest that must be mitigated for RIAs — and trust administrators — to adhere to their strict fiduciary regulations.

One such conflict stems from the potential conflation of the trustee role with the manager role: In the financial services industry of yesteryear, the Wells Fargos and JP Morgans of the world would act as both administrative trustee and investment manager to a client’s trust assets, creating a conflict of interest where firms had a financial incentive to use their own, often expensive, investment products. In the RIA space, a joint trustee-manager would mean the trustee couldn’t fire the manager for poor performance or other reasons — or, they could, but only at the expense of their business.

‘We knew we needed to have a solution that clients felt close to, but at the same time had the right firewalls and protections between the companies,’ Fleissig said. ‘We felt the best way to manage these conflicts was to form a sister company … very importantly not a subsidiary but an independent, separate company from the family office that is still owned by the same parent company.’

Kittner concurred: ‘There has to be a bifurcation.’

Another important decision must be made around fees, particularly whether to include trust services as part of the advisory fee or to charge clients a separate asset-based fee or flat retainer.

Pathstone, for its part, has opted for the latter of the three options.

‘We’ve been very against bundled fees since we started the business,’ Fleissig said, noting that Pathstone also charges retainer-based fees for tax, accounting and property and casualty insurance services. ‘You pay for what you want to use versus someone charging basis points and then you hope that they don’t call you to use your additional services because then you have margin compression.’

Moneta also charges a separate fee, but how much the client pays depends on their AUM.

‘It is an additional cost,’ Kittner said, ‘typically a graded schedule based on AUM. It’s obviously a smaller fee relative to a typical RIA fee.’

Who’s it for?

While trusts have traditionally made sense only for ultra-high-net-worth investors, say, those with $20m or more in investable assets, some RIAs have expressed interest in offering trust administration to clients closer to the mass affluent level.

Fleissig, voicing a perhaps contrarian view, said he is skeptical of retail-focused RIAs getting into the trust business and believes that clients with $10m or less who are looking for a third party to take discretionary power over their trust should find a family member or individual service provider rather than hire a professional corporate trustee.

‘Especially in the $5m and under, the math I just don’t think works from an economic standpoint. I’m not sure if you should be paying the dollars it costs to have a corporate trustee to do that,’ he said. ‘When I see a lot of firms acquiring trust companies with smaller client sizes, I actually scratch my head. I think there’s a fad to buy trust companies, and I think people … are potentially using them not for the right reasons.’

Cost alone, Fleissig said, should be prohibitive for clients below a certain wealth threshold. He cited banks and institutional broker-dealers which charge in the 60 to 70 basis point range for trust administration, and even sometimes up to 1% on top of investment management fees.

‘That’s where I struggle to think about the need,’ he said.

Stern holds a different view, and instead sees trust services as a means of helping young people all along the wealth spectrum make smart, safe and fair money management choices, especially during precarious asset transitions where a regular will just won’t do.

‘Who’s going to be in charge if, God forbid, something happens to you?’ he said. ‘It’s not a net worth question at all at that point.’

Kittner acknowledged that the need for a corporate trustee rises with a client’s wealth level but countered that ‘there are scenarios in probably all levels of wealth where a corporate trustee could be pertinent,’ referring to a theoretical $10m client that believes her two children should not be the trustee of their money.

Put simply, he said it’s essential for an RIA with multi-generational aspirations to be able to support multi-generational client assets, whatever the size and whatever the specific need.

‘We talk about playing a game that is kind of the forever game, right?’ he said. ‘Our goal is to continue to transition the firm from generation to generation.’