cpwa

What should I look for when interviewing financial teams?

The financial team you hire should be Independent, Integrated, and Individualized.  If they aren’t, you are putting your financial security at risk.

Independent –The first question to ask a financial advisor is if they must always work under a fiduciary standard.  The fiduciary standard means that they are legally obligated to always work in your best interest.  Most people who call themselves “financial advisors” fit into the following categories:

1. Registered Investment Advisor (Always a Fiduciary, Continue the interview process)

2. Broker/Broker-Dealer/Registered Representative (Not a Fiduciary, Stop the interview process)

- Do not have a legal obligation to act in your best interests

3. Dually Registered as a Broker & Registered Investment Advisor (Not always a Fiduciary, Stop the interview process)

- Have a conflict of interest and can choose whether to act in your best interest or not

- As Peter Mallouk wrote in The 5 Mistakes Every Investor Makes and How To Avoid Them, “The dually registered advisor is the ultimate wolf in sheep’s clothing.”

Integrated – You should be hiring a complete team of people that will work together for you.  The experts on your team must include:

- Chartered Financial Analyst (CFA ®) (https://www.investopedia.com/terms/c/cfa.asp)

- Certified Public Accountant (CPA ®) (https://www.investopedia.com/terms/c/cpa.asp)

- Attorney

- Certified Private Wealth Advisor (CPWA ®) (https://smartasset.com/financial-advisor/cpwa)

- Certified Financial Planner (CFP ®) (https://www.investopedia.com/terms/c/cfp.asp)

The members of your team should all work at the same firm so that there is constant real-time collaboration.  If the financial teams you are interviewing are missing any of these experts, you should stop the interview process with them.  

Financial advisors that are not part of a Family Office and do not have a CPA® on staff will often make statements like:

- We work closely with a CPA® at an outside firm (Expensive, not effective, not efficient)

- There is a conflict of interest having your CPA® and Investments handled by the same firm (False Statement)

- Having a different firm handle your taxes provides checks and balances (False Statement, you need to hire a “Forensic Accountant”, not a “Tax Accountant” to perform the audit; ask them what checks and balances are provided by having an outside Tax Accountant) 

Individualized – You are in the 1%, you have a unique career, and your situation is different. You do not fit into one of 5 or 6 “Model Portfolios” from a limited menu of firm-approved investments that are offered after filling out a Risk Tolerance Questionnaire.

Because your situation is different, you require a different solution.  You have “One Net Worth and One Effective Tax Rate” and you should be receiving tax and investment advice simultaneously to maximize your opportunity. You need a tailored financial solution based on your life, career, and circumstances.  

What should I do next?

Email every firm that you are interviewing with the following “MLB Wealth Advisory Team Questionnaire” and request that they fill it out and send it back to you IN WRITING.  If they are not willing to put their answers in writing, that is a major red flag.

If you would like to receive a copy of AWM Capital’s filled-out questionnaire, please text or call Will McGuffey at (225) 326-0992 and he will send you a written copy of our filled-out questionnaire as well as help answer any questions you might have about the questionnaire so that you can feel confident when you sit down to interview Wealth Advisory Teams.

Already in the first few weeks of 2021, we’ve seen: Bitcoin cross the $40k mark, President-elect Biden promise $2k stimulus checks, Elon Musk has become the richest man on the planet while one of the other richest men in the world – Jack Ma – has apparently gone missing, the Democrats win the Senate run off in Georgia, and rioters stormed the US Capitol.

And is the midst of these events, the markets marched higher.

In this week’s episode, AWM co-founders Erik Averill and Brandon Averill along with Chief Investment Officer Justin Dyer discuss last week’s events and financial news and how we could be seeing unpredictable and even tumultuous events in the news while the stock market continues to climb.

Episode Highlights

• Is 2021 the Hunger Games? (00:09)
• Why stock markets continue to climb (1:12)
• Looking at historic traumatic events’ impacts (2:26)
• Why you can’t predict what markets will do (3:12)
• How to be a pro in volatile markets (4:13)
• Why 2021 predictions are useless (5:53)
• How investors should be thinking about individual equities and Bitcoin (7:10)
• Don’t rely on emotion (10:08)
• Elon Musk’s big bet with Tesla (11:12)
• “We know the winners of today are not the winners of tomorrow.” – Erik Averill (12:59)
• Determining your priorities (15:02)
• The best generator of returns in your lifetime (16:06)

As we close the books on one of the wildest years for the financial markets to date and head into 2021, how do we approach this new year in light of the volatility of last year’s markets? The S&P dropped 33.9% then ended the year up 18.3%, Small caps out-performed the S&P ending up 20%, and Bitcoin finished up 304% after seeing a -52.4% decline during the year.

What lessons should we take from last year that should impact our investment decisions moving forward?

In this week’s episode, AWM Capital co-founders Erik Averill, CFP®, CPWA®, Brandon Averill, CFP®, CPWA®, CIPM, are joined again by Chief Investment Officer Justin Dyer, CFA®, CFP® to discuss the biggest stories in the public markets and private market opportunities of the week.

Episode Highlights

• 2020 market volatility replay (1:36)
• How should 2020 markets impact your investment decisions moving forward? (2:17)
• Potential impacts of the Georgia Senate race and stimulus checks (2:39)
• Setting your own timelines (6:18)
• The dangers of misaligned priorities (7:56)
• The rewards of small caps (8:51)
• The potential impacts of missing just a few days in the markets (10:28)
• Are the rewards of Bitcoin worth the risks? (10:52)
• One of the biggest mistakes investors can make (14:38)
• Looking out for your best interests (15:18)
• What are the ways to optimize your portfolio the maximize your returns that are evidence backed? (15:42)
• Right-sizing your risk exposure (16:09)
• How should 2020 markets impact future decisions? (16:51)

As an NFL player, you’re in the highest tax rate. That means with your endorsement deals and appearances that 40-50% of that income is going to go to the IRS. Are you taking advantage of all the available opportunities to hold on to the income you’re acquiring? 

This week, Zach is joined by Aaron Goldberg, CFP®, fellow AWM Capital colleague and former PGA, Korn Ferry, and Canada Tour golfer, to discuss some of the biggest tax savings that they’ve seen professional athletes miss out on.

An important distinction on why the SEP IRA is inferior is the ability to do non-deductible IRA contributions and then later convert them to a Roth. You cannot directly contribute to a Roth because of income phaseouts but Roth accounts can grow tax-free and then be withdrawn with no taxes later. The Individual 401k can exist and does not affect the backdoor Roth strategy as it’s commonly known. For athletes, the SEP IRA is an indication the advisor or CPA is not experienced with the unique circumstances and income of athletes. If you would like more detail check out our blog.

Episode Highlights

• The Individual 401(k) and endorsement income (00:24)
• Deferring your 1099 income (1:17)
• The importance of a CFP® as a wealth advisor (2:24)
• Is a SEP IRA enough? (3:36)
• Zach’s experiences of missing out on tax savings (5:18)

The differences between someone who plays in a football league on the weekends and an NFL player are obvious, but did you know there are similar gaps between people who call themselves financial advisors? When trusting someone with your net worth – do you know the designations to look out for? What are the differences in qualifications between someone who says they’re a financial advisor and someone who is a CFP®, CPWA®, CPA or CFA? Approximately 300,000 people in the country could call themselves a financial advisor – even if they just sell insurance. However, there are only roughly 82,000 people with the designation of CFP®, and 2,500 with a designation of CPWA®. Knowing which designation you need for your unique situation could end up equaling millions of dollars for you.

In this week’s episode of the NFL Players’ Podcast, Zach Miller and Erik Averill break down the different designations you’re going to come across and you should be looking out for, and they’ll cover one of the biggest assets that you have as an NFL player that we’ve seen as also one of the most neglected assets out there.

Episode Highlights

• Who is actually a professional? (1:16)
• The designations you should look for: CFP®, CPA, CFA (2:15)
• Trusting in the right expertise (4:24)
• “So what I would say is, regardless if you're an athlete or you are parent listening, or an agent, you should first and foremost, work with an independent company that is doing what's in your best interest. They're not actually trying to sell their products and their services at you of trying to extract value.” – Erik Averill
• What Wall Street firms can’t help you with (5:26)
• Everything you should know about the NFL Benefits Package (7:05)
• “These are extra benefits that the average advisor just has no chance understanding and they don't want to, it's not worth it for them, but it matters to me and it matters to helping guys get the benefits that they earned while they were playing.” – Zach Miller

As the dust of 2020 begins to settle and we round the corner to the end of the year, we can see just how wild it was. More than 40 weeks since COVID-19 has started, financial markets dropped by more than 30% and currently are up around 17-20%. However, there’s been one asset class that’s currently up over 200% - cryptocurrency.

With more than $11.5 billion in Bitcoin purchased in the last 90 days and Wall Street firms jumping in - is now the time to invest?

This week, Erik, Brandon and Justin discuss the pros and cons of cryptocurrency and the major questions you should consider before adding it to your portfolio.

Episode Highlights

• Valuing Cryptocurrency – is this a currency replacement? (1:23)
• The assumptions on Cryptocurrency (2:24)
• $11.5 billion in Bitcoin purchased in the last 90 days (4:02)
• The change in institutional money entering into cryptocurrency now (5:13)
• Should we invest in speculation? (6:40)
• What circumstances should someone consider entering the cryptocurrency market? (7:41)
• Bitcoin corrections over the years (8:44)
• How do you set up a risk/reward spectrum for cryptocurrency? (9:38)
• Repeating conversations on Bitcoin (10:31)
• How the correlation of assets lower risk allocation (11:35)
• The danger of chasing returns – know why you’re buying (15:36)

Some of the biggest financial and investment news from the last week includes DoorDash – a food delivery service – reached a $60 billion market cap, even though the company isn’t currently profitable. Will it get to profitability? Why are IPOs like this and AirBnB ending up with such unexpectedly huge valuations?

This week, Brandon Averill and Justin Dyer discuss these high valuations, break down the 3 categories of market returns, and outline why now could actually be one of the most dangerous times for a new investor just starting out.

Episode Highlights

• How to be a good investor (1:09)
• Watch where your information is coming from (3:04)
• "If something is possible to know, you're better off not being very smart because smart people fool themselves into thinking they know, while average people are more likely to say, I don't know and up end up closer to reality." Psychology of Money by Morgan Housel
• Should you buy Tesla? AirBnb? (4:52)
• Skill vs Luck in investing (5:21)
• The 3 categories of market returns (5:38)
• Why this is a dangerous time for investors just starting out (8:07)

AWM Insights 

Presented by AWM Capital

COVID Vaccines and Long-Term Investing

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Erik Averill: LinkedIn

Brandon Averill: LinkedIn

Justin Dyer: LinkedIn

In this week’s episode, Erik Averill, Brandon Averill, and Justin Dyer discuss the biggest financial news of the past week and highlight the biggest takeaways you should know.

We begin by highlighting more hopeful news from last week – this time out of the UK, as they become the first country to approve a COVID-19 vaccination with it rolling out this week and through the end of the month. With additional vaccines expected to begin distribution around the world, a recent report showing a drop in unemployment, and continued conversations on a potential additional stimulus package in the US, the big question is: how does this impact portfolios in the short and long term?

Episode Highlights

• What the drop in unemployment claims misses in regards to the jobs report (1:17)
• Are economic stimulus packages good for the markets? (2:52)
• Deciding between two bad options? Control what you can control (4:22)
• “So I would summarize it really as remaining diversified, not trying to predict how the market's going to react to certain things like adding more stimulus over the long term. Because it truly is, like Brandon said, and we've said time and time again, a fool's errand.”
• “The core principles of having a successful investment experience is understanding the long-term nature of your investment strategy” (6:28)
• The importance of financial structure – understanding your priorities (7:52)
• Updating plans in real time as a long-term investor (9:50)
• The questions to ask about specific assert classes (10:30)
• “You have to invest in the markets as they are. You can’t invest in the markets as you want them to be.” (11:10)
• Liability matching (11:53)
• The most important question to be asking in the current economic climate (15:02)

Investing in Tik Tok US? 

AWM Insights
Presented by AWM Capital

For more insights, sign up for our newsletter at awminsights.com

AWM Capital: IG | LinkedIn | Facebook | AWMCap.com

Erik Averill: LinkedIn

Brandon Averill: LinkedIn

Justin Dyer: LinkedIn

Investment in Tik Tok US is starting to make headlines; Erik, Brandon and Justin give you The Average Joes vs. Pros on Tik Tok impact in public + private markets.

:40 - 1:16

Apple’s app store charges are back in the news.  Spotify, Fortnight’s Epic Games and Tinder have all partnered with the non-profit coalition called the Coalition of App Fairness to bring legal action against Apple to see if they can bring down their charges.

1:34 - 2:50

The latest legal standing for Tik Tok in the United States. President Trump being asked to defend his status on Tik Tok to a US District Court. 

3:02 - 5:30

Average Joe’s vs. Pros:

What does the Tik Tok news mean for investors? Should you go buy Oracle and Walmart stock with their investment to Tik Tok US?

5:31 - 8:28

What does the Tik Tok news mean for the private markets?

8:42

Recapping the news on Tik Tok and the impact it will have on the public and private markets.

Judge says U.S. must defend or delay TikTok app store ban by Friday

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For Part 2 of “What is a Financial Planner”, we talked about our view on some industry credentials and what they provide.  Tim, who has both CPA and CPWA credentials, shared his experience on both courses.  While they were helpful, he said, nothing trumps self-teaching and life-long continuing education.  He added, the most difficult, and yet most fascinating part of financial planning, is the qualitative side.  It’s not just about money and numbers, it’s also about your goals and lifestyle that you are willing to pay for.  We believe that the key in financial planning is a forever changing, agile process.  Like Dan brilliantly pointed out, as life changes, so should your plan.  A financial plan is just a snapshot of a period of time - it should always evolve with your life.