Wealth Actually

The LGBTQ+ community has always been an important part of American fabric. But it’s only in last two decades that society, the law and the financial services industry have started to catch up to the community’s unique planning needs.  To help us put context around these features and the evolution of the law, I spoke with estate planning attorney, Brian Balduzzi Brian is a lawyer in Philadelphia at the international law firm FAEGRE DRINKER.  Among many other activities, Brian serves as the Vice President of the Cornell Pride Alumni Association, where he holds his MBA. I’m thrilled to have him on to discuss this important topic. BACKGROUND We start off talking about Brian’s background and a little bit about his practice. Then we dive into some specifics. LGBTQ+ TRENDS – Demographic Shift – more need, more complexity – Court decisions in review – Windsor/Obergefell planning and post-planning, and (perhaps) re-planning – Planning Needs: Concepts around DINK (Double Income No Kids) lifestyles, urban lifestyles, chosen family, estranged from biological family, dignity under the law/hospitals/banks SPECIFICS – Documents: Extra durable, trust planning (privacy, avoid/minimize probate), ILITs (insurance to cover unexpected costs or taxes?), Power of Appointments, no contest clauses, guardians – Holistic Advisor: gender-neutral terms, no assumptions re: marriage, family tree dynamics, privacy/confidentiality/outing – Some Must Review/Updates for all LGBTQ+ families: Pre-2015 planning, beneficiary designations, decisions to marry/adopt, prenups, separation/divorce planning OUTRO You can find Brian here: BRIAN BALDUZZI LINKEDIN

For many wealthy families, concentrated liquid investment positions present special types of issues. More often than not, a diversification plan for a position that has been built up over decades, is relegated to a 5 minute discussion.  And it shouldn’t.   From low-cost basis issues, income requirements, family executive involvement and even other factors like emotional attachment, the decision to buy and sell liquid positions can be more complicated than it looks.   To help us understand the best practices in the area and some of the tools at a family’s disposal, were going to talk to STEPHEN DAVENPORT CFA from DECATUR CAPITAL MANAGEMENT in Atlanta, Georgia.   Based in Atlanta, Steve is the Director of Alternative Investments for Decatur and advises clients on a wide array of issues including concentrated position management. Steve received a BS degree in Industrial Engineering at Columbia University, a BS degree in Math/Computer Science at Providence College, and a MS degree in Finance from Boston College. STEVE’S BACKGROUND Engineering and quantitative skills applied to finance Lots of questions around “risk vs return” turned into “emotion vs. reason” Kahneman and Taversky – Risk avoiders instead of return enhancers 2000 a time of excitement and wealth creation in Boston/Silicon Valley 2005 Moved to ATL and worked w Wilmington Trust on DuPont heirs 2015 Moved to STI and worked on Coke heirs 2020 Moved to Decatur to help RIAs/family offices & institutions to manage risk STEVE’S APPROACH TO INVESTING – PERFORMANCE, GOALS, EMOTIONAL COMPONENTS Aligning clients to all goals and not just financial (work in chip space or health care so…) Incorporating all factors including emotion in the investment process ESG is about values and aligning your resources with things you believe in MSCI/TruValue measure companies and companies write CSR Like accounting standards, no global measures UNPRI for three years Indexing – Good, bad and UGLY, so inclusive to be “complete” 1: People want more so they can stay invested in tough times (sell at bottom – 1.5%) 2: Lengthen horizon and 3: Lower fees are three legs to the stool of investment success Investing in ideas/companies who you agree with, ESG may hold the key to better returns Holding on may be more important than what you hold CONCENTRATED POSITIONS- (Blackrock buying Spiderworks, there is a limit to ETFs . . . ) 1 – Customize more holistic solution 2 – Use tools of options market to enhance the transition 3 – Always adjust as the playing field changes ETFs are a one solution fits all solution but client risk and return parameters are unique  BRK- example – FINDING INCOME in the OPTIONS (W/ NO DIVIDEND STREAMS) Recently created wealth by IPO – UBER Familial wealth, sitting versus actively managing Coke – not selling is value added? Complex situations require a sophisticated approach! Took a while to acquire so disposition…. INVESTING THEMES TO DEFEND AGAINST (OR TAKE ADVANTAGE OF) . . . Inflation – Fact or Fiction? Present across the spectrum of risk: Crypto, NFT, SPAC, Meme, IPO, Real Estate, FANG  Fiscal and monetary coming together like never before Is it Temporary or is a CB (central bank- not just US) Put option forever? TAX AND POLICY CHANGES Target the top 1% …., Cap gains from 23% to 35-40%, planning for lifetime step up, dividends at OI rates Ambitious plans need funding, never let a good crisis go to waste, $4 trillion and counting on COVID Stimulus to get economy through 2022 election and beyond Market reacts environment and creates solutions Option overlays will be the beta adjuster “Diversification sometimes fails when you need it most . . .” Research paper Universal for the masses, Black Swans becoming more common so should solutions for them!  â€œWealth effect” really not focused on Main Street and Fed knows this is increasing inequality  â€œTrickle down” not backed by research so changed the name to protect the idea With Fed in markets, there is very little that can be thought of as “normal market operations” Best time to buy an umbrella is before it starts raining OUTRO: STEVE’S CONTACT INFORMATION Steve Davenport, CFA sdavenport@decaturcapital.com https://www.decaturcapital.com/stephen-davenport/

Divorce in the Ultra-High Net Worth Space is a little bit different.  Gates, Bezos, Kardashian . . . You don’t have to look too far into the headlines to see how important this space has become for wealth families. While the emotional pain is the same, the stakes are higher and the process can be more complicated.  OLIVIA SUMMERHILL joins us to help us think through the issues. In her practice, Olivia has seen the devastating effects of divorce on stay-at-home mothers in ultra-high-net-worth families. She is the founder of SUMMERHILL WEALTH MANAGEMENT and helps to protect their lifestyle when they are going through a high-stakes divorce. Having developed her financial career at JP Morgan, Olivia broke out on her own and started her own firm focusing on the space. Olivia’s practices focuses on affluent women.  She is one of few financial professionals to hold Certified Financial Planner, Certified Divorce Financial Analyst, Certified Divorce Specialist, and Behavioral Financial Advising credentials. I spoke with Olivia on the ins-and-outs of team-building around a divorce, her unique business model focusing on UNHW women and her advice for people going through the process. Describe your background- -How did you get to that point to making the leap to starting your own practice? -Any specific challenges? -You focus on a few specific niches- larger situations and women coming out of divorce. How did you come to specialize in that area? -How do you define UNHW? ($50mm) Engaging With The Client: Information Asymmetry- -How do you get past the initial client’s shock? -How do you get clients through that education process? Teamwork with the Advisors -Divorce is complicated and involves many different experts besides the divorce lawyer- what does a good team look like?  (Legal, Tax, Investment, Estate, Psych, Administrative/scheduling) -How do you integrate with the team / issue spot / decide who the quarterback is? -Any examples where that has worked well (and where it hasn’t?) What does your process look like? -How do you know when to step in or step away from the emotional and psychological repair that needs to happen- when do you call in the experts?  Do you get involved in the child custody issues? -A big challenge is understanding cash flow needs and dividing illiquid wealth – how do you help clients think through that – how does that work with a divorce lawyer’s strategy?  Pre/Post nuptial planning? -If going through the internal questioning, what should someone thinking about a divorce be thinking about?  What information should they be thinking of collecting?  What happens when you don’t think in these “business” terms? Practice Notes -You have a unique (and cool / aligned) business model- you consult but don’t manage money- help us think through that.  How do you get paid for your value (I will be listening intently to this- I struggle with it myself)!!! -What do you do to “get out there” given your business model? -Is there anything idiosyncratic about doing business the Pacific Northwest? Do you clients come from all over? Staying in Touch -How do we keep track of you? OLIVIA’S LINKEDIN PROFILE: https://www.linkedin.com/in/oliviasummerhill/ OLIVIA’S PODCAST: https://podcasts.apple.com/us/podcast/divorce-for-wealthy-women/id1546130936?i=1000503911523 OLIVIA’S IG: https://www.instagram.com/summerhillwealth/?hl=en

“Shirtsleeves to shirtsleeves in three generations” is as old as commerce itself. Family enterprises rarely make it beyond three generations for many reasons. Today, we hear the story of the Grossman family from BEN GROSSMAN who co-operates the family business with his brother, David. They are fighting that “Shirtsleeves” phenomenon with an interesting set of tools and intention. In this podcast, we listen to their story of building the family business, managing transition and creating the conditions for success in future generations. GROSSMAN MARKETING GROUP was founded as the Massachusetts Envelope Company back in 1910. Ben Grossman and his brother, David, are the 4th generation of family leadership 111 years later. The company has evolved into a full-service traditional and digital marketing firm. Ben Grossman went to Princeton University. After college, Ben worked as a strategy consultant to Fortune 500 clients, as well as started and sold a sportswear and marketing firm. He went on to receive an MBA from Columbia Business School before taking the reins of the business with his brother. Ben’s Background The Business “Then”: The Nature of Grossman Marketing Group- -What does GMG do? -A Brief History and who are the players? -What was important to your father and other family members? -How were you and your brother “developed” and integrated in the business? The Next Generation-  The Business “Now” -What processes do you and your brother use to run and evolve the business? **“Start Stop, Continue” Review -How does a marketing company survive and thrive in this day and age? -How was your succession process different from other businesses that you see? -What did succession look like for you father? -Establishing credibility and not taking success for granted -What hasn’t worked?  What are the frictions?  Anything you would have done differently? -Outside Boards? The Business “Next” How are you thinking about ownership and operational succession? What do you think your kids’ involvement will look like?  Will it be with the firm? How do you think about the impact to other constituencies? (I.e. community, employees, customers, vendors) GMG’s Strategy for the future “The Letter” – Examples of Communication within and outside the family. This is a treasure trove for families looking for good examples of value communication. They articulate an ethos that has served the family for four generations (plus!). Link to Ben’s great grandfather’s dollar-a-year check from the US Government: https://uploads-ssl.webflow.com/6037c57f7424b4ea01ef8e45/60515ae13f381f3f1ef1ca37_Dollar%20a%20year%20man%20check.jpg Letter the Grossman Marketing Group sent out when Ben’s great-grandfather left to serve FDR and when Ben’s grandfather left to serve in the Army: https://uploads-ssl.webflow.com/6037c57f7424b4ea01ef8e45/60515a91e1e851084c30e394_1941%20Letter.pdf Letter Ben and David sent out when their father left the company to serve as Treasurer of Massachusetts 70 years after our great grandfather left for public service: https://uploads-ssl.webflow.com/6037c57f7424b4ea01ef8e45/60515a913f381fee04f1c956_2011%20Letter.pdf How do we keep in touch with Ben? Ben’s Blog: BEN GROSSMAN’S BLOG GMG’s acquisitions page summary here: GMG ACQUISITION SUMMARY Grossman Marketing Group: WWW.GROSSMANMARKETING.COM Personal website: WWW.BENGROSSMAN.INFO LinkedIn: BEN GROSSMAN Twitter: @BIGROSSMAN

With interest in alternative asset classes at an all-time high, the focus of family offices and other investors has been to investigate more “liquid assets.” We’re not talking about cash or oil . . . the spirits world has produced scores of profit stories at the asset class and business level. Bourbon is a niche that has been on fire recently. With a low interest rate environment, private capital’s huge appetite for “uncorrelated” asset classes, and a theme that is a haven for entrepreneurs in Kentucky and beyond, this is a good time to investigate the bourbon space. It is more than just Jim Beam, Maker’s Mark and Wild Turkey. (FYI- Jack Daniel’s is technically a Tennessee Whiskey and not a bourbon). To get our arms around the subject, I spoke with MARK GARBIN and centered the discussion around bourbon. MARK is an investment management executive focusing on fiduciary duties issues in investment vehicles for public and private funds.  He is a CFA charter holder and professional risk manager.  More importantly, he is an expert on bourbon and whiskey both from a quality and taste perspective and as an asset class. He is the author of many books including his new book “Whiskey Glory” – about the rise of the Dewars famous lineup. We take a deep dive into bourbon as an asset class- actually owning the liquid inputs and deriving yield from them- to investing in a bourbon company. Finally, we get into some of the fun stuff around the great tasting bourbons and terrific whiskey bar experiences that Mark knows well. This podcast is so chock full of information that I’m having a transcript done (which will be coming soon). in the meantime, the outline is below. Enjoy! A little background on Mark How did you get involved in Bourbon? Becoming a sommelier and writing about “Whiskey and Romance” in NYC https://www.amazon.com/Whisky-Romance-Manhattan-Neighborhood-Restaurants-ebook/dp/B07565P833/ Different classifications and ways to learn about the bourbon subject – rex videos Bourbon as an asset class Why is Maccallan 18yr whiskey at $350 vs the 25yr $3500 How does a barrel program work? Expected returns? Fixed Income attributes (and risks)? How do warrants factor into a barrel program? Bourbon as a Business What makes for a good whiskey company and brand? A brief discussion of the antiquated 3 tier system (manufacturing, marketing, 3rd party distribution) reduces profit for the producer- and why a direct link to consumers is vital now. The legal and distribution landscape is changing. Digitialization of marketing (and the rise of direct distribution) Experience of Bourbon at Source- great bourbon at the experience level- Good to visit, bad to distribute- lots of “limited release” The rise of goodwill, the mailing list and the repeat buyer Brand is vital and important to the exit strategy The Bourbon Experience Favorite Places Favorite tastes How do we stay in touch?  MARK GARBIN Twitter: @CoherentCapital Where do we find the book? https://www.amazon.com/Whisky-Glory-Tasters-Stories-Compendium-ebook/dp/B096PMS7FG/ https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

With the Biden proposals comes the potential for tax increases at the income, capital gains and estate tax level. Life insurance is becoming interesting again to a lot of families looking to expand on their functions of income replacement, business succession and tax planning. Using trusts and other structures to amplify their effectiveness is shifting back into focus. The ongoing maintenance of these structures is usually underestimated and the resulting liability could be a nasty surprise for many families. To help understand the emerging tax environment and the best practices around life insurance and the under-appreciated task (and risk) of administering life insurance trusts, I spoke to ANDREAS STUERMANN. Born and raised in Bremen, Germany, Andreas moved to California in 1987. He began his financial services career with John Hancock in the San Francisco Bay Area as their technical resource in sophisticated life insurance and benefit transactions. In 1998, he joined Winged Keel in New York City for which he managed design, implementation, and administration services of substantial life insurance, non-qualified benefit, and wealth transfer programs.  In 2003, he founded Stuermann Consulting, Inc., an independent insurance and benefit advisory firm. Background What is the function of life insurance? Replace income, Fund Business Succession, Income Capital Gains, Estate taxes, Insurance as an Investment? Asset Protection? Executive compensation? What is the benefit of having insurance owned in a trust?   Proceeds pay outside of the insured’s estate, asset protection, structure around distributions, liquidity at major life transition, others . . . Many individuals are tasked with acting as trustees of these trusts- why might that be a bad idea?  Are Individuals qualified to understand the legal requirements of a trustee and the vagaries of the insurance industry? Making sure all Crummey letters are sent and the trust complies with all other formalities- Making sure all timely premium payments are made- Making sure the policy continues to make sense for the trusts’ beneficiaries and is performing- What is the best practice for reviewing insurance policies?   Confirm who actually owns the policies and whom the beneficiaries are- you’d be surprised at the mistakes! Where does the policy stand? Is it funded? Are there any loans against it? Are there useful in-force projections to analyze the policy? Has it been stress tested? How is the performance of the Insurance Company? Any issues with capitalization to be considered? How often should policies be reviewed? Every year? Every few years? How does the trustee make sure the approach around insurance is handled in a consultative manner (as opposed to being designed to generate another sale?) How does one stay in touch? STUERMANN CONSULTING ANDREAS STUERMANN on LINKEDIN https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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, just one to two to three where they come from, they could be very, very different. They’re in the same family, but the way they grew up is vastly different. And we talk often about Jim Webb and where this in his book about natives and immigrants to wealth and the immigrants to wealth often could be the first generation who grew up and made the wealth and have a very different thought process about it. Then third generation who grew up with NetJets, and you cannot pretend that they didn’t go to a private school and they didn’t have everything that they needed. They didn’t have to scrap or that it’s just you come at it differently. So I think the acknowledgment of that and what people have not done for so long is, gee, three from an early age, how do you feel? What is your relationship to money? And I have a lot of questions we can ask to open up these conversations, but I think parents, grandparents are astounded when they actually stop on their side to actively listen to three about how they might feel if across the board you can’t assume based on culture or where you come from or where you grow up, it’s all based on the individual. So asking the questions and I’ll tell you another thing, having the right to have the conversation is huge. I think you have to earn the right. And I think people in my position often are looked at as just one or two, two person. So if you don’t earn the right with G three to form that bond or trust or they don’t think you’re on their side of the table as well, that can cause distrust and distrust in this process as a killer. FR: That, to me, is one of the problems with the whole wealth management industry that they’re facing is how do you reach the next generation? How do you become their person? How do you earn that? Right. And maybe a better way to ask it is how do you start that conversation with a segment of the family that is either suspicious or unknowing or just maybe curious, but not equipped necessarily to engage in the discussions? And how do you bring them along at the correct pace so that they’re involved and at the same time you’re able to make progress with the overarching structure? BP: I’ll tell you this through a story. I have two young clients who have recently turned thirty five twins. Their mother, father and aunt died all within three months. And twenty twenty nine of them are an interesting lot. And they went from needing to work, know seventy five thousand dollar jobs to never needing to work again. I was one of the first calls they made to help with just trying to understand everything that was happening. I think that comes from the fact that 10 years ago I sat with one of them before she was getting married out on the porch downstairs here at a restaurant and tried to talk to her about why we needed a prenup when she was going to get married. And she said, why are you trying to ruin my marriage? Brittain Prigge, you’re trying to ruin my marriage. And it was interesting because we formed a relationship based on that conversation and my understanding of how she looked at all of it that lasted. And so I think the fact that over the past year, we she and her twin sister and I have literally talked weekly trying to help them get through what is the horror of having to settle three estates and lose three of the most important people in your life. But being able to be the go to person again, you have to earn that right. And sometimes you have to go through some tough conversations. So I think that is really, really important. And assuming that you can earn that trust without some time is a mistake. FR: You’re getting involved with wealthy families. Often times, that comes from the patriarch or patriarch, the wealth generators or maybe the people who are the decision makers around the wealth. What are some of the discussions you have with them to get them to be thinking beyond their generation and to be thinking from a legacy perspective, from a next generation perspective? What is their wealth going to be from a stamp on the world type of perspective? And ultimately, I guess, sort of how do they define their legacy?  How do you get them to think about that in the same way that you had that discussion with the two twins? BP: Again, it takes some time. They have to be ready. What I often talk about when I start this conversation and a lot of times people think my kids are too young, I don’t need to have that thought yet. I don’t need to have that conversation yet. People also say, why does anybody care? Do I really think my grandkids are going to care about any of this? What I start with now is to say you have in my mind a responsibility. And the family goal often is to create good decision makers in all the various roles and responsibilities. These next generation will have an adult life and saying it’s doing them a disservice if you don’t do this, if you don’t teach them how to be a good steward of the wealth, if you don’t teach them how to deal with a trust, if you don’t teach them what your expectations are with income from a trust, educating them about the values, it’s so fun to watch the light go on. I have a client who has been a client for over 20 years and he has Parkinson’s and he has started thinking more and more. Fortunately, two years ago we went through the process where he took one year to get comfortable enough to let me have a family meeting and have these discussions with due to and by the way, to are in their 40s. You’ve got to recognize that the patriarch has to be ready to transfer that decision making power, because that’s really what it is. And you also have to let them understand, A, they’re different than you are. They didn’t build it. They’re probably more native. The interesting thing is when you got some natives that are children and children that are immigrants, literally different because of how they grew up and maybe their ages. So it’s a lot. FR: So one of the important things to me, it seems in sort of transferring these values and the ethos to the next generation is writing it down and getting it into a tangible form. What are some of the tactics that you see that work? And I noted somewhere in my reading what you did, that it can be as simple as a letter. It can be as involved as a book. It can be a series of videos. It can be all sorts of things. What have you seen from an example perspective that has been effective? BP: I think what I’ve seen a couple of times is I’ll encourage people to write what they call a philosophy of wealth. And it’s funny, I talked to one guy about it for literally two years and he runs a lot and he started saying on my runs, I started thinking about what they might be interested in and it would go home and write down bullets that he thought about his career and also lives that he had made over time. So I think just that understanding of what is important, what was meaningful, what happened in your life that made you either change, I mean, stories about the business and how many businesses do you hear? The stories that they almost went something big happened, some big decision that made a difference or some risk or some fear or something, and then going forward about the business. But after that, the expectations, what gives you pleasure? What do you think is important with regard to being a. Steward of the wealth, and I’ll tell you, there are people who don’t care as much and I might push it and then I realize they don’t care. If they don’t care, I can make them care. It’s the different constituencies of wealth in the family business world. I mean, it’s beyond just the family in the wealth. You’ve got employees, you’ve got vendors, you’ve got communities that have been built around family businesses. And sometimes I’ve seen it with the next generations. There’s some passing understanding of that. But to write that down and to talk about why those components were important to the first generation and the wealth creation, sometimes that can be a real eye opener. I’ve seen it multiple times in meetings where something that went beyond the piece of paper sort of brought into a deeper understanding of where people came from. Again, I go back to how often I think it’s interesting that people don’t necessarily think, gee, three, well, they don’t think that father will care. I think they often clamor for information, you know, tell me your story. And what I found is that it doesn’t have to be with wealthy people. It’s all people. Tell me your story. Tell me what happened in your life to make you believe the things you believe and how what made you teach me what you taught me as your heir to believe? And ultimately, it’s the value. The money is important. The money as big as money is what we all talk about. But what’s behind the money? And often there is a lot and there is often heartache and there’s often tragedy and there’s often sadness that’s really important to the make up of ultimately the family. The family is, let’s call it, as ready as they will be to have a family meeting and to have sort of this joint endeavor to understand the direction not only of the wealth, but of the family generally. FR: How do you think about that in terms of the tactics around family meetings and how often where who has input those types of things? There are tripwires all along that where if you forget to get somebody’s input or you have them too often that people get bored or not often enough that people forget, how do you try to balance the cadence and the input and the general structure of these meetings? Now, a year ago, I would not have said, you better figure out how to connect with people over Zoom because that’s a new thing. BP: I am such a face to face and personal person. You’ve got to go to dinner. You got to meet him. You got to understand what they’re thinking about. Well, that’s not as possible anymore. So we have to figure out something new, another story that I think is really, really telling. I have a client who we’ve had for a little over 10 years, recently sold his business and started a foundation and wanted to bring in all his children and their spouses and stepchildren and everything. The core was around. He had a child that died, mental health, substance abuse. And so the family meeting was to discuss the foundation, to discuss what is going to be the mission of the foundation, understanding this might take us six months to get there, but with the absolute conviction that the patriarch and matriarch really wanted all of these children to feel ownership in that mission and therefore understanding there had to be some discussion. So for two months, we had discussions with the patriarch and matriarch, just like you were talking about, making sure they’re on the same page, kind of getting for things around this mental health understanding. But what was so rewarding to me and where I found it a privilege is sitting on this Zoome call and facilitating the conversation, but then stepping back and having these two who are all in their 20s and related in a certain way, but not blood related, talk about taking that core of the mission and taking it even further. So each of them, there’s six of them have a say, had an understanding. All of them fortunately did have that core because of the tragedy that happened. But how they took that one of them with women and single women and children, one with education, same mental health starts these days in kindergarten where the divide starts. I literally had to ask three questions and the conversation just flowed. And so that was the first. And we don’t expect to get this mission drawn up until probably November, December. But that is just so rewarding to watch. And you’ve got to give credit to the patriarch and matriarch for allowing that conversation to happen and people feeling comfortable enough to participate. Well, one of the cool things about that is the whole family. It sounds like it’s gotten to see how the rest of the family thinks and what’s important to them. And that’s some of that context that I think many situations are missing. And ultimately, without that shared context, that’s where shirtsleeves to shirtsleeves really does happen. And people go their own way and the liabilities increase a lot faster than the assets do. And ultimately, that’s how things devolve when people are able to communicate closely together and have that shared context. You have a better chance of extending things. You know, there’s so much that goes into that. But I do think understanding three years down the road, I remember that Sonja really did have a passion for this. So it makes sense that she wants to increase the giving amount to this type of organization. I remember that I was there when we first heard that. I also think having those discussions while the patriarch and matriarch is alive again, if they are willing to allow this type of discussion because it’s going to be different than it would be if it were just few is really important. What I find is when people leave in their will, here’s the expectations or have people, three siblings who might like each other a lot in the house in Nantucket when one just can’t afford it. Trying to put that on them is really, really difficult when the context is positive, lots of great things can happen. FR: What happens when the context is negative? There’s baggage between the siblings. There’s misunderstanding or distrust among the generations. Ultimately, there’s conflict. Have you been in situations where that’s the case and how do you handle that? I will find it often is people say third generation. A lot of times it is their generation, but it could be second generation. It’s just when a lot of times people do things for estate planning purposes, put trust together, put siblings together, and all of a sudden you realize 20 years later, they just don’t have the same values. They don’t think the same way. They don’t want to invest the same way. They don’t want to buy things the same way. They don’t want to vacation in the same places. So often in a situation now where we had this fantastic process where all the forty two entities of the companies couldn’t invest together and ultimately it’s fallen apart because of problems with the family business. And they are literally distributing everything and the whole family is divided. It is really, really hard to watch. I’ll say on our side what we can do is facilitate the fairness, if you will, and have conversations. But sometimes it’s better to say it’s better if we’re not all tied together. Maybe the family discord comes from being together and if you do split things up, you can come back together as different entities with your own thoughts, ideas, family, entities that aren’t just combined because the grandfather decided it. I will say that does happen a lot and it’s devastating. With other devastating is when money tears you apart, when certain siblings are part of the business and other siblings are not. They say you shouldn’t be part of this. You shouldn’t be getting the fruits of my labor. It happens a lot and I think it happens a lot when there’s not planning done early on. And just assuming here’s what could go wrong, let’s try to alleviate that. So one of the ways that I see that that context can be challenged is when other people, outsiders, interlopers, whatever funny thing we can call it, marry into the family. And you have people who come from completely different backgrounds no matter what happens. And they’re joining this family, let’s call it a family enterprise, but it’s certainly a structure. FR: How do you help integrate those people in a way that’s comfortable for the matriarch patriarch family structure and at the same time provides the safety and comfort for both sides as they enter into these types of situations. And I can see it ultimately when you’re around a family business that can get complicated, does the spouse participate or not participate? That integration is an issue. And I do think around that. BP: My view on that is and this is really practical, is you’ve got to be real clear with what is the decision maker going to allow? And if, in fact, you know that the decision maker is not going to allow the new in law a seat at the table for a time certain, be honest about that. And if they will never allow it to be honest about that, too. And I think that that often provides conflict. But I think being real clear about what the rules are is helpful. I can’t help but think about Meghan Markle and their little family and saying I would assume you kind of knew what the proposal is for her. But I think what happens is you get in there and I’ve had another situation where a child was getting married to somebody who was older and she knew he had a trust. And he came to me and said, I’d like my trust money. And I said, that’s unfortunately not how it happens. So try to facilitate a conversation. The outside the new in-law was say, and my parents would never, ever, ever do that. You know, they would give me anything that I was on my name. And I said, this family just doesn’t work that way. And they are very specific about what goes when. Based on that, they’re actually G3. And ultimately there’s a split in the family because of this in-law who comes in and says, I come from. A different place, this is wrong and pulls the child away, I mean, devastating, they don’t see their grandchild and it comes and that is specifically because of money, those kind of situations when I can’t facilitate some sort of help. It really bothers me. Now, some things just aren’t necessarily fixable. And you do your best. You try to educate people. You try to impart information and have that shared context of the people, understand the why behind the decision making. And sometimes that’s not enough. And it’s also really, really important. And this is one thing my mom always taught me. You got to try to look out of the everybody looks out of their eyes, the way they look out of their eyes. And so trying to understand, how did you come to the thought process you’re going through right now is really helpful. But there’s often sometimes a mistrust that comes from having money and comes from somebody say and make sure you protect. And assuming that everybody feels about the money like you feel, I’ll tell you, I’ve said it before. There’s a certain level of wealth where I think it becomes more of a burden. And to recognize that and acknowledge especially two to three to four, that that is difficult. It’s hard. The decisions that come with great wealth are more difficult as opposed to poor little rich kid. But literally it is more difficult. FR: Just because the problems are around money doesn’t mean that they aren’t problems and that they don’t have emotional impact and that they don’t need solving. Sometimes it’s tough to have different optics around that for the rest of the world, but at the same time, you have to fix it and you have to try to deal with it. So that points well taken. I think as we start to wind down here, one issue that I think is an overarching component in a lot of this sort of planning and structuring and trying to have these conversations with families is the concept of fair versus equal. Equally dividing assets is sometimes simple shorthand for being fair, but at other times it doesn’t take into account the different contexts around different branches of the family. Huge question and sort of probably overly broad. But when you’re thinking about that, how does that figure into the building of context around these wealth discussions for you? BP: I think it comes back to understanding how is it? That the patriarch or matriarch thinks, and that will be very much determined by how they grew up and not as the facilitator making any assumptions or putting my bias on anything. I think that comes back to that active listening, active listening, really understanding what is it that that they want. And I’ll tell you, people are very different. There are people that say, absolutely, I want everything. My four children. Twenty five percent of everything. I mean, if I could split up jewelry, I’d do it that way. And I think sometimes they feel like that’s the easiest way. I’ll tell you what’s interesting and what’s a big part of what I’ve learned from listening to to G3 is often they feel differently than parents might think. Say you have a special needs child that is absolutely getting more of the. Well, absolutely. At death will have a different type of trust. I find that most of the time due to G3 is so OK with that. Wants it to be that way. Or you’ve got three kids. One is struggling with money to have very successful businesses. They say absolutely. Give more to Sarah, who is a teacher and had a bad divorce and is single and is raising two kids by herself. Help her more than that. Again, if that communication there’s the other side where where the expectation that you will be given something is great. And I think often people struggle with that. It’s just like, how good a parent have you been? What do you believe? How have you conveyed your values? I’m a parent of an 18 and a 16 year old, and I don’t make judgments anymore because I know they’ll come back to haunt me. So I do think fair versus equal is again, you got to communicate, you’ve got to understand and you’ve got to ultimately listen to the client and understand what they want and then try to help facilitate that discussion with the next generation based on their feelings. FR: Well, this has been a terrific conversation. Britain, thanks so much. How do we keep track of you and what you do at Valentine? BP Mainly our website and also if you are interested in getting any of our marketing. We said something about once a month with blogs and things that we think that people will be interested in that go far beyond investments. So in any conversation, I’d love to have this. I think it’s really, really, really important. And I think more and more people are understanding the importance of this wealth and legacy discussion and how difficult it can be. FR: So it’s been a pleasure and a great and I’ll have that information in the show. Notes for our listeners Britain, thanks so much for being on. This is great. OUTRO: Thank you for listening to this episode of Wealth, Actually hosted by Fraser Reiss, author of the book Wealth Actually, and a leading private wealth manager. Head on over to wealth, actually, Dotcom, where you can subscribe to this podcast, get your own copy of the Wealth actually book and connect with Fraser directly. We’ll see you next time on Wealth, Actually. https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

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/