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The Alternatives Mason: Building Alts Knowledge Brick by Brick | Episode 5 | The Authentic Advisor featuring Vance Barse
5 Plays1 year ago
Welcome to The Alternatives Mason: Building Alts Knowledge Brick by Brick. Banrion Capital Management uses technology to help independent advisors scale and educate themselves on alternative investments. Since education is such a big piece of the Banrion mission and business, we are excited to kick off this series to dive into the nits and grits of the alternatives space. Episode 5 "The Authentic Advisor" features Vance Barse, CPWA®, AIF® , Wealth Strategist & Founder of Your Dedicated Fiduciary®.
Vance graduated from the University of Maryland with a B.S. in Neurobiology & Neurophysiology. He began his career in financial services with Altegris Investments as Regional Director of Intermediary Relationships. He consulted leading private wealth management firms and financial advisors across the nation.
Vance brings a unique perspective on wealth management as he’s seen the business from the inside. At Altegris, his clients were leading financial advisors at banks such as Merrill Lynch, Morgan Stanley, and UBS; independent broker-dealers such as LPL, Ameriprise, and Raymond James; registered investment advisers; and family offices. This has allowed him the deep expertise in services and strategies that financial advisors offer – and, more importantly, the services and strategies they often don’t offer. Who you have serving you can make a big difference, particularly when it comes to complex planning strategies.
After nearly a decade in his role with Altegris, Vance became a financial planner and founded Your Dedicated Fiduciary® with the desire to positively impact those he serves by filling in the gaps often left behind by other advisors.
Learn More about Your Dedicated Fiduciary
Follow on LinkedIn Vance Barse
Follow on 𝕏 @VanceBarse
Subscribe to Vance's YouTube Channel @yourdedicatedfiduciary
Host Brittany Mason’s diverse background has given her a unique perspective stepping in to the role as Chief of Staff at Banríon Capital. Throughout her career she has embraced challenging projects proving her ability to lead the development and the successful launch of brands. From staffing, branding, and marketing, Brittany has spent the last 20 years working in the fashion and entertainment industry with some of the world’s most iconic brands. This includes but not limited to event management and production for high scale events like the Superbowl, Indianapolis 500, TAO Group, NYFW, Miami Fashion Week, product launches at Salesforce’s Dreamforce, CES, and partnerships with brands such as John Frieda, Eleven Australia, and Valentino.
Her extensive work in the industry motivated Brittany to produce her own events. In 2013 her first directorial project was to spread awareness for Prostate Cancer. This 1 minute campaign video reached 13 million in just a few short weeks. This is when Brittany began producing charity fashion shows and coaching young entrepreneurs under her brand MOXIE Media. In Just one year Brittany worked with approximately 100 thousand students. In 2017 Brittany launched MOXIE Media Productions in Ireland, becoming the Director and license holder of Miss Universe Ireland. Brittany is known for the rebrand and launch of the Universe brand in Ireland and over the course of 5 years built a historical track record for the country that earned several global awards. Miss Universe Ireland became one of the country’s most exclusive and sought out events to attend. In 2019 MOXIE Media gained the right to Miss Indiana USA and Miss Indiana Teen USA making it the first production company in history to participa
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Transcript
Introduction to Alternative Investment Knowledge
00:00:01
Speaker
Welcome to the Alternatives Mason Podcast with host Brittany Mason, Chief of Staff at Bonner & Capital Management. You'll learn how to build alternative knowledge brick by brick. Bonner & Capital Management uses technology to help independent advisors scale and educate themselves on alternative investments. And since education is such a big piece of what we do, we are excited to kick off the series to dive into the myths and bricks of the alternative space.
Guest Introduction: Vance Bars
00:00:26
Speaker
Hello everyone, it is Brittany Mason and we are back here on the green couch for the Alternative Mason Building Alts Knowledge brick by brick. We are on episode four and we have a very special guest today, Vance Bars. He is a wealth strategist and founder of your dedicated fiduciary. Vance began his career in the financial service industry at Alturgis.
Journey to Financial Planning
00:00:49
Speaker
investments where he served as an investment consultant to the leading private wealth and retail financial advisors throughout the US. He saw firsthand that many advisors are constrained in their approach to planning and often leaving clients underserved. After nearly a decade in this role, Vance became a financial planner and founded your dedicated fiduciary with a simple mission, to be authentic, transparent, and to have a positive impact on the lives of his clients.
00:01:16
Speaker
Vance is dedicated to his clients putting their best interests first and views the client advisor relationship as a long-term trusting partnership. So let's see, Vance, you also hold a bachelor's degree in neurobiology and neurophysiology from the University of Maryland, where you served as a Howard Hughes Medical Institute and fellow studying the onset and progression of Alzheimer's disease. Wow, what a background, Vance. I'm really excited to have you here.
00:01:45
Speaker
We met back in May at the Jolt Conference and I just have to say your energy, your enthusiasm for what you do in the industry. It's really contagious. And so I'm really excited to have you on the show. I've been really looking forward to it. So thank you so much for taking the time to join us today.
00:02:03
Speaker
Well, Brittany, thank you very much for having me. It is truly a pleasure to be here on the show. And what an intro. Thank you. Hey, mom, come over here and listen to this. You'll be proud. My mom's not actually here to joke, but that was wonderful. Thank you very much. No, thank you. Thank you. I know you're a very busy man, so we really appreciate you taking the time to, you know, chat with me and, you know, dive into the world of alternatives.
00:02:28
Speaker
So I really want to first understand what your journey has been into the industry.
From Neurobiology to Finance
00:02:34
Speaker
I mean, you had such a different background that you came from neurobiology. I mean, how did you make the switch over to the finance industry?
00:02:43
Speaker
Well, that's a loaded question because it's a little bit of luck and a lot of hard work. So back in 2003, I had graduated college with an undergrad in neurobiology and neurophysiology. I'm a total nerd, loved organic chemistry, still have all the books, still read them. And I moved to San Diego because at the time I wanted to go to med school
00:03:10
Speaker
with the backup idea of getting into biotech. There are three different hubs for the aforementioned. The first is Boston. It's very cold. The second is the Bay Area, and it's pretty great. And the third is sunny San Diego. So I don't know, Brittany, where would you want to spend time of those, right? I had no offense to the Bay or Boston. But in any event, I moved to San Diego and took a temporary job running a behavioral health care company.
00:03:37
Speaker
And what was interesting is I remember I went to this social function at one of the hip cool spots in town. And I noticed something which was several very nice cars drive up to the valet. And these guys all had the big Breitling watches and they got out and they walked into this restaurant. And I walked up to them because I've never met a stranger. I went, hey, what do you guys do for a living? They said, we're loan originators. Like, you mean mortgage brokers? Yeah, yeah, mortgage brokers. Don't you own a home?
00:04:07
Speaker
No, I'm 27 years old, I rent, you know, I'm early in my career. And I think I want to go to med school. And their response was, you dummy, you can put basically nothing down and get into a home, save yourself money, because your mortgage payment will be less than what you're paying for rent. And you know, when it resets to the current rate in three, five or seven years, you'll be making more money then. No problem.
00:04:34
Speaker
I went, gee, well, what happens if I'm not? And they said, no problem. You can just turn around and sell it. And a light bulb went off in my head. And I went, how many of these are you guys doing? This is all we've been doing since basically 2003, 2004. And when this conversation happened, I might add, it was 2007. So I'd been in San Diego for four years at that point in time.
00:04:58
Speaker
Okay, I was about to ask what year was that? What year are we talking about exactly? Yeah, sorry. So it was 2007. And my then boss introduced me to a guy named John Sons, who founded Altegras Investments.
00:05:14
Speaker
And at the time I had read a lot of IBD and the Wall Street Journal and Barron's and so forth. And he said, hey, I think you should talk with this guy, John. That introduction led to a complete career change. And little did I realize that the Great Recession was about to start and everyone watching this knows the rest of that story. Yes, that is for sure. So wait, did you then did you did you
00:05:39
Speaker
become an MLO, a mortgage loan officer then for a bit? I think I was the only one in San Diego who wasn't in the mortgage industry in 2007. Sorry. Yeah, I'm sorry. I got a little confused. I thought that you were... Okay, that's really interesting. Yeah, my background actually in finance, I started as a banker doing mortgages.
00:06:03
Speaker
And man, I had just missed the refi boom. So by the time I finished my testing, so boy did I get my.
00:06:11
Speaker
you know, butt kicked with those interest rates when everything changed. So, but it was a really great introduction to finance and getting a start. So, yeah, that's really fascinating. I'm really curious to know how your, you know, neurobiology may have helped you, you know, in studying human behavior. Has that helped you at all in this, in finance?
Scientific Approach to Finance
00:06:39
Speaker
Oh, very much so. Yes. News flash breaking this just in. Critical thinking is not yet illegal. It seems to be completely remiss in today's society. But one of the main takeaways from not only my undergrad studies, which are just measly undergrad studies, but
00:07:00
Speaker
They're pretty technical when you're looking at biochemistry and organic chemistry and so forth. But also the time I spent as an HHMI fellow studying the onset and progression of Alzheimer's was to really question reality and to question hypotheses and to look at the data to determine a number of different potential outcomes. It's not that what I learned vis-a-vis studying
00:07:27
Speaker
is something that I used on a daily basis. But it's the process. It is the understanding of different outcomes, looking at data sets, and, you know, for example, zoom out, look at monetary policy and fiscal policy and the implications of zero interest rate policy and QE and all of the above.
00:07:49
Speaker
you really start to look through the prism of understanding things scientifically. And sometimes that's good. And sometimes that means that we really need to be awake at the wheel. Yeah, yes, absolutely. I'm always curious. Just again, back on your your journey into this world. I'm always curious, like the foundation of
00:08:14
Speaker
you know, finance in our first, you know, our formative years as children, you know, how we're introduced to, you know, money and I'm just always curious to know what that's like for the people that I have on the show because our relationship to money is so important.
00:08:33
Speaker
and studying human behavior, it's so important and it really dictates the direction of our lives in so many ways.
00:08:45
Speaker
And my own journey, I did not have a healthy relationship to money. And I didn't, I didn't learn those things, you know, my formative years. And so my journey into this industry and learning all of this has been quite an interesting one. But I like to, I like to find out and dig deep with my, with the people we bring on the show to understand, you know, what was your initial, you know, what was your relationship with money prior
00:09:14
Speaker
As a kid, what did your parents instill in you?
Early Experiences with Financial Literacy
00:09:17
Speaker
I know you're a father too, so I'm curious to know what are your passing along as well to your children? So despite working in the private wealth space and prior to becoming a financial advisor, spending almost a decade in the hedge fund space, I do not come from
00:09:38
Speaker
a family of money. In fact, when I think of my relationship with money as a child, and this is such a brilliant question, Brittany, I really think back to the emotional challenges that I used to see over money. Think about the number of marriages that end and what the primary cause of that is, and it so often
00:10:00
Speaker
are you know the largest driver are fights or is pardon me fights over money right fiat currency it's just so bizarre what's also interesting is that we live in a country that doesn't teach financial literacy think about that for a second let that sink in so we teach history we teach science we teach math we teach tick tock we teach instagram right but we don't
00:10:29
Speaker
We don't send these young minds off into society with any foundational knowledge, idiosyncratic to financial literacy. That bothers me. It's very concerning because unless a young mind is being provided with foundational understanding of things like time value of money and investing for the future, etc, etc.
00:10:52
Speaker
or even just balancing a checkbook, right? Which probably 90% of viewers just went, checkbook, what's a checkbook, right? It's a checkbook. It's very important to have these core understandings on how to make smart money decisions. And that's something that I remember as a child growing up with this fear of financial insecurity and thinking to myself,
00:11:20
Speaker
If I only make enough money to provide financial security for myself and my family, then life will be great. And in the solipsism of youth, that is an easy conclusion that one can make. However, that's not reality. And some of the happiest people that I know have almost no assets. And some of the most miserable people, pardon me, that I know, have the most assets. None are clients, I might add.
00:11:50
Speaker
But that notwithstanding, now that I'm a dad of my six-year-old son and my four-year-old daughter, both of whom have become my raison d'etre. And some of these videos are out there publicly. I teach them about financial literacy. I will ask them, what do we do with our money? And they go, invest for our future. And I go, what do you want to buy? Stocks and real estate. That's not investment advice, compliance people.
00:12:18
Speaker
But it's an opportunity as parents, right? And we in the industry really need to do this, not only in our own families, but also for the public to educate on how to make smart money decisions. And it's not to sound virtuous. It's just something that I think is a natural fit because financial advisors have the knowledge in their minds and we often think about it in terms of advising clients. But we really need to start in our own homes.
00:12:46
Speaker
A hundred percent. I mean, everything you just said. Exactly. I didn't find that. No, I wasn't being taught that in schools. I didn't have that at home. And so I relate to you on so many levels with that. And so as an adult, it definitely I look back through my 20s and I see, you know, some of the challenges and obstacles that I face that really had I had the financial literacy, I would have been able to avoid so much of
00:13:14
Speaker
of that. And so we feel at Bannering Capital that it is so important to spread education. I think that's really fantastic what you're doing with your kids. And that's really what this platform is all about, breaking down those barriers and helping to educate people.
00:13:35
Speaker
you know, more about in the financial industry and all specifically. So authenticity, I've heard you talk about this a lot. So why is authenticity so important to you? What is it about, you know, why, why are you so keen on, on that part? Because having spent thousands of hours inside of wealth management firms,
00:14:03
Speaker
I think the industry really lacks the ability for financial advisors to open up as
Authenticity in Wealth Management
00:14:11
Speaker
to who they are. What kind of music do you like? What is your belief system? What are your core values? You love fly fishing? Great. Put it out there on LinkedIn. Do you love classic rock? Excellent. Go out and tweet about it. Because ultimately, while we're in the business of making people
00:14:32
Speaker
feel confident about the dollar sign related decisions they make, it's all founded on being human. And so much of the time, that's the one thing that the wealth management industry lacks, which is the ability for the practitioners to be fully open and authentic. And build that trust and build that trust, you know, with your with your clients. Do you have any specific strategies that you're willing to share on how you do build that trust for clients?
00:15:03
Speaker
Very much. So in the onboarding process, when I either meet with clients or they'll send me all of their electronic documents, and I have to see all aspects of an estate, tax returns, estate planning documents, of course, investment accounts, all risk management policies. And if the client has one, either a household or a business balance sheet.
00:15:27
Speaker
And so we sit down and I'm like, okay, it's our first meeting. This is excellent. What do you want to talk about today? And typically the individual or couple go, well, you have all of our documents. What have you found? And I literally or metaphorically push them all to the side. And I go, I want to talk about what is most important to you about money.
00:15:51
Speaker
It's interesting, Brittany, that you asked about the behavioral aspect of things because from the outside, it appears that my firm is a financial planning and investment management firm, and it is. But the majority of the time that I spend with our now 63 households
00:16:11
Speaker
is around the relationship with money and how to live an impactful life of intention and ultimately trying to preserve capital so that it can be transferred tax efficiently to the next generation or possibly, depending on the overall profile, the grandchildren, which is generation three. And so much of those conversations are around what are the family dynamics? What are the family politics?
00:16:39
Speaker
and that's where the authenticity of the family comes into play. It's not uncommon for families to have two, three, or four children. One is the model citizen, two are kind of just living their lives, and one might have a drug and alcohol problem. It happens all the time. So how do we leverage different tax and estate planning strategies to accomplish certain
00:17:04
Speaker
goals that the matriarch and or patriarch have with respect to their estate and then make sure that those goals are manifested. So something that is at our core and I found that by asking a very simple question which is turning to the spouse that speaks the least because I want to give that person a voice and overwhelmingly it is almost always the wife.
00:17:33
Speaker
I go, what is most important about money to you? And typically, I get a superficial answer. Well, I want to have plenty of it. OK. Well, let's explore that. And so there's this ladder of questions that's built where ultimately, I understand what is most important to that person. And around that fundamental point of importance, we can build the overall strategy.
00:18:02
Speaker
I love that. That's great. I mean, it's so important to feel comfortable with the person managing your money. So to build that relationship, you're helping these people navigate through some of the most important and critical biggest moments of their lives. Well, and that's one of the big problems that I would see in my former career of consulting advisors. How does a typical person find a financial advisor?
00:18:31
Speaker
They turn to someone that they know, love or trust. And they go, Hey, I'm looking for somebody that can help me with my finances. That person to whom they turn is not an expert in financial services. And so typically they go, Oh, well, you know, my guy down the street at whatever, you know, firm, he's great. Our kids go to school together. We go to church on Sundays. He's fantastic.
00:18:56
Speaker
They have no idea that the portfolio might be loaded in very expensive tax inefficient.
00:19:03
Speaker
mutual funds, for example, they might not be aware of the major planning guests that they have in their state. And for some folks out there, they're eligible for some pretty sophisticated, very intriguing estate planning strategies that practitioners simply aren't required to know. And so it's really important to understand the right questions to ask so that you compare the technical expertise with the trust factor.
00:19:30
Speaker
Absolutely. Well, what drives you, Vance? What makes you get up out of the morning, out of bed out of the morning? What is your why? What is your why? I have two young kids that have to go to college someday. Except that's really the answer, right? And I know that they'll see this someday. And I'm mostly kidding. I was born with boundless energy. I have never met a stranger. I love humanity. I'm naturally inquisitive. And whether it's a
00:20:00
Speaker
billionaire in a Bentley or a bozo on the bus, I just talk with people. There's a very well-known on social media financial advisor who has shared that he is very much an introvert. And it was funny because we got together and he has grown his practice over the years through search engine optimization and having Google direct people to him versus what I've done, which is just talk to strangers. We have seven clients.
00:20:30
Speaker
that are people I've met on planes. And it was funny because it reminded me of that classic painting where there's a sailor out at sea dreaming of being on land and it pans over and there's the guy on land who's dreaming of being at sea. It's like we both have gotten to the same place and building our firms, but we're just different people and that's the beauty of this business is we can build it however we want.
00:20:57
Speaker
What drives me is just the goal to really live an enriched life of fulfillment, which sounds, you know, fancy to say, but this is it, Brittany, we're all front stage and center in our lives.
Understanding Alternative Investments
00:21:11
Speaker
And I don't know about, you know, what's what's next in the other side, as they say, or on the other side, but I'm in no rush to find out.
00:21:20
Speaker
I love that, I love that, very well said. Well, let's dive into alts. So how would you define alternatives and what is so great about them? Alternative investments are globally diversified investments that historically have provided near zero correlation and health hedge downside risk, period. And it's so funny because in my prior career, and I tell this to clients and potential clients,
00:21:51
Speaker
My job was to travel around a certain part of the country to consult, typically leading RIAs, independent advisors and registered investment advisors and so forth, very specifically on how to use institutional alternative investments for their high net worth and ultra high net worth clients. And it's so interesting because
00:22:18
Speaker
Advisors understand stocks, they understand bonds, they understand mutual funds. And in that alt space, very commonly I would hear, oh, you know, I tried alts and they just, it never works. They just never work. I'm like, what I think that really means is it's like a seatbelt.
00:22:36
Speaker
They put the seatbelt on and they're anticipating some type of event. It doesn't happen. And these advisors will myopically look at the performance of the alternative investments relative to say the S&P 500 and it doesn't work, which really means that
00:22:55
Speaker
They're looking at the return stream and the return might not be consistent with the S&P, but that's not why we use alternative investments. We use them for all types of different reasons, and there is a myriad
00:23:10
Speaker
list of different alternative investment types, long-sword equity, private credit, managed futures. So we really have to understand what we're trying to achieve in a portfolio and then determine from that menu of alternative investments, which strategy or strategies as the case may be, we should incorporate. What do you feel is the most important or maybe the most frequent reasons that you would use alts?
00:23:42
Speaker
One is to diversify because if we look at a conventional stock and bond portfolio, let's pick on 2022. The performance of the 60-40 portfolio last year in calendar year 2022 was actually worse than in 2008. Don't believe me? Google it. People don't think of it that way because they think of 2008 and the performance there. But look at what happened to bonds last year.
00:24:10
Speaker
And so when we look at alternative investments as a diversifier, whether we take from the stock portion of a portfolio or the bond portion of a portfolio largely depends on the client and the thematic view that we have with respect to those asset classes in a portfolio. But of utmost importance, pardon me, would be to diversify alongside of stocks and bonds.
00:24:43
Speaker
So the biggest disconnect you feel for advisors is they're focused too much on the result is what you're saying or on the- Yeah, because- Yeah. Yes, because they look at the return of the alternative investment or alternative investments in which they are invested from the time they start until the day at which they're looking at it and they go, well, wait a minute.
00:25:10
Speaker
the stock market might be on a big tear, interest rates might have gone down, so my bonds are making money, and the alts have served as a detractor. Versus alternative investment allocators back in the nadir of 2008 were remarkably happy, generally speaking, because compliance is watching this, generally speaking, with their alternative investment allocation, because many of those alts, not all, but many did this or this when equities tanked.
00:25:39
Speaker
No guarantee of future returns, of course, and insert all of the required disclaimers here. But it's important to understand the different types of alternative investment strategies
00:25:51
Speaker
relative to what we're trying to accomplish. So for example, many advisors would say, I want to help hedge against downside risks should the stock market sell off. Well, immediately we look at what are called crisis alpha strategies that come to mind, one of which being managed futures.
00:26:10
Speaker
Managed futures can be kind of technical to explain to clients, and a lot of advisors find that to be a challenge. But if there is no event where stocks drop precipitously for a prolonged amount of time, then that particular strategy might not have enough time to prove to the advisor that historically it has been able to hedge out downside risk. So it's really important
00:26:39
Speaker
when working in alternative investments, to think of it like parenting. We have to really manage our expectations. Well, alts have been around for a while too. So I mean, how do you feel we can bridge that gap and get more advisors on board and utilizing them? Interestingly, the level of assets that I would raise in my former career
00:27:06
Speaker
asymmetrically shot up after equity markets would sell off. Go back and look at the dot com. Go back and look at the Great Recession. Look at the pigs trade. Look at the flash crash. It's almost like the collective body of financial advisors want to put the seatbelt on after the crash. Now, naturally, it really depends on the advisor and the type of client and what's in the best interest of those clients.
00:27:35
Speaker
If we have young clients that are high-income earning and they have a 20-year investment horizon, maybe alts aren't fundamentally of interest. But if we have a typical retiree who wants to participate in some of the upside, well, some of the potential upside, again, because compliance applies to this, in the equity market, but also hedge out some of the downside, then alternative investments might be intriguing.
00:28:03
Speaker
So to generate interest, we really have to focus on the impact of the solution versus how they work. Because so much of the time, and again, I spent thousands of hours inside of financial advisors' offices explaining how to allocate to alternative investments. And so many of them want to open up the hood and understand how the engine works versus focusing on
00:28:28
Speaker
really what the client is interested in, which is why we have this particular vehicle in the garage in the first place. I want to ask a little bit more about your dedicated fiduciary.
Starting a Financial Advisory Firm
00:28:45
Speaker
So could you give me, you know, give me your
00:28:52
Speaker
most exciting moment of starting your business. And then give me your most challenging aspect of starting your business. The two are very closely related. So the most exciting, and I know that this is hard to imagine based on how I look on camera right now, but the most exciting moment was when I had a great big beard and really long hair. I was on a Harley.
00:29:20
Speaker
I know it's that there are no pictures of that dance on the internet anymore. But for those that are interested in seeing them, and you know, Brittany, we run into each other at different industry conferences, I'm very open to sharing those pictures from my cell phone. And anyway, hold you to that. I'm gonna hold you to that. It's fine, folks in the industry know about it. So I had my prior career of consulting advisors and raising capital for
00:29:50
Speaker
These are large institutional alternative investment managers, Wynton, KKR, Brevin Howard, Citadel, and there are several others.
00:30:01
Speaker
My grandmother had a massive stroke, and I quit my job to go move to, of all places, West Virginia, where she lived, and go see her in the nursing home every day. And then when she died, I rode a Harley that belonged to my biological father, whom I had never met in person. A lot of people don't know this, but I never met my biological father. We talked on the phone three times in my life. And his widow happened to live also in West Virginia.
00:30:29
Speaker
So she found out that I was there looking after my grandmother's house and going in and seeing her. And she reached out and she said, Hey, I would love to give you his Harley. It's just sitting in the garage. So when my grandmother died, I picked up the Harley and I rode that Harley around the concert for a little over a year. And it was somewhere again, big beard, long hair. I had no accountability, no responsibility. It was, it was truly a once in a lifetime opportunity. And I was halfway between Sturgis and Denver.
00:30:59
Speaker
And I thought with ZZ Top Plan in the background, maybe I could raise 25 or 30 million and just basically go and become a financial advisor and let's see where that kind of goes because I have this unusual knowledge set of what these different firms out there do, but more importantly, don't do for their clients. That was the most exciting moment because it was that realization that really led to where I'm at today.
00:31:29
Speaker
And I'm sorry, your second question, Brittany. Oh, my second question was, what was the most challenging then, you know, what was the most exciting, maybe the most exciting moment, you know, in the process? And then what's been, what was the most challenging in starting yet? Yes, so that's right. And I apologize. The most challenging
00:31:51
Speaker
were the first two and a half years because I failed miserably. I went from going and meeting with these investment committees and family offices and talking about delta hedging and theta bleed and yield curve steepener trades and a number of things that are very technical in nature, which I happen to really love because of my background in science. The more technical and nerdy, the better for me because that's just how my brain works. What I realized
00:32:20
Speaker
is that the typical client does not care about how the portfolio is constructed unless they're an engineer or certain types of attorneys. They generally just have no interest. They really want to understand the warmer and fuzzier elements of the planning relationship and it took me a lot of fumbling
00:32:44
Speaker
the first two and a half years. And then finally, it just kind of clicked because when I got into my former career, I had several mentors that were teaching me how to have the conversation with financial advisors and with investment committees. When I became a financial advisor, I did not have that. And it really took a lot of dropping the ball to use these sports analogies
00:33:07
Speaker
to learn from my own experience to then correct that. And once it really started to work, it all just worked and it's been great. That's amazing. That's amazing. I do feel
00:33:22
Speaker
you know, what we're most afraid of, you know, freedom is on the other side of fear, you know, so we should always go for what we're most afraid of. You'll have to excuse me if you hear a little squeaking sound. My dog has decided that he wants to play. So if you hear a little squeaking sound. This is fantastic. It's fantastic. In the post COVID world, I hope that the largest takeaway
00:33:48
Speaker
is the vital importance that we are human again. Yes. Depending on where you live in the country, many of us were indoors for the better part of two years. That has a social impact. That has a psychological impact.
00:34:03
Speaker
So I love the fact that your dog is there and enjoying life and chewing on the chew toy that's making noise because that's what it means to be human. That's great, right? Like it's all part of life. If we had this about a year ago, one or both of my kids would have come into my office here and you know, hi dad, hi, you know, because that's how kids are and like life is meant to be lived.
00:34:27
Speaker
Yes, well, I feel very lucky that I get to be able to spend so much time with my dog, you know? So he doesn't realize how spoiled he is, I will say that. He has no idea. But yeah, he's my whole world. They're the best, you know? So I wanted to ask some questions about what your tips would be for people who are just maybe entering this space and trying to understand the world of alts.
Guidance on Alternative Investments
00:34:51
Speaker
What would you suggest are the best resources to learn?
00:34:57
Speaker
So about four years ago, I wrote a piece for ThinkAdvisor that was titled, and bear with me momentarily because I want to make sure I quote this correctly, 10 due diligence questions to ask absolute return managers. So you can simply Google that, advanced farce, 10 due diligence questions, and it will pop right up. It's really important that financial advisors understand the following. Number one,
00:35:26
Speaker
does the client need alternative investments based on the risk tolerance and investment objective? And number two, what are we trying to achieve? Because if the client is of the mindset that they want to hedge out downside risk, should equity markets go through a maelstrom, then crisis alpha strategies like Managed Futures might make sense.
00:35:49
Speaker
If the client simply is trying to smooth out the overall return stream and wants some upside of equity markets, but also wants to hedge up some downside, then maybe a long short equity or merger arbitrage strategy might come to mind. But there are articles out there that really simplify the inherent complexities of alternative investments.
00:36:11
Speaker
And interestingly, I found that particularly those clients who have assets and where are most of those assets with respect to age in this country, they're folks that are baby boomers. They have an interest in capital preservation.
00:36:26
Speaker
So it's important that financial advisors at least have a working knowledge of the landscape so that they can fluently engage in conversation around alternatives and then pick the best strategy or strategies as the case may be based on the client's objectives. Are there any podcasts or books that you would recommend that you've read yourself?
00:36:49
Speaker
or consume. Yes. So there are too many books to go into now. I know that Corey Hofstein has done podcasts on alternative investing, which I've really enjoyed. And there are several others. Do you happen to have a podcast yet that covers some of the fundamentals, Brittany?
00:37:09
Speaker
Well this this podcast here we're covering you know alts and just breaking down and that's what we're doing every week is just inviting different people on and you know just discussing their journey to alts and you know
00:37:23
Speaker
what it's been like for them, their recommendations and everything. So that's, you know, the, the foundation of this really is just bringing on, you know, and creating a discussion around it. But, you know, this is episode four. And so of course, you know, if there's any, anything that you think we should cover or bring on here, please, I am absolutely open to all recommendations. You know, we want this to be a safe learning space for everyone.
00:37:51
Speaker
Um, you know, that's why I was saying earlier, I'm really curious to know what, what your journey, I'm always curious to know what the journey is, um, to arrive into the finance industry, because it's different for all of us. And just again, that how important it is, our behavioral, our emotional relationship to money in general really creates that foundation and, um, and dictates so much of our life. So.
00:38:14
Speaker
Yeah, so you can't see it now, but I have an entire library of alternative investment books off to my right here, your left. And I'm certainly happy to answer any questions that viewers might have on where to start. There are some asset managers like Altegras and AQR that if you go to their website and you just do a little clicking around, there's some foundational
00:38:41
Speaker
white papers and so forth that can really get folks introduced to this space. It's also important for financial advisors that might have institutional clients, maybe some endowments that have long-term horizons that really fundamentally per the IPS or investment policy statement would require the inclusion of alternative investments at a say 10 to 35% allocation. So plenty to think about and more to discuss.
00:39:11
Speaker
For sure, for certain. I took, I got a certification from KIAA on the fundamentals of alternatives. That was really helpful for sure to get a jumpstart on it, but it's such a vast world. There's so much to learn and I think, you know, that actually just never ends as we continue to evolve and grow in this space.
00:39:32
Speaker
What are some of your favorite alts right now, alks funds and things that you perhaps would recommend right now? Should we be watching, paying attention to? What do you feel?
Exploring Investment Strategies
00:39:46
Speaker
A couple comes to mind. The first of which is merger arbitrage. And due to compliance reasons, and I hope that every financial advisor out there is laughing at that because you understand the struggle. I can't mention individual names, but
00:40:01
Speaker
I like to look at manager tenure and certain correlations of the strategy relative to S&P 500, other alts, and also fixed income. I think a lot of advisors look at the correlation of alternative investments to the S&P. But if we're going to provide a menu of alternative investment options for clients, I really want to look at the degree to which
00:40:30
Speaker
different alternative investment strategies have had hopefully near zero correlation in the past because you would want to diversify the diversifiers if you will but in particular merger arbitrage comes to mind and for clients that are skittish on the equity valuations and we don't have many of those because most of our clients have been through
00:40:58
Speaker
the crises that you hear about, 1987, I mentioned them earlier, but the dot com, the great recession and so forth. And they just go, hey, Vance, it's not time in the market. It is time in the market as retail as that sounds. But for those that are skittish, we do look at managed futures as another point of intrigue in this environment. All right.
00:41:25
Speaker
Well, is there anything else you would like to share or any final thoughts you'd like to leave with our audience? Just remember the fundamental importance of being authentic and putting it out there because clients see it, they resonate with it. Even if someone might not like the same music that you do or that you go fishing in Maine or something like that, they love the authenticity factor because it's one thing to have the technical expertise and know how.
00:41:55
Speaker
in bringing value to clients, but it's also another thing to really be human and have that level of trust with clients. So really appreciated you having me on here. Thank you so much, Brittany. It's been fun.
00:42:08
Speaker
Thank you so much. That was beautiful. So well said Vance. Thank you so much. You really are the best. It's been so great chatting with you today. Thank you again for taking the time and everyone go ahead and give Vance a follow and boundary and capital follow on LinkedIn, Instagram, and Twitter X. So we will see you next time on episode five. Thank you so much for tuning in everyone. We'll see you next time right here on the green couch.
00:42:38
Speaker
The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you consult your financial advisor prior to investing.
00:42:58
Speaker
Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparisons are unmanaged and can be invested into the records. As always, please remember, investment involves risk and possible loss of capital. Please seek advice from a licensed professional.