Part 3: The Long and Short on Tax-Aware, Long-Short (TALS) Investing

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The Hosts:

Kevin Kroskey, CFP®, MBA – About – Contact

Tyler Emrick, CFA®, CFP® – About – Contact

Episode Transcript:

Kevin Kroskey:

Have a sizable brokerage account, have unrealized capital gains. Do you pay income taxes at some of the highest rates? Do you want to pay your fair share but no more? If so, today’s episode is a not-miss for you.

Walter Storholt:

Another great episode of Retire Smarter is on the way. Walter Storholt, with you once again alongside Kevin Kroskey, Wealth Advisor, CERTIFIED FINANCIAL PLANNER at True Wealth Design. Find us online at truewealthdesign.com. That is your place to go for more information and to book a 15-minute call with an experienced advisor on the team to see if you’d be a great fit to work with the True Wealth Design team.

This is part three of our conversation about TALS and looking forward to continuing this with Kevin. It’s been an in-depth series and I think there was hints of perhaps a part four, but it sounds like maybe we’re going to wrap this up with part three, Kevin, is that right?

Kevin Kroskey:

Well, given my past track record and my goal of 20 minutes per episode, which I failed miserably over the last two, we’ll see. But I do believe that this is going to be more focused and a bit briefer today compared to the last two.

Walter Storholt:

Excellent. Well, looking forward to that. Before we dive in, we just passed Thanksgiving the other day. Hope you had a great holiday and gearing up for the final few weeks before the end of the year. Anything big on the Kroskey game plan these next few weeks?

Kevin Kroskey:

Not necessarily. I think we did a little bit more for Thanksgiving. So we spent Thanksgiving in Puerto Rico and my sister and her fiancee to-be. I don’t know if I’m allowed to announce that actually, but shh, nobody’s listening.

Walter Storholt:

Like a pre-retiree, a pre-fiancee.

Kevin Kroskey:

I think so. They’re together. I’m the oldest of three, I’m 48 and sister and brother are both 18 months apart, so three and three years. A lot of stress on mom growing up with that and she’s my little sister and it’s awesome to see her happy and her better half I suppose, or other half, we’re very impressed and looking forward to having him become part of the family. So always great when you spend time with your loved ones and to do it in a nice climate and enjoy the outdoors and do some hiking, enjoy the ocean, things like that. It’s been great.

Walter Storholt:

Fantastic. Well, glad to hear that and best wishes to you over the next couple of weeks through the rest of the holidays. Let’s dive into TALS. Give us a recap in case somebody’s missed the first two episodes or even if they heard them but need a refresher and where do you want to take today’s discussion?

Kevin Kroskey:

You got it. I’m going to keep it brief. The prior two episodes are good to go back and listen to if this applies to you. We’ve actually had, I would say Walt, this is probably the content that has generated the most responses from prospective clients wanting to learn more and explore a relationship in short, who doesn’t like tax savings? And there’s really two key benefits here.

Tax savings could be deferral, could be even a complete avoidance of gains, or it could also have investing benefits, which we’re going to describe today. But the tax component, which is where we focus more so on in the prior episode, is really for those with unrealized capital gains. Could be appreciation from stock, could be businesses, could be real estate, any of those. This strategy could potentially help avoid, mitigate capital gains and again, potentially when combined with other strategies, completely eliminate those gains in time.

So that certainly sounds good to most folks. Who wouldn’t want to do that as long as it meets other requirements and makes sense for the client specific situation? And then there’s also a component where for the really well-to-dos, SEC qualified purchasers, which is generally 5 million in investments plus, that you can actually add a second layer to the strategy where you can actually use the investment strategy to go ahead and offset ordinary income.

So business income, wages up to a certain threshold each year and so forth. At worst, you’re really transforming an ordinary income rate into a capital gains rate, but again, you could potentially completely avoid the capital gains too, thus saving even more dollars. So it’s really impactful when you look at it. It’s not uncommon that you’ll have clients that are successful and able to implement these strategies to save north of five figures a year.

We have some clients right now that are significantly more than that. Everybody’s situation was a little bit different, but from both investing and tax perspective, I’ve used the word game changer. And I think in the last episode, Walter, maybe it was the first, but you said, “Wow, that’s a really strong statement.” And it’s one that I firmly believe it’s just different, it’s innovative and it really couples very favorable tax benefits with some very favorable investment benefits as well. And of course, it needs to be implemented properly and executed properly and monitored. So as long as all of those requirements are there, we can certainly expect to improve a client’s situation significantly in both the tax and investing realms.

Walter Storholt:

Excellent. Well good recap of the last time around. And again, really encourage folks to go listen to those first two episodes. Of course, if you have missed them, I’m going to give you a lot more information and detail on that background. We’ll link to that in the description of today’s show so that you can find it easily. So Kevin, where is our new direction today? How can we take this conversation to the next level?

Kevin Kroskey:

Today we’re going to focus on just high level aspects of the investing benefits and dive into this long short strategy. I chuckled when I was thinking of explaining this to a client recently, and when you hear long short and realizing losses, his comment was, “Look,” he’s like, “I get it. It makes sense.” He’s like, “It’s terrible marketing. Nobody wants to lose money. You have to reframe how you’re explaining this.”

So it’s candidly when you’re in the industry and this is the world that you live in and it happens to everybody, every professional, and then you have some really bright people that communicate very simply and clearly the very complex concepts that they may be dealing with, like Warren Buffett is probably the best example of this. How does Warren Buffett talk about credit risk or the risk of default when you’re talking about debt?

He said something along the lines of “People have lost more money reaching for yield than at the barrel of a gun.” So reaching for yield higher yield higher rates means higher risk, but oftentimes people don’t perceive it that way. Pretty complex concept illustrated very nicely by the great Warren Buffett.

When we’re looking at this. Yes, there’s certainly some losses and loss making that’s involved in these strategies, but again, to focus on the main benefits, we’re talking about saving taxes as well as increasing our expected return on the portfolio and not only doing that, but we’re expecting to add some significant diversification benefits as well.

So I’ll outline that today, but don’t get hung up on the loss component here. We’re going through this in a way where of course we want to go ahead and make more dollars but do it in a very tax efficient way and the tax benefits that are being able to be derived from these specific strategies, again, are quite innovative and very significant for the right type of client situation.

One of the things we talked about in the first episode was just about how the markets are changing and how the number of stocks in the stock market has declined by about half over the last 20 years. So it’s creating more concentration, it’s creating less of an opportunity set. It’s creating generally more correlation or the stocks are moving more in a similar direction together than they have in the past. So these are all I would say, negative investing characteristics when you’re looking to assemble a beautifully diversified portfolio.

And when you think of your portfolio, the analogy I always like to use is you need a good recipe that’s like your asset allocation or “Hey, am I going to add stocks, or bonds, or commodities, or gold, precious metals, or something different.” As then you also need very high quality ingredients, which are the underlying investments that you choose within those asset classes.

So it could be whether it’s an ETF or a mutual fund, limited partnership or something different, those are all the ingredients that would go and fulfill your asset allocation recipe. So both are important. Again, studies generally show that the recipe is more important and explains more the variation of returns in your portfolio over time. So it certainly makes sense to start there and then you go and look to add a manager for that specific strategy.

And so some of the benefits that I see really with the TALS strategy from an investment perspective is really helping with the asset allocation. So I’ll just do a brief recap, high level and then dive in a bit deeper. But again, it’s not about losing money here. We’re looking to implement this strategy to increase expected returns. You want to have a higher return at a lower level of risk that’s greater portfolio efficiency.

And importantly, and we should all know this by now, but anything that we add into the portfolio, if it looks risky in and of itself, that doesn’t really matter. What really matters is how it relates or correlates to other asset classes that we have in the portfolio. If you think back to 2022, Walt, what happened in markets that year?

Walter Storholt:

I’m remembering the stock market took a step back.

Kevin Kroskey:

The stock market took a step back. The NASDAQ was down approximately 30% that year, but it was also coupled with one of the worst years on records for bonds. So bonds, the aggregate bond index was down nearly 14%. So most people, when they think of their investment portfolio and they look at it, the vast majority of the risk exposure comes from stocks that they own. But then secondly, it comes from bonds.

And if you break up the bond component, there’s really two parts there. It’s how much term risk you’re taking or how far out in time are you going, the longer you go out, the more volatility and the more risk. It’s just like the same way that you see mortgages priced, the 30 year is almost always priced higher than the 15 year, for example. And then it’s that credit risk that I mentioned when I was trying to channel my inner Warren Buffett or Walt, as I like to say, “I think you’re the Warren to my Buffett.”

Walter Storholt:

Oh, I like that.

Kevin Kroskey:

That doesn’t sound inappropriate. It sounds a little weird, but not inappropriate. But hey, I’m rolling with it, Walt. Again, when you look at that both in ’22, a lot of people were very surprised that they lost money. Not only did stocks go down, but so too did their bonds, and in part that’s because rates were so very low coming out of Covid that I don’t want to say they only had one place to go because they had stayed low for really well more than a decade at that point, even after the financial crisis stayed low.

And even in fact, the Federal Reserve was saying that they were going to be low pretty much near zero through the end of 2023. And hey, there you go. The Federal Reserve has some of the best information in the and before many others have it. And they were way, way wrong with their forecast. So again, be skeptical of anybody that says they have a crystal ball or acting like it.

You really had the equity component deriving most of the risk in the portfolio. And then you had the bond component with its two parts, the term and the credit risk, the other part of your portfolio. And again, all those went down for most asset classes in 2022. There are certainly some parts of the portfolio that did well. Most people did not have exposure to these in those years. It’s different, you have to think differently to implement these strategies and there’s a risk in looking different. Well, when you harken back to your days at school, were you one of the kids that just really wanted to stick out or did you want to fit in?

Walter Storholt:

I was a little bit of both. I wasn’t afraid of being a bit unique.

Kevin Kroskey:

How were you unique, Walt? Did you have purple or blue hair by chance?

Walter Storholt:

No, not in a rebellious way I suppose. So no, I blended in probably from a style standpoint.

Kevin Kroskey:

And I would say that’s what most people do when it comes to their portfolio too. It’s what they hear about on the news. It’s what they’ve seen show up as options in their 401K, investment lineup over the years that they were working and that’s what they were forced to pick from. And so regardless of their level of understanding of those underlying investments, there’s a level of comfortability just because it’s what they’ve seen over time.

So if you’re going to do something different, and there’s an old saying, I always like to repeat, but different isn’t always better, but better is always different. And I believe that to be true, but you can look to get creative improvements to your portfolio by adding some diversified positive expected return sources of return. Some things that did really well, for instance in ’22 were trend following strategies or momentum strategies. Those are some things that will show up in the TALS strategy that I’ll talk about. Other things were floating rate debt. So as interest rates increase markedly, you had floating rate debt, which is, at least was, pretty uncommon to see in people’s portfolios doing really well because it did not suffer losses as normal bonds do from the term risk that they take. So it’s that seesaw implication where as rates go up, bond prices go down, but floating rate doesn’t have that.

And in fact, you had some other floating rate securities that did particularly well in the private credit space. So it’s not like all credit was bad. It’s not like all bonds were bad, but certain types worked really well in that environment. But again, these were a little bit different. I won’t necessarily call them esoteric, but uncommon things that you generally don’t see in a 401K lineup. And we generally don’t see when a new client is coming on board and we’re starting to work together and we’re taking a look at their portfolio.

But the thing is, and one of the reasons why I’m mentioning this is you have to be comfortable with being a little bit different. Maybe you don’t have to do the blue or purple hair and stick out that way. Maybe you can take more of a Walter Storholt approach and stick out in his own unique way, but more blend in if you will. Because if you can’t live with this new strategy, or this enhanced strategy, or this just plain old different strategy, then ultimately you probably shouldn’t do it because the markets are going to zig and zag over periods of time and you really have to have the stick-with-it-ness, if you will, to go ahead and last through that and realize the expected benefits of any strategy, whether it’s this tax aware, long short strategy we’re talking about or anything different for that matter.

So it’s good to have a philosophy, it’s good to have an understanding, but candidly, while maybe in my career, particularly earlier, I was more idealistic and “I’m going to teach everybody about this and the baseline knowledge so they can be really disciplined and stick through thick and thin in the markets.” The thing that I’ve learned with just being pragmatic, or hopefully ending up there with all the years of practice and the conversations and the real life experience and working with people and hopefully the wisdom that resulted from that, is one of the big reasons people hire us is in part because they don’t have to worry about this.

Some clients certainly want to be more informed than others and we’re happy to meet their communication preferences. But a common refrain you hear from one you’re working with clients is, “Well, Kevin, this is what we pay you for, to worry about all these details.” And our advisors will usually broch that with maybe a bit of a joke and say, “Hey, Mr. And Mrs. Client, when we get to the investment part, would you like the five slide approach or would you like us to go through all 55 slides?”

And no one has ever opted for the 55 slide presentation, but Walt, when I reflect back on my career, there is definitely some people I took through that 55 slide presentation because I wasn’t self-aware enough to go ahead and ask that question, but you learn over time. And so there you go.

But again, just to keep this in context, we’re looking to add this strategy to improve returns as well as improve diversification and save some additional tax benefits, potentially significant tax benefits, but we are adding some complexity as well as being different. And we really have to stick with anything that we’re going to do as long as it makes sense because any investment strategy is going to have some times where it’s doing well and other times where it’s not, there is no such thing as something just goes straight up over time.

So when we get into the TALS strategy, specifically the diversification that I’m really talking about, when you have a long and short portfolio, so you’re going long on stock and you’re going… not a stock, you’re going along a basket of stocks, could be on the order of a couple of thousand for that matter. In short, another basket, a similar amount, you’re really pursuing some diversification within the strategy and you can implement it different ways. But a lot of times if you just think of a simple implementation where you don’t have any market exposure, they call those market neutral.

And what you’re trying to do is just really extract the benefits of going long traits of certain stocks. And again, these are stocks that are generally cheap and improving companies, companies with lower risk, stable business models, high profit margins, resilient earnings, positive sentiment as well can certainly propel stocks forward for a while.

And then the corollary is you’re going short, more expensive companies that may have declining revenue, higher risk, higher debt levels, negative sentiment, things like that. One of the ways we described this previously, which I think you felt was a bit humorous, while it was going long, quality companies and short junkie companies, you remember that?

Walter Storholt:

The short junk, yes.

Kevin Kroskey:

Short junk, yes. We want to short the junk. And again, that’s actually in some of the academic literature calling it that way. So it sounds a lot better than some other ways that these sorts of traits or factors are described. But most people, even if you decompose equity market or stock market returns in the bond market, I mentioned credit risk and term risk. In the stock market there’s a few more of those traits. And again, some people define them a little bit differently, but you could have the growth companies typically tend to be more expensive. Value companies tend to be cheaper. You can have positive trending stocks. Those are more momentum stocks. And then the opposite of that too are catching the falling knife.

You have a difference between big companies and small companies, and there’s several other ways to look at this and slice it and dice it. So there’s a little bit more variation in the equity markets, but the driver of the equity markets in general is just investing in companies, their profitability, their earnings, their ability to grow those over time and pay out those benefits to shareholders, whether in the form of dividends, share repurchases, price increases, what have you.

But these strategies, these long short strategies, you’re really trying to separate and not take that equity market exposure and then you’re taking more exposure to those, call it, the quality versus junk. We’ll just use that as a simplified example to explain this.

And the example that I’ll give you here when you look at it is I just picked a 10-year period ending in mid of ’24, so June 30 of ’24. Looking back over the prior 10 years, it’s been a good time to be an investor. So you did an episode with Tyler recently, I think it was called SPY or Die, and just talking about how positive the S&P 500, which the SPY is an ETF attracts it has done, and also some of the risks of how concentrated it’s been. If you look at SPY over the last 10 years, ending mid ’24, it had a 12.7% annualized return. So above historical average and the risk volatility or AKA Walt…

Walter Storholt:

Wiggle factor.

Kevin Kroskey:

The wiggle factor, yes.

Speaker 3:

The wiggle factor, the wiggle factor, the wiggle factor.

Kevin Kroskey:

Walt, it’s probably my favorite sound effect. I appreciate that one. I do.

Walter Storholt:

More than the egg one?

Kevin Kroskey:

Yeah, I don’t know why. Maybe there’s some bad memory of eggs buried down deep.

But the risk or the volatility is about 15.3% for the S&P 500. So nearly 13% return with about a 15% volatility level. I’m not trying to really get into any specific funds, but I’m just trying to illustrate these strategies here. And again, this is just past performance and of course listen to the end and you’ll hear the disclaimer as you do with anything in the investment world, but past results are not indicative of future performance as they say.

But again, we’re talking more about the strategy and how these relate to each other or don’t and can add those diversification benefits. And one of the managers that we work with happens to have implemented the long short strategy and the publicly available mutual fund, and I picked that as an example for comparison. And returns have been pretty favorable as well, just right around 11%. So a little bit less than the overall market.

However, when you look at it, the risk level has been about 30% less. So you’re giving up a little bit return compared to the equity market, SPY, but you’re also getting a lot less risk involved. And while that sounds good on surface, you really need to go down another level too because the source of the return again, is not just from the market. This specific fund, if I decompose its returns, about 40% of the returns came from market exposure. So it was not market neutral. It did have some market exposure in there. And again, these can be managed and implemented in several different methods, whether it’s zero market exposure or market neutral or something that does have some market exposure as well.

But they had 60% of those returns, or when you look at it close to 7% of the return on an annualized basis, not coming from market exposure. It was coming from the traits of those securities that were going long, it was quality stocks and being short junk. Well, being short the junk. And when they’re doing that, they were able to achieve about a 7% annualized return per year. And that return is not correlated to the equity component in the equity markets.

So for example, when you have that 2022 and you have stocks and bonds going down at the same time, these sorts of strategies, long short strategies, again, there could be variations in how they’re implemented, but the ones that we prefer are highly diversified, not looking to take individual stock risk, but trying to go long traits for favorable stocks and a high number of those to maintain the diversification. While going short a high number of those with the opposing traits, that’s a completely diversified and uncorrelated source of returns to the equity markets and those sorts of strategies that we prefer that are in this asset class, you call it long short investing, were up significantly in 2022.

Again, past performance not indicative of future results, but a really good example in the recent past where how you can add a diversifying strategy to the portfolio and it will make your portfolio more resilient. We don’t necessarily want to predict what’s going to happen in the markets. Again, crystal ball, don’t have it, it doesn’t work. But we want to prepare. We want to make our portfolio more resilient and how do we do that?

We combine different asset classes into our investing recipe that have positive expected returns and behave differently, they’re uncorrelated. And then also we want to make sure that we pick good ingredients to go ahead and meet those asset allocation recipe objectives.

So these are the things that you need to think about whenever you’re looking to build a better portfolio. You want it to be more resilient, you want it to do good in good markets, you want it to do relatively well in down markets. Ultimately, you want a smoother ride because the smoother ride or the lower wiggle factor, the higher you’ll compound your dollar growth over time. And what does that mean? Well, it means you have more dollars to put food in your belly, support your lifestyle, retire earlier, do more, spend more, give away more, have more comfortability, whatever it means to you and your financial life plan.

So those are really the results why and the reasons why you’re looking to go ahead and implement a strategy such as the long short investing component. And then if we take a step back more broadly with what we covered in the prior episodes, it’s not just the long short or the LS component, but it’s also the TA or the tax aware component of TALS. And when you couple them together for a taxable investor, it’s very, very compelling, particularly as you move up into higher tax brackets up the wealth ladder.

But even if you’re not there and you understand these benefits that we’re discussing, you could still add a long short component to your portfolio and improve the recipe, improve the asset allocation of it, and you have to stick with it. You have to understand it. If it has a bad year, which it inevitably will, and SPY is just going up, you don’t want to just sell the thing that’s doing bad and pile up more risk in the thing that’s doing well, that generally does not end well.

But this really can be applicable for anybody that has the wherewithal to be more logical, to seek improve sources of return, and to seek more diversification and build a more resilient portfolio, whether they’re starting out early in their career or whether they’re making sure they want to protect but grow their nest egg over time.

Walter Storholt:

Curious if you can give us one last… I’m just sitting here thinking, okay, we’ve covered the reasons, and I think we’ve definitely danced around who this is a fit for, but I’m wondering if you can drive that home as a way to end this. If somebody’s listening to the episode today and they’re like, “I think I might be a good fit for this,” or “I think I’m interested in this.” Can you give us an idea of really who is going to be the best fit for this? You definitely indicated there that you want to make sure that folks are well-suited for this strategy, that they’re going to have the right mentality and the right mindset, all those kinds of things. So who is going to be the typical person that is going to fit this type of strategy the best?

Kevin Kroskey:

No, good question. So if we start where we’re at today with the investing aspects that we focused on, again, I would say anybody that’s pursuing a more diversified, a more robust, a more resilient portfolio and is comfortable potentially being a little bit uncomfortable relative to the masses and not just having traditional stocks and bonds in the portfolio, that’s for sure. So we have a lot of clients, a lot of their wealth has been built up in IRA accounts over the years, in 401K accounts and Roth, and maybe they don’t have much in the way of a taxable investment in a brokerage account, or trust account, or joint account that they have.

And that’s fine. Obviously you don’t have any capital gains in those retirement accounts. So you are generally not, you are not going to get the tax-aware benefits of the strategy, but you can certainly derive the expected benefits of the investing strategy. But when you go into the tax-aware component, I would say a bare minimum, you need to have about $500,000 in a taxable investment to do these strategies. And that’s not just something that you’re going to be pulling down pretty quickly, but something that’s going to be left to invest and grow for a period of time or being added to and continue to grow over time as well. So that’s number one.

And for those clients that meet those characteristics, which we have a lot that we’re implementing the strategy with, again, we’re expecting to grow wealth by having a better portfolio, but we’re also expecting to shelter capital gains and make the portfolio much more tax-efficient. So that’s a pretty broad swath there that it applies to. As you move up the wealth ladder, some specific and unique cases come up. We have several corporate executives as clients that have received a lot of equity compensation over time, whether through grants or through options, and there’s certain restrictions to being a company insider and being able to sell these.

And it may not look good too, that a company insider is selling these securities. So a lot of times they’ll continue to grow and hold these and it could be very significant over time. So if you are one of those lucky people, and not just luck, but hey, we’ve all had some luck, and as the saying goes, luck is when opportunity meets preparation. But if you are one of those few corporate insiders that have this sort of situation, this strategy can work incredibly well for you to diversify that concentrated risk in your portfolio and do it in an incredibly tax efficient way better than anything else.

There’s other strategies that are out there candidly, I think this one is just, again, it’s a game changer in terms of the benefits and the amount of the benefits it’s able to derive. If you’re a business owner and you’re looking at a sale, we have one client this year that had a very successful exit from selling actually two different business interests this year and a very sizable capital gain resulting from it, an eight figures level. He’s been able to implement this strategy and he’s able to defer several hundred thousand dollars of capital gains he would’ve otherwise paid this year.

If you’re a business owner looking to sell your business down the road, which ultimately, you should always be planning for that. And in doing so, you’re ultimately going to build a better business and give yourself more options. But harvesting some of these losses while you’re pursuing the growth in your portfolio is a good idea. Accumulating these losses will give you some additional capability to make that exit in a very efficient way. So the business owners are real bread and butter component and sweet spot for this strategy.

And then if you are somebody, we have a few, actually, we have a handful of clients that are both husband and wife, Doctors have very significant incomes. Some work for and are partners in a local physician-owned hospital. So not only do they have high W2s, but they also have fairly high K1 business income and they also have enough money to go ahead and invest in this inside of their taxable account.

So there it helps with both of those things I talked about in the prior cases where you’re just harvesting these losses, growing the portfolio, you’re making it more tax efficient. But in their case, and again, this is for those people that have 5 million plus and meet the SEC qualified purchaser definition, there’s a second leg to it that I talked about in the second episode where you can actually add in a second part to the strategy that will help save ordinary income too.

And in their case, it’s more than half a million dollars a year they’re avoiding at a 37% tax rate. So we’re talking about $200,000 in tax savings there. So there’s some pretty broad applications.

And the final one I’ll mention for anybody that has significant wealth in real estate, particularly investment real estate, they’re generally familiar… Real estate has some inherent tax advantages to it with a depreciation and ability to go ahead and continue to defer gains by investing in a new project or doing a 1031 exchange into another property. But it keeps you on that real estate hamster wheel. So it almost forces you, sometimes it’s pretty common that people will hear, “Well, we got a 1031 investor.” So price didn’t matter to them because they’re so concerned about the tax benefits and the timing that they have to do the 1031.

Walter Storholt:

Not being concerned about price is not a good strategy in any investment.

Kevin Kroskey:

So by implementing a TALS strategy, it has some similar traits to it where you can actually offset and defer those gains, but it’s a heck of a lot less restrictive and it’s able to derive much more liquidity that somebody can take if they wanted to not reinvest in real estate reinvest elsewhere, or just take money out and spend it or gift it to charity or something of the sort.

So while it really does have broad applications, but at the core of it, you really do have to have an understanding that you’re going to look a little bit different than the general market. That is generally a good thing, at least it will very likely be over time and you have to stick with it.

When we work with clients, I’ve said this before, but we see when they log into their client, we call it their client vault, and it’s like a daily performance report, and they can see how their plan is doing. They can see their success rates, margins of safety in their plan, the goals that they have in their plan, as well as all their investments and a slew of other information that we have in there as well. And what we see is over time as we continue to work with people and we continue to work hard to derive significant benefits to them, help make things more efficient, better working, and just make their life simpler, we actually see them logging in less.

So I would say that we’ve earned their trust and have firmly become into the trustworthy category. And that’s great. We feel very happy when we see that and we know that their peace of mind is increasing because that’s very indicative of that. But it does take time to build that relationship, at least for me, I’m always one, it’s kind of trust but verify.

And I am one of those natural skeptics I guess, which hopefully makes me a good investment manager too, and not just chasing the new shiny object. But those are some things I think you see, because again, if you can’t stick with it, don’t do it. And just pursue a simpler strategy that may not be as diversified, may not have as high of expected returns, certainly won’t have as many tax benefits, but these are some, I think, logical trade-offs that you have to balance and weigh and decide upon.

Walter Storholt:

Well, I’m glad that we expanded that last piece of the conversation because you’re right, that net or who falls under the category of being qualified for this expands a little bit when you run through the list like that. So that’s really helpful. And if you are out there and you’re thinking, “Hey, I might be a fit for this, this does sound up my alley,” or “I at least want to find out a little bit more.” What’s the best next step to take?

Well, we always talk about it here on the show, but if you’re new, it’s very easy to get in touch. And the first step that you should take is going to truewealthdesign.com, truewealthdesign.com. We’ve got it linked in the show notes or the description of today’s show, so you can find it easily. But you’re going to go to the website, look for the, are we right for you button and click to schedule your 15-minute call with an experienced advisor on the team.

And that’s going to see if you’re a good fit to work with one another and get some of those initial questions that you have answered. Great introduction to the team, and to get the process started without a huge commitment on your part from a time perspective. So take 15 minutes to have that call. You can schedule it at your convenience at truewealthdesign.com and look for the, are we right for you button. Kevin, nice bow on the three series here. Well done my friend. We did not keep it to 20 minutes, but that’s okay, it was packed.

Kevin Kroskey:

Well, I’m blaming you a little bit. You’re culpable here, Walt, because you asked a very great question about explaining who it applies to and I’m glad that you did. But yes, at least I’m consistent, if not accurate. And here we are again.

Walter Storholt:

Kevin, thank you so much. Have a great rest of your week and we look forward to catching up with you soon.

Kevin Kroskey:

Thank you, Walt. You too.

Walter Storholt:

All right. Take care. For Kevin, I’m Walter, we’ll see you next time on Retire Smarter.

Speaker 4:

Information provided is for informational purposes only and does not constitute investment tax or legal advice. Information is obtained from sources that are deemed to be reliable, but their accurateness and completeness cannot be guaranteed. All performance reference is historical and not an indication of future results. Benchmark indices are hypothetical and do not include any investment fees.