March 2020 | Posted By PJ McDaniel

While millions of people frantically check their smartphone notifications about the coronavirus disrupting the stock market, here are a few notifications that catch my attention.

These reminders are reassuring, especially when the 24-hour news cycle tempts us to hit the panic button. Most importantly, they keep me focused on things that I can control. In this case, my investment accounts have been busy taking advantage of the volatility in the stock market by using intelligent portfolio management.

Let’s quickly break down both of these notifications:

The first alert I received was for tax-loss harvesting, which is a nerdy term for converting market downturns (such as the one we’re seeing right now) into tangible tax savings. When properly applied, tax-loss harvesting turns your financial lemons into lemonade. A successful tax-loss harvest lowers your tax bill without substantially altering or impacting your long-term investment outcomes.  

The second alert I received was for rebalancing – also known as buying what’s cheap in the market and making sure my overall risk profile, also known as my asset allocation, is on target. This happens automatically—and without additional fees. It’s the investing equivalent of having your GPS re-route your trip to maximize efficiency.

These are the little things that add up over time. In fact, last month we posted a popular article titled “No Tipping on Taxes” which explores how important tax-loss harvesting is to avoid paying unnecessary taxes. No one likes to be surprised by a larger-than-expected tax bill.

In times like these you need to focus on the things you can control (automating your portfolio management) and avoid worrying about the things you can’t control (fear-mongering news alerts). In fact, the smartest financial decision you make could be putting your phone away. If you’re curious about how these simple yet important investment management tools could help you during this period, schedule a short call with us here.

March 2020 | Posted By Matt Hall

John Jennings is someone you want to know. He is fascinating, and not in a weird way, in a lovely Dr. Seuss style. He deserves to be famous, though he doesn’t care about fame, and is worthy of it and your attention.

He writes something called the IFOD – Interesting Fact of the Day (we’ve shared them with you here in this newsletter).  His daily thoughts often tickle the brain into an active state. They are meaningful, relevant, poignant, and thoughtful.

Does IFOD pay the bills? We think not. So what does Jennings do for work? Uh, he’s a big deal. John is President and Chief Strategist of The St. Louis Trust Company, a leading multi-family office. This means he helps the ultra-affluent. Unlike most in wealth management, John deserves a lot of respect.

And if that’s not enough, John is an adjunct faculty member at Washington University’s Olin School of Business where he teaches in the Wealth and Asset Management masters program. John is also a Forbes contributor, a lawyer by training, a hardcore vegan and a loving husband and dad.

Enjoy this wide-ranging conversation covering: Lawyers who aren’t lawyers, John’s IFOD, committing to a plant-based/Vegan diet and how it connects to solving John’s fight with OCD, investment thinking and what the ultra-rich struggle with, Coronavirus and what napping has to do with success.

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March 2020 | Posted By Nell Schiffer

Sometimes we are indifferent to the brands we interact with. You might buy whatever Amazon’s algorithm recommends, or and listen to songs on Spotify playlists that go in one ear and out the other. 

But sometimes there are brands we can’t stop talking about: the amazing coffee you can’t survive without, the jeans you have six pairs of, the wine you serve for every guest. In these cases, you’re not just a customer, you’re a raving fan.

Converting clients into raving fans isn’t a scientific formula by any means, but it starts with a specific mindset: that’s why everyone at our office is (re)reading Raving Fans by the renowned management expert Dr. Ken Blanchard. Rather than burying his advice in jargon, Dr. Blanchard uses a parable that explains how to DEFINE a vision centered around your client, DISCOVER what your client wants, and DELIVER on your vision, plus some. Best of all, it’s all packed into just 137 pages (no excuses, busy people!)

Make no mistake: You don’t have to be the CEO of a business to apply the principles in Raving Fans. Maybe there’s a cause you’re passionate about, maybe you want to inspire a friend to make a change in his or her life, or maybe you want to foster better relationships at home. 

Bottom line: this is essential reading if you have a vision and want to bring it to life. In the case of Hill Investment Group, that means inspiring people to Take the Long View. We’re fortunate to have raving fans like yourself who read and share our newsletter. It’s been a 15+ year journey, and it’s worth every second. 

March 2020 | Posted By Henry Bragg

Matt Hall’s recent view out a plane window.

Jason Zweig from the WSJ wrote a great piece in this weekend’s journal. In it he writes “Don’t let yourself be fooled into believing its unusual that nobody knows what’s going on right now. The past makes sense only in retrospect, after our minds burnish it to our liking. The present almost always defies our efforts to make sense of it.”

Read the the WSJ piece here.

March 2020 | Posted By Katie Ackerman

You may have read Matt’s prior message about the Coronavirus, but just in case you missed it, click to listen. Please note we have received a few calls, contrary to the audio message, but the central themes remain as relevant two weeks ago as they do today (even as the media’s position on the virus changes daily).

 

 

February 2020 | Posted By Katie Ackerman

Take the Long View with Matt Hall is back with a new episode! Matt kicks off Season 2 of the podcast with a man who may exemplify long view thinking more than any other guest he’s had on the show. How is he so long view? David Stine is a woodworker (understatement) and makes products that last forever, using material that was likely born before he was. Who do you know who can make the same claim? David has also done the thing most people don’t have the guts to do. He quit. He quit the thing that most stick with their whole lives. He left office life and made the outdoors his new workplace. He’s thriving – so much so that media gurus are working to make a TV show about his life. David has clients around the world, awards from industry experts, and more than two decades in business, but the thing Matt loves most about him, is he’s not just an artist, not just a craftsman, he’s deeply philosophical.

David Stine joins Matt for Episode 1 and covers his journey from growing up on the family dairy farm to deciding to go to law school and eventually realizing his dream and passion for creating custom furniture handcrafted from sustainably harvested American hardwoods. Matt says “David is smart, funny, talented, brave, and kind. These characteristics are a tough combination to beat and episode 1 sets the bar high for season 2.”

Click here to listen to episode 1 and check out the short video below to learn more about David.

 

February 2020 | Posted By Henry Bragg

20 things I’ve learned about investing and how people approach money.

I’ve been in engrossed in personal finance and the financial services industry for more than 25 years, and I’ve seen some amazing successes and some things to be avoided. I decided to compile a list of 20 observations based on my experience—and the ways people can do better. See the bulleted list below.

1. Wealth, career success, and financial sophistication are not perfectly correlated.

Whether you have $50 million, $5 million, or $500,000, success in one area of life doesn’t mean you’re ready to be a good investor; investing is a totally different skill set.

2. Most people spend too much (today) and save too little (for tomorrow).

Taking the long view is an adjustment for a lot of people. If you want to live comfortably for your entire life, you have to start planning early—while you’re earning an income that gives you the flexibility to save and spend.

3. Most portfolios are not properly diversified.

The typical non-Hill investor owns too much of too few things—like U.S. large-cap stocks. Being truly diversified means owning global capitalism. Think 10,000+ stocks, not 500.

4. Most investors pay too much in tax.

Common mistakes include high-turnover investments, not taking advantage of tax-loss harvesting, not matching the right assets to the right accounts, and not coordinating charitable giving with an investing strategy.

5. After-tax returns don’t show up in annual performance numbers.

But they do show up in the total dollars that  compound in your investment account, which is more wet snow for the snowball to gather during its long roll down the hill.

6. Most people don’t take the time to understand the three definable investment philosophies.

There are critical differences between the three main approaches:

  • Active investing (believing that you or your fund managers can pick investments better than the market)
  • Plain indexing (a passive approach that captures the returns of a given market index, but rarely results in good coverage across asset classes)
  • Evidence-based investing (which captures investment premiums shown by historical data to work across asset classes)

7. Strategy can be controlled, outcomes can’t.

This simple fact is why it’s so important to understand—and choose—an investment philosophy that you can stick with.

8. At any given time, there’s a balance between lucky investors and unlucky investors. Together, they create the market’s return.

The market is smarter than any one of us, and the math of investing is a zero-sum game. You want to put yourself in the best position to reduce the likelihood of being on the losing side.

9. Understanding investment premiums is the surest way to superior long-term outcomes.

No one is lucky all the time. Applying everything we know about the science of investing to create portfolios is the closest thing to a repeatable, reliable strategy.

10. Frustrated investors lack patience.

Investment returns are not linear; therefore, patience is essential.

11. Only a small percentage of people have an integrated financial plan.

Investments are just one piece of your financial puzzle. A good advisor can bring order to chaos.

12. Do-it-yourselfers need supervision.

You need someone to help you use your time wisely and to reveal your blind spots.

13. You can have the best attorney and CPA and still have an inefficient plan.

This costs you money and maybe more importantly, time. Decisions should be made in context of the overall plan with an advisor that knows how to optimize the full picture.

14. Few people can see the big picture and make it work.

Each person’s financial situation is different—it’s like a 1000 piece Lego set with no instructions. Only a good advisor can see how to fit those pieces together and build something uniquely strong and beautiful for your family.

15. If you’re focused solely on low-cost funds and ETFs, your strategy may be due for an upgrade.

Focusing solely on cost can cause you to miss the forest for the trees. Instead focus on the value of your investments with tax strategy and planning. You need both to capture the highest return.

16. “Money managers” are not financial advisors.

The job of a money manager is simply to invest the money you give them. They don’t think about estimated tax-payments, after-tax returns, insurance strategies, estate planning, and all the other pieces of a financial plan.

17. Private equity and venture capital funds have their place.

…in someone else’s portfolio. If you give up liquidity (as you do with these investments), you should expect outsized returns. More often than not, you just end up with a bigger tax bill each year and less money at the end versus a buy-and-hold strategy. Plus, you have to deal with K-1s, capital calls and long-winded updates along the way.

18. Most people don’t understand that 90% of financial advisors in the U.S are not required to give advice that’s in the client’s best interest.

The so-called “suitability standard” lets these financial professionals make decisions that benefit them personally, or that benefit their companies. Fewer than 10% of the market—Registered Investment Advisors—are true fiduciaries, legally required to put clients’ needs first. They are the only help worth considering.

19. If you have accounts at major Wall Street brokerage firms, you can do better.

The professionals who work there are among the 90% who have an incentive to serve their companies, not just their clients. Today, these are high-cost custodians that are marketing as much to advisors as they are to current and prospective clients.

20. Be prepared, because life happens.

If you love your spouse and your kids, you should have an advisor. We’re like the co-pilot flying this plane with you. When something happens, we are prepared, we have the experience and proper motivations to see your family through a time of crisis.