Tuesday, February 06, 2018

What Super Bowl 52 Taught Us About Calculated Risk

I remember one chilly Tuesday as an elementary schooler in Philadelphia. We were allowed to stay home because the hometown Eagles beat Dallas on Monday Night Football the night before. It wasn’t for the East Division title or National Conference championship. It wasn’t even for the final playoff spot. We simply beat Dallas during the peak of the hated Cowboys’ dynasty. That single game made the “Iggles” otherwise forgettable 2-12 season a huge success. At least in the eyes of Principal Warnick.

Fast-forward 40 years later. The Lombardi Trophy finally rests in Philadelphia. Never happened before. In case you missed it, the Super Bowl went down to the final play with the NFL’s winningest quarterback (Brady), coach (Belichick) and franchise (Patriots) trying to pull out one more miracle comeback from their bag of tricks. Eagles Nation was bracing for yet another gut-wrenching disappointment, but the football gods finally got over their grudge against the guys in green. Brady’s 50-yard Hail Mary pass got lost among a sea of arms, legs, hands and elbows and fell harmlessly near the end zone and the clock ran out. No flags on the play! No review! No Buffalo Bills comparisons.

For once, the guys in green and black came out on top. Nick Foles, the humble backup quarterback-turned-Super Bowl hero, simply said, “I didn’t try to be Super Man out there.” Just play the game and trust your teammates, is essentially what Foles added. I don’t think it was an intentional dig at the Hall of Fame-bound opposing quarterback, but Brady didn’t exactly congratulate the Eagles for their victory in his terse, post-game press conference.

Side Note: New York Giants fans, to their credit, have been very gracious to yours truly for the unlikely win by their bitter NFC East rivals.

Not your dad’s NFL title

Sure the Birds won the NFL title back in 1960, but there were only about 10 teams in the league and no such thing as a Super Bowl. I wasn’t born yet, but my dad told me pro football wasn’t that big a deal. You could get cheap walk-up tickets the day of the game at creaky old Franklin Field. He doesn’t recall a ticker tape parade in the Eagles’ honor. It’s going to be a little different on Thursday morning with over 2 million green-clad supporters on hand to salute their heroes and/or take advantage of the free Bud Light along the South Philadelphia parade route.

Living between NYC and Boston the past two decades, I’ve endured countless Super Bowl victories, World Series titles and Stanley Cup hoists by the hometown teams. In 1994, I accidentally stumbled into the NY Rangers parade in lower Manhattan and sort of got caught up in the excitement. It didn’t last. I’ve tried to root for the hometown boys, but old habits are hard to break. Do I have a perpetual chip on my shoulder? Yep. Does the city of Philadelphia? Yo!

We like it that way. The Eagles (and their raucous) fans will never be confused with the Chicago Cubbies and Boston Sox--“lovable losers” who endured over a century of futility before using sophisticated analytics and a business-like approach to the game to end their respective championship droughts. Eagles fans taking losing very personally.

Underdogs, Not!

Sure, the Eagles wore the underdog label like a badge of honor, but they are a shrewdly run organization that spends big bucks to sign high priced stars, between (and during) each season. Sure they started the season at 60-1 odds to win the Super Bowl. But, The Philadelphia Eagles Professional Football Club, Inc. uses sophisticated data mining and decision-making algorithms to exploit opponents weaknesses and to determine when to gamble on gutsy 4th down plays and two-point conversion attempts….and when not to.

Data analytics is also what allowed the Eagles to diversity their portfolio of players with enough “Next Man Up” talent to overcome the loss of nine opening day starters, including their MVP quarterback Carson Wentz.

As with the stock market, information moves at lightning speed in the NFL. Most teams will start emulating the Eagles’ use of data analysis, calculated risk taking and roster-stacking. They may not be able to manufacture the same team chemistry, but it won’t be easy for Philly to stay ahead of the pack, even with a full healthy roster next year. That’s what makes the Patriots’ recent dynasty so impressive in this data-driven free-agency environment.


As with the long-running bull market, the Patriots dynasty may be losing some steam, but the team will be back among the contenders next year--with or without the game’s greatest quarterback and supporting cast. Same goes for stocks. In fact, 80 percent of you told us in our fall 2017 Wealth Advisor Confidence Survey that you expected a 10-15 percent correction in 2018. That’s what gave me the courage to post Is the Miraculous Market/Economy Coming Back to Earth?  last Monday when the Dow was over 26K.

Stocks will take some healthy hits this year, but in the long run, they’ll remain the top contender in the asset-class competition for investors’ money. Just remember they’re a risk asset, not a savings bond. You can review this call as often as you like. It won’t be overturned. Principal Warnick said so.

TAGS: Stock market correction, Super Bowl, Bill Belichick, Tom Brady, Carson Wentz, Nick Foles, Philadelphia Eagles, risk management

*** Take our Insta-Poll and see how you stack up to your peers.

Monday, January 29, 2018

Is the Miraculous Economic/Market Balloon Coming Back to Earth?

Many of you have been sprinkling the term “animal spirits” into your blogs and articles lately and referencing the Shiller CAPE ratio. Good stuff. That’s why we’re sharing Robert Shiller’s piece from yesterday’s NY Times with you: Consumer Confidence Is Lifting the Economy. But for How Much Longer?

Shiller, originator of the eponymous Cyclically Adjusted Price to Earnings (CAPE) ratio, argued that consumer confidence is a critically important advance indicator of economic booms and busts. That said, he admitted we don’t really understand how and why consumer confidence behaves the way it does.

That’s a dangerous notion. We can talk all we want about a very low (perceived) jobless rate, GDP approaching the magic 3% target, inflation in check and a record-high stock market with earnings (sort of) keeping pace with ever-rising share prices, but Shiller argues that doesn’t fully explain the buoyant mood from Wall Street to Main Street.

Our Take: It reminds of us of the balloonist who doesn’t understand the concept of helium—and that he doesn’t have an infinite supply of it. The view’s great now, but you better be ready when the fuel that’s keeping you aloft eventually runs out.

Shiller argues “animal spirits” are at work, referring to the term popularized by economist John Maynard Keynes in the 1930s referring to a “psychological state in which people get a consumerist and entrepreneurial bug that allows them to forget their worries and let their optimism guide their economic decision-making.”
Is the exuberance irrational?

According to Shiller, exuberance like this is fueling the lofty stock market, in which “prices have far exceeded fundamental valuations.” He observed that real (inflation-corrected) corporate earnings per share for the S&P 500 in Q3 were only 6-percent higher than they were in Q2 of 2007, just before the financial crisis. In contrast, real stock market prices were 39 percent higher. “That disproportionate increase is based much more on how earnings are being valued than on how the level of earnings has increased.”
Our own Wealth Advisor Confidence Survey last fall found that nearly 80 percent of advisors expected a double-digit market correction in 2018, but less than one third (31%) expected a recession.
Obviously, this disconnect has happened before and will likely happen again. According to Shiller, “The four major confidence indexes took a long ride up between 1990 and 2000, again after a recession. From the bottom of the Michigan index in October 1990 to a peak in February 2000, real S&P 500 price per share rose 256 percent while real earnings per share rose only 78 percent.”

What gives? Shiller said a traditional explanation is that investors had a rational expectation of future earnings increases, “but, it is clear that they were grossly mistaken. The S&P 500 lost just over half of its real value from its peak on March 24, 2000, to its trough on Oct. 9, 2002. No concrete event caused this plunge, though we can point to the bursting of the dot-com bubble and a recession. Both were plausibly caused by a drop in overinflated confidence.”
Shiller said that while Trump’s presidency may have exerted “some impact on animal spirits in the last year,” it doesn’t explain the preceding eight years of gradually rising confidence. “I am skeptical that the upward swing can be entirely explained by standard factors like government and central bank stabilization policy or technological innovation,” added Shiller.
Our Take: If we don’t know what’s keeping the balloon aloft, then we’ll never know what’s going to cause it to plummet--or when. Don’t trust the gauge just because it says there’s gas left in the tank.

Said Shiller: “History indicates that a long uptrend like this one will eventually shift downward, even if we can’t say when it will happen. While the timing will be a surprise, we can expect a sharp change in direction that is likely to have serious consequences for the economy in the United States and around the world.”

Fasten your seatbelt and always make sure your parachute is working. Think we’re full of crap? We’d love to know what you think and why.

*** Take our Insta-Poll and see how you stack up to your peers.

TAGS: Robert Shiller, CAPE ratio, consumer confidence, market overvalued, animal spirits, irrational exuberance

Monday, January 22, 2018

Surround Yourself with the Right Mix of Finders, Minders AND Grinders

One of our most popular posts last fall was: Are You a Finder, Minder or Grinder? C’mon Be Honest. As expected, the vast majority of you considered yourself Finders (82%), according to our unscientific InstaPoll. Finders are the rainmakers at professional service firms. They bring in the business and cultivate relationships that turn into new business or strategic partnerships.

Of the remainder, we expected most of you to say you were Minders (i.e. project managers and supervisors). You’re the experts that focus on process and keeping the trains running on time. But, that only describes 3 percent of you. Surprisingly, one out of every seven of you (15%) described yourself as Grinders. You’re the worker bees who put your nose to the grindstone to deliver all the promises that your firm’s finders make—no matter how aggressive and far-reaching.

This imbalance also tells us that many of you are trying to fill too many roles—burning the midnight oil every night to deliver all the promises that you and your fellow partners have made to clients and high level prospects. And supervising the work. That’s not a sustainable business model or organizational structure.

Balanced talent portfolio
As Forbes contributor, Keenan Beasley explained recently, you need a balance of finders, minders and grinders. If you’re top-heavy with minders, then Beasley says nothing will get done. Your costs will go up and you won’t be able to scale. If you have a disproportionate number of grinders, very few see the big picture and too much strategy and execution falls on the founders and you won’t be able to expand profitable. If you have too many finders, Beasley says you’ll win a lot of business, but retention of both your clients and over-worked staff will suffer.

Our Take: Be especially cognizant of that last one, folks.

By moving closer to an equal balance of finders, minders and grinder, your business will grow from both a topline and bottom line perspective. The efficiency will boost your profits and free up founders/finders to do what they do best--bringing in more (and larger) clients that enable you to scale.

Generally, employees fall into just one of these classifications above, said our client Blake Christian, CPA a partner at HCVT and author of the new book: Becoming a CPA-Preneur. Make sure you have the right person with the right mindset in the right role. “Occasionally an employee will have more than one of these groups of skills. When you find them make sure you retain those gems,” said Christian.

But, if you’re trying to be one of those organizational triathletes yourself, you’ll eventually run out of gas before you reach the finish line. Be brutally honest about what you can and cannot do, and bring in the help you need to fill those gaps ASAP.

TAGS: Finders, Minders and Grinders, Keenan Beasley, Blake Christian

*** Take our Insta-Poll and see how you stack up to your peers.

Saturday, January 13, 2018

Our Top 10 Posts of 2017

From the White House to Hollywood to the worlds of sport, business and high finance, it’s hard to remember a year in which the media has been more central to the national conversation. From fake news, to workplace misconduct to a President hell-bent on bypassing it, the media is still one of the most powerful tools a free society has to keep those in power accountable. Like it or not, the media isn’t going away anytime soon. You better figure out how to make it your friend, not your foe.

According to the Wealth Advisor Confidence Survey™ 2017 that we conducted with The Financial Awareness Foundation, half of advisors (48%) say that being quoted in the press is a “Very” or “Extremely” effective way to enhance thought leadership. Nearly two thirds of respondents (63%) say the same about writing articles for publication. Respondents were 5-times more likely to cite these channels than to cite mainstream social media (other than LinkedIn). As always, we’re here to help you make the media your best friends and referral mechanism. Just remember You Are What You Write, which was by far our most popular post of 2017. And while you’re at it Avoid These Written and Spoken Credibility Killers (#7).

Many of our other Top-10 posts related to improving your communication, your work habits and your ability to connect with Next Gen. Enjoy the list:

8. What High Performing Advisors do Differently Than Their Peers

9. New Books by HB Publishing Clients Help You Flex Entrepreneurial Muscles


Have a great 2018 and buy yourself some good sneakers. We’re going to be running very, very fast this year.

*** How badly have your clients been hit by tax reform? Take our Insta-Poll and see how you stack up to your peers.

TAGS: Top 10 posts of 2017, make the media your friend not foe

Wednesday, January 03, 2018

HB Clients Attracting National Media Attention

Burning the midnight oil may seem lonely at times, but your efforts did not go unnoticed by your clients or the national media. Those of you who’ve been making your weekly Gut Check™ accountability calls are 5-times more likely to obtain coverage and guest publishing opportunities.
Here’s a sampler:

BLAKE CHRISTIAN, CPA explained to Financial Advisor Magazine readers how the potential elimination of the AMT Slams HNW Clients on Real Estate. “Repeal of the alternative minimum tax could have a significant impact on investment plans,” said Christian. “Under current law, alt min’s top rate is 28 percent. Its elimination would drive many AMT clients into the 35 percent bracket and push them to invest in tax-free municipal bonds,” added Christian, a partner at HCVT LLP in Park City, Utah. Christian recently unpacked the Trump Tax proposal on the Mountain Money podcast and keys to opening a new office on the Journal of Accountancy podcast.  Blake was recently interviewed on Sarder-TV about his new book, “Becoming a CPA-Preneur, Never Again Be the Most Boring Person in the Room.
KYLE WALTERS, a partner of Dallas-based L&H CPAs & Advisors landed regular guest columns in Accounting Today (The Power of the Red Chair) and CPA Trendlines (How to Avoid Getting Run Over or Left Behind). Hint: Staying in your lane will not get it done in today’s complex advisory service super highway.

SAMUEL BETHEA, The Rosewood Group’s president, was among the cybersecurity experts profiled in Digital Guardian.
"When it comes to security measures in a small business, the metrics generally fall into two categories: internal protection and external credibility,” explained Bethea.

Chief Investment Officer of Fortis Wealth in Valley Forge, PA told The Street why Millennials Are Scared and This Is the Financial Reason Why. He was recently published in Planned Giving Design Center (Top 10 Life Advice Comments for Millennials). Hint: Get off Facebook and learn how to write, speak and network in the real world, advocates Topley.

ANTHONY GLOMSKI, founder of Los Angeles, based AG Asset Advisory  is frequently asked to comment about cutting-edge issues at the intersection of finance and technology. Take Bitcoin and blockchain technology. Glomski told US News & World Report that "Blockchain appears to have the potential to be as transformative as the internet.” However, he cautioned that at this stage you’re talking about “speculation rather than an investment. This phenomenon is as old as the tulip bulb bubble of 1634.” Glomski was also interviewed on Sarder-TV about his new book, Liquidity & You: A Personal Guide for Tech and Business Entrepreneurs Approaching an Exit.
Also check out other provocative new books by our clients:

According to the 
Wealth Advisor Confidence Survey™ 2017 that we conducted with The Financial Awareness Foundation, half of advisors (48%) say that being quoted in the press is a “Very” or “Extremely” effective way to enhance thought leadership. Nearly two thirds of respondents (63%) say the same about writing articles for publication. Respondents were 5-times more likely to cite these channels than to cite mainstream social media (other than LinkedIn).

Are you sure you don’t have time to publish, speak and grant interviews in 2018?

*** Are you a Finder, Minder or Grinder? Take our Insta-Poll and see how you stack up to your peers.

TAGS: Blake Christian, Anthony Glomski, Kyle Walters, Samuel Bethea, Cecil Nazareth

Wednesday, December 27, 2017

New Books by HB Publishing Clients Help You Flex Entrepreneurial Muscles

What could a surfer from the Midwest, a snowboarder from California and a field hockey coach from India possibly have in common? Answer: They’re entrepreneurial financial advisors who love working with fellow entrepreneurs.

They’re also book authors who recently collaborated with HB Publishing & Marketing Company to unlock more than 100 combined years of wisdom about successfully planning your business exit, avoiding international tax traps and seeing around the corners to make your firm and your own career more successful. If you like concise real-world client examples rather than textbook theory, you won’t be disappointed with the three new releases below:

International Tax & Compliance Handbook (with special emphasis on India-US)
Author: Cecil Nazareth, CPA, CA, MBA, a former professional field hockey player from India and a partner of Norwalk, CT-based Nazareth CPAs. Nazareth said a lack of knowledge about international transaction rules and reporting requirements leads to very poor decisions that can trigger significant financial penalties, even jail time. ”Too often even very smart individuals and very savvy companies don’t know what they don’t know,” observed Nazareth. “That’s what inevitably gets them into hot water as FBAR, the Panama Paper and the Paradise Papers have taught us.”

Liquidity & You: A Personal Guide for Tech and Business Entrepreneurs Approaching an Exit

Author: Anthony Glomski, founder of Los Angeles-based AG Asset Advisory. The Midwestern-born world traveler, now an avid surfer and Porsche club member, said successful entrepreneurs work tremendously hard to build their companies, but too often overlook the importance of having a transition plan for Act 2 of their post-liquidity lives (emotional risk). They also tend to have a significant overconcentration of personal wealth tied up in their businesses (financial risk). “Change is constant. Challenges are inevitable. The only way to survive is to create a solid support team around you and never give up,” noted Brian Vickers, a NASCAR driver who wrote the forward to Glomski’s book.

The Benefits of Becoming a CPA-Preneur: Break the mold; never be the most boring person in the room
Author: Blake Christian, CPA/MBT
a partner of HCVT, one of the nation’s fastest-growing CPA firms. Christian grew up surfing the waves of Long Beach, CA and now surfs the snow in Park City, UT when not in the office. Christian stressed the importance of learning how to get outside your comfort zone to become proactive rather than reactive. If nothing else, that means bringing solutions to clients (or your bosses) before they ask for them. “The days of being a financial historian and looking through the rear-view mirror are over,” observed Christian. “Being proactive is so much easier than undoing client’s bad decisions after the fact.”
Like Christian, Glomski finds many parallels between surfing, the business world and life. 

“Sometimes when surfing, you get pulled underwater by a big wave. The instinct is to fight the force of the wave, but what you really want to do is surrender to the power of the wave,” explained Glomski. “If you do, you will eventually float back to the surface. You’re at the mercy of the ocean, just like you’re at the mercy of the market. You can’t fight the market, but if you stay within your plan and don’t panic when things get rough, in the end, you’ll likely come out on top.”


All three authors are very candid about the influence that their parents and families had on their careers. My parents sacrificed a lot to give me and my siblings a great education and left us with these words of wisdom,” related Nazareth:
  • “Always give more than you get.”
  • “Challenge yourself and hold yourself accountable.”
  • “Inspire, motivate and bring out the best in yourself and others.”

Great words of advice to keep in mind during the Holidays and beyond.

TAGS: Cecil Nazareth, Brian Vickers, Blake Christian, Anthony Glomski, Business Exit, FBAR, Entrepreneurial CPA

Saturday, December 16, 2017

Must-See New Movie for Financial Advisors

I’ll admit it. I hate shopping. I hate the stress, crowds, overspending, forced smiles, drunken caroling and crappy weather that comes with the Holidays. But I do enjoy one tradition this time of year--advance screenings of major motion pictures that come straight to our doorstep courtesy of my wife’s membership in the Directors Guild of America.
It’s been mostly duds this season, but last night we took a chance on Molly’s Game and it will be worth standing in line for this one when it opens Christmas day. Many of you are skiers, poker players and closet math nerds, so add this flick to your must-see list. You might also recommend it to your risk-seeking clients.

The film is based on the true story of Molly Bloom (Jessica Chastain), a highly attractive and intelligent washed-up Olympic-class skier who ran the world's most exclusive high-stakes poker game in the 2000s. She had a great decade-long run before getting beat up by the mob, addicted to drugs and ultimately taken down by gun-toting FBI agents.

Starting out just to pay the rent, Molly was soon making seven figures hosting private poker games that catered to Hollywood royalty, sports stars, business titans and finally, unbeknownst to her, the Russian mob. Great story, but the best part is that she ran her “game” as a legal, tax-paying corporate entity, complete with legitimate books, tax returns, a “no raking” policy and 1099s forms sent to her “staff.”

Not to be spoiler, but Aaron Sorkin’s film not only touches on risk management and securities law, but on most of the advanced planning principles you preach to clients including wealth enhancement, tax mitigation, wealth protection, wealth transfer, legacy planning and business succession.
Many of the financial issues in Molly’s Game are as realistic as the ski scenes, poker hands and bluffing strategies. Molly also takes down her abusive boss and dozens of extremely rich and powerful men in the process as she goes from a middle class upbringing, to poverty, to riches to rags again, as so many American entrepreneurs do.
If you or your significant other are Kevin Costner fans, you’ll enjoy seeing him excel in a NON-nice guy role for a change. He plays Molly’s demanding, often estranged father who gave her drive, smarts and ambition, plus enough emotional baggage to fill at least two luxury hotel luggage carts.


I don’t know if STX Entertainment had this much foresight, but Molly’s Game ties in seamlessly to the perfect storm of complex tax issues, Winter Olympics promos and powerful men being taking down daily in the headlines. It’s not exactly Bing Crosby, but it’s a timely encapsulation of the times we live in—and poignant exploration of how each of us comes to terms with fear, greed and our relationship with money.

*** Are you a Finder, Minder or Grinder? Take our Insta-Poll and see how you stack up to your peers.