Everyone has stories to tell about investing—how it went right, wrong or sideways. We believe there’s value in sharing these experiences. Note that the SEC prohibits endorsements on advisory websites (for good reason), so we’re offering generalized versions of what we’ve heard. If you would like to talk with a current client about how we have helped, we’re happy to provide a real-life reference.
You: You’ve managed your own finances and investments with good results for many years. But you’re getting older, and it’s time to get someone else involved. You understand index funds and passive investing. You know what you want. So you ask friends and search online for an advisor you can trust. You’re surprised at the wide variation in pricing; some passive investing firms charge as much as active advisors, and that doesn’t make sense. Then you find Cardiff Park Advisors.
Us: When you’re accustomed to doing it yourself, it can be hard to trust someone else. At Cardiff Park we’ll earn your trust. You’ll work with the firm’s principal, and likely get to know everyone else on our small, efficient and highly professional team. Pricing is fair, reasonable and transparent, never based on a percentage of assets under management. We provide monthly management reports with customized or personalized benchmarks, according to client needs. We’ll help move funds, make appropriate allocations based on risk tolerance and capacity, and assist with tax loss harvesting, rebalancing, and liquidity requirements to meet income needs with tax efficiency. We can help re-register a trust, update beneficiaries, and consolidate accounts across multiple institutions. Call us when you’re ready to simplify and hand off your do-it-yourself responsibilities.
The Near-Retirement Investor
You: You’re nearing retirement or have recently retired. Most of your assets have been tied up in company stock and/or 401(k)s. You haven’t been an actively involved investor because your money has been in an employer-sponsored plan. Now you’re responsible for managing a substantial nest egg, which requires diversifying your stock and other assets, and creating investment income to replace your paycheck. You begin to learn on your own about how to manage risk and investments, and as you do, you marvel at the complexity of choices and options. For many reasons, you decide that being a passive investor is the best and safest path. Then you find Cardiff Park Advisors.
Us: Investors at or near retirement face many choices, and most don’t have a framework for evaluating the impacts of these choices on their financial future. These investors need a comprehensive, reliable solution from someone who understands the big picture—a fiduciary who has their best financial interests in mind. To evaluate potential scenarios, this investor’s needs must be assessed through multiple lenses. Among the issues to test and validate: how to sequence withdrawals, when to take social security, and when to take distributions from retirement accounts. The need for liquidity (income) must be balanced against the need for growth, total portfolio return, and preservation of inflation-adjusted value. Perhaps you have been offered a lump sum or annuity as part of retirement, and need a framework for evaluating different payout options. Does it make sense to take the lump sum and add it to bond holdings, so it becomes part of retirement income? Most people don’t know how to calculate the potential gains and losses from these decisions. We can help.
We can also help you assess the big picture. Retirees in particular are seeking certainty during all kinds of economic phases. What happens when market conditions change? How can you prepare and fortify a portfolio against the risks of inflation, rising interest rates, deflation or sharp contraction, or conversely, for the opportunities of market expansion? The goal is to create a portfolio that will meet liquidity needs and income requirements, while simultaneously balancing the need for capital preservation and growth. Appropriate diversification and asset allocation are key. Call us when you’re ready for a framework and path forward through some of the most important financial decisions of your life.
The Wealthy Investor
You: Good fortune has smiled on you. Your stock options or restricted grants are worth a fortune, or perhaps you inherited a substantial family trust. Maybe you simply got lucky, investing in companies that did very well over the years. But now you want more help. It’s not as exciting to manage your own money as it once was; it feels like work, and you’ve got better things to do. You’re nobody’s fool. You’ve thought a good deal about managing risk, diversifying, and how markets work. You understand the principles of passive and index investing. And you know it’s unjustifiable to pay someone 1% of assets under management under any circumstances, certainly not when using a passive approach. You realize there are alternative providers out there. Then you find Cardiff Park Advisors.
Us: We offer high-wealth investors the same solution we offer every client: low fixed fees, high ethical standards, full support and a smart strategy. These attributes are magnified in value for those with a large asset base, who benefit greatly from our experience and integrity. We will review your asset allocation and diversify holdings based on risk tolerance and risk capacity. We can set up credit facilities (also called pledged asset lines) for short-term bridge financing for property acquisition, or as an alternative to selling equities to cover tax liability. We can advise on tax loss harvesting and the best way to diversify concentrated stock to protect against capital gains. Collaring strategies may be appropriate in certain cases; in other cases, outright gain realization can be supported by tax reserves that are invested until taxes are paid. Whatever the aftermath of gain realization may be, we’ll find the smartest way to redeploy and make your money work. And we’ll look to maximize future gains through tax loss harvesting opportunities. These services are standard for our high wealth clients, and complement management of all the fundamentals of investing: needs assessment, investing to meet goals and objectives, optimal asset allocation and diversification. Whether your wealth has come from good fortune, good luck, or hard work, call us to protect it and help it grow.
The Nonprofit Organization
You: You’re a Board member of a nonprofit organization, responsible for overseeing investment management. Your role is to preserve and grow assets while simultaneously supporting an annual spending goal of 5%. Many financial advisory firms have offered their services. But you’re suspicious when a consultant offers “a dynamic plan that responds to changing markets” or “alternative investments to boost returns” or “flexible investment opportunities.” Personally, you are convinced of the merits of index investing—a low-cost, proven strategy. Why shouldn’t the same principles apply to your nonprofit organization? You want honest guidance that doesn’t come packaged with promises and fat fees. Then you find Cardiff Park Advisors.
Us: Most nonprofit organizations have dual objectives: meet set annual spending requirements, and preserve and grow assets for the long-term. These seemingly competing objectives make nonprofits a target for investment advisors who promise inventive or unique strategies that deliver higher returns. If you are inclined to believe such strategies work, we invite you to educate yourself and your organization by reading our website.
At Cardiff Park we work with a variety of nonprofit clients to create and manage investment plans for long-term results. We help organizations set realistic goals, design risk-appropriate investment strategies, build and manage portfolios, and periodically rebalance investments. We also help our nonprofit clients create and implement viable long-term spending strategies.
We understand the challenges that nonprofits face. For instance, if an organization must meet a 5% annual spending goal and inflation is 3%, assets under management must effectively earn 8%. This is an ambitious goal, and certainly not realistic year after year. Meeting such a goal would require substantial portfolio risk, more than most nonprofits are comfortable with.
We help nonprofit Boards evaluate their options by demonstrating how different asset allocations have performed in every kind of market environment over time. We can also demonstrate the impact of different spending rules on assets over time. Changing the asset allocation or spending rules can help a non-profit retain or improve its asset base, but these changes alone do not guarantee long-term survival. During periods when market returns are low or negative, some foundations have the ability to counterbalance capital spending with substantial additional fundraising. Most, however, do not. In these cases, investment decisions alone are not enough to guarantee long-term survival.
Foundations facing financial pressure have several options: reduce spending, take on greater risk for greater potential gains, or consider an exit strategy. Existing in perpetuity doesn’t have to be the default goal. There is no right or wrong way to proceed, but Cardiff Park can help model realistic options. If the goal is to balance the needs of today with tomorrow and maintain your nonprofit foundation well into the future, we’ll show you the way without empty promises, magic bullets, hidden risks or excessive fees.
The “Time to Push Restart” Investor
You: You have concerns about how your money is being managed. Perhaps you’re a novice at investing and don’t know what questions to ask. Or perhaps you’ve been investing for years under the guidance of a bank’s brokerage arm. But it doesn’t feel like you’re being supported. It doesn’t feel like your money is being managed; it’s just thrown into a mix of high-cost funds with subpar performance. The relationship doesn’t feel personal. Your advisor was no help at all when you moved and needed a bridge loan. And whenever you ask questions about fees and how your money is invested, you get peppy marketing talk but no real answers. You may have financial knowledge gaps (who doesn’t?), but you resent being treated like a child. So you start asking around. Who has an advisor they trust? Then a friend recommends Cardiff Park Advisors.
Us: The billion-dollar money management industry is run by legions of salespeople and big brokerage houses. But well-dressed professionals and nicely furnished offices are no substitute for honest guidance and ethical money management. Unfortunately, few investors take the time to educate themselves. So they fall prey to glib pitches that mask high fees and lousy money management.
We have a solution. First, read our website to learn about passively managed index investing. Vetted research and documented data over a hundred-year timespan demonstrate how markets work. You will be convinced there’s a better way.
Next, learn how we can help. We can extricate you from your current financial relationship. We’ll analyze your holdings and tax implications, sell what needs to be sold, manage tax loss harvesting and otherwise oversee all the administrative details of transferring accounts (regardless of how many institutions have a chunk of your money). We’ll examine your needs, goals, and any special circumstances. Got trusts that need to be set up or transferred? Want to update beneficiaries? Trying to decide the best approach to legacy giving? We can help.
We’ll educate you about risk—both how much you feel comfortable taking, and how much you must take to reach your goals. If you’re risk averse but need the higher returns of equities, we’ll find a comfortable compromise solution. We’ll invest and manage your assets in low cost funds, seeking tax advantaged solutions.
We’ll report to you quarterly in an easy-to-understand format. We answer the phone and our small, professional team is always responsive. We’ll answer all your questions clearly. One day in the not-too-distant future you’ll realize you are paying a reasonable, transparent fee (nothing is hidden!) and have a personal relationship with an advisor who actually serves your best interests. That might be a very welcome surprise.
The “Escape from the Wirehouse” Investor
You: In retrospect, you can see that you were beguiled, smitten, and perhaps too impressed by your new friends at that famous wirehouse. You had arrived. Not only that, you were soon invited into the inner sanctum of one of the most prestigious full-service broker-dealers in the world. Let’s look back at how it all got started…
Week One. First impressions count. Just look at those beautiful people behind every desk! All gleaming smiles, perfectly polished and manicured, dressed in silky Zegna suits. Heck, their shoes probably cost more than your expensive watch. It feels so good to have these folks on your side. And they seem ready to help with every need, with an amazing cornucopia of products and subject matter experts under one big financial umbrella.
You consider yourself a savvy investor. You’re certainly wealthy enough, with investable assets in the $10 to $40 million range. But money management is complicated. You’re not sure you’re doing it right. Taxes are high. Your money is scattered about with different brokers. Are you losing out on big opportunities? All these concerns are on your mind during early discussions.
That’s why you’re grateful to be immediately invited you into the private client group. You notice that everyone in this group is not only beautiful but brilliant, with impressive pedigrees and diplomas from all the best schools. You meet the estate planning people, the tax people, the investment analysts, the retirement and legacy-giving advisors, the insurance advisors, and so many other consultants that your head spins. The team has dazzling ideas for asset allocation, and the best managers for each asset class. Yes, that’s what you want, the smartest and the best!
Soon they’ve designed a bulletproof portfolio diversified across every category, each category a separate account. Ten or twelve accounts, who’s counting? You’ve got alternative investments sprinkled in there, too, designed to be uncorrelated with everything else. The reinsurance alternative, the long-short strategy, the alternative credit strategy, the infrastructure fund, the merger-arbitrage play and the tax-advantaged qualified opportunity LP to handle capital gains. And one more thing: they also have special overlay programs, including a risk-management overlay, a tax harvesting overlay and a “Black Swan” overly designed to protect against losses in “Six Sigma” turbulent environments. Yes, that sounds good. You’ll take that too.
Several Months Later. You’re trying to read your statements. It’s difficult. You now have 13 different accounts (how did that happen, you must have agreed), and each account has up to 100 or more holdings. It’s extremely hard to decipher the fees on anything. And those alternative products…what are they, exactly? Each one is separately benchmarked. You’ve signed up for exclusive private equity offerings too, which made you feel pretty good at the time. Heck, now you’re investing alongside the likes of Apollo, Blackstone, KKR, Oaktree and Bain Capital Management. Well, maybe you can figure it all out later. A phone call to your primary advisor is friendly but minimally useful. But you’re pretty sure you’re doing quite well in this new relationship.
One Year Later. It’s nearing tax-time and you’re getting your reports in order. Wait…this cannot be…is that report really 200 pages long? Reconciliation of your K-1s is 150 pages. Your CPA fees skyrocket. You admit to yourself that you have no idea what’s going on. Your blood pressure rises. Are you being bamboozled? You get mad at the dog.
Six Months After That. You express dissatisfaction to your primary contact at the famous brokerage house. The response wasn’t what you expected. He showed how much you are receiving at no cost: certain trust services, private banking, credit cards and airline miles. So much for free! It’s costing you nothing to work with us! You grudgingly admit that yes, there’s free stuff. But you still can’t figure out the fees. It’s way too complicated. You still can’t get the answers you want.
The Breaking Point. It’s not a breaking point so much as a nagging feeling that you’re being slowly crushed to death. You better extricate yourself before it’s too late. You call your CPA and ask her if she could possibly unravel your fees and provide clarity. You do not ask the famous brokerage house to do this for you. You call several friends whose money is similarly invested. You find a mix of apathy and disgruntlement. You call another friend, who recommends that you talk to Cardiff Park Advisors. That’s where he moved his money. To your astonishment, he knows exactly how much he’s paying and he understands his investment strategy. He encourages you to learn about passively managed index investing. So you do. Then you pick up the phone.
Us: We’re sorry for what happened to you, and angry about it too. Our principal, John Gorlow, once worked on that side of the fence. It was a long time ago. He got seriously disgusted and quit. Read How Wall Street Formed Me. So we know the experience you’ve been through, better than you think.
Passively managed index investing is a proven, low-cost, better way to invest. It is not a strategy that works either for or against those of great wealth. It’s a strategy that works, period. In our experience, investors of great wealth often believe there’s something better, which makes them gullible to schemes that promise superior returns. Even after the blinders fall off, it can be difficult to overcome inertia and begin the process of extricating your portfolio from a big brokerage house. Those portfolios are complex for a reason.
Cardiff Park is very good at moving the process along.
There’s no cookie cutter approach to how it’s done. We’ve helped clients bring over holdings intact or in-kind, with careful examination of how to manage illiquid investments. We’ll break the portfolio down, categorize it, consider cost basis and tax implications, and craft a plan to reformulate the portfolio at the lowest cost. It can take several months or longer to unravel complex positions. We are conscientious about mitigating taxes and other fees during this process.
We help our clients choose new custodians to support their assets. Our custodial relationships are vetted and the people we work with have tailored customized approaches for many high-wealth clients. Allocation decisions are always a partnership. We’ll work to establish risk-appropriate investments based on personal goals, objectives and priorities. We offer specialized reporting and back-office support as needed. To learn about the many other ways in which we support high-wealth clients, please read our website. Personal references are available.
Take your time. On the other hand, what are you waiting for? It’s not going to get any better at that wirehouse. Those folks aren’t in it for you. We’re here to help when you’re ready.