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Registered Investment Advisor Podcast Episode 1 from Strategic Capital in Austin
Meet the Proven IAR’s and explore concepts about working with the team at Strategic Capital – Registered Investment Advisors in Austin, Texas.
Founding Partner - Financial Advisor
I specialize in helping businesses and business owners identify their needs, define success, and implement strategies to accomplish those goals.
Founding Partner - Financial Advisor
My comprehensive process embraces investments and insurance as an asset so that your whole financial life is magnified.
Founding Partner - Financial Advisor
I believe this combination of independence and teamwork is the best way to serve clients. It lets me provide you with the highest quality financial planning services, built for life long relationships with you.
Holistic Wealth Management
We are a Fiduciary – your financial well-being is our focal point. We integrate with your needs, and plan holistically so you get risk management built into realistic portfolio management and other important features that can enhance peace of mind and potential. You get more choice, better focus, stronger customer service and access to world class institutional-level resources with Strategic Capital
AI in Investing & Innovative Resources
Waterloo offers significant opportunity through innovative products and platforms that allow our clients better understanding of trends, better options for investing, and insights on a full-portfolio level. In addition to this exclusive offering we also have resources that some financial advisories don’t have access to. Call us and let’s see what’s possible.
Business Planning, Insurance, and access to Capital
Our practice was built for you. Traditional service offerings in the financial services sector leave a lot to be desired. We wanted to give our clients the best potential for growth in all ways, always. Our approach takes a new look at not just the usual suspects in financial planning, but also brings other resources to bear as well.
Meet our Team of Professional Registered Investment Advisor Representatives
This Team makes it possible to do what we do – Right here in Austin
Our partnership with Waterloo and our incredible team at our Registered Investment Advisory Firm in Austin allows you to continue what you do best and leverage our talents, our time and our resources to help grow, protect, and transfer wealth, no matter where you are in your investing journey. We have access to tooling and resources that opens up options and improves risk management, without giving up potential for growth or stopping you from doing the things you love to do. We should Talk!
Find the right fit with our Registered Investment Advisors today
We’d love to work with you on your planning for the future, because what’s possible shouldn’t be feared due to the unexpected – get a real plan in place and work with the right Registered Investment Advisor in Austin.
Below is a transcribed version of the podcast – it may contain errors, and may not be an exact replication of the audio of the above clip. Regardless of any inaccuracies between the audio and written variant of this episode/audio/video track, all discussion is for general informational purposes and entertainment only. None of this content should be misconstrued as investment, legal, financial or tax advice. We apologize for any inaccuracies in the written content. You may contact us to notify us of anything you believe to be inaccurate.
Episode 1 Podcast/audio/video
Working with Strategic Capital and Mainstream Financial Advisor Concepts
Tell us about Strategic Capital as a firm and the Origin Story?
B (Moderator): “All right so I’m here talking with the Strategic Capital guys today and we have Bobby Russell and Chris Hernandez and you guys are based out of Austin Texas I want you to tell me a little bit about your firm uh Chris why don’t you tell us one of the founding Partners what you guys do on a daily basis uh in the financial services industry.”
Chris Hernandez: “So as corny as it sounds we really do try to help people I think uh people deal with money every day whether they’re buying their coffees or lunch so I think inside people just feel like they should have a better understanding of money but when it comes to saving investing and building good habits those are two different things so a lot of times people will reach out to us and say I just don’t know what I don’t know and need help so we spend a few minutes I would say eight to ten giving them an introduction to us our philosophies how we work how we help people and then if they like that information we spend the rest of our time together learning about them what they’re trying to accomplish what they’ve done so far what they feel like they could do better what they feel like they’ve done really good at and then we create a comprehensive financial plan for them a road map for them to follow and more importantly we help them execute on the plan.”
B (Moderator): “Okay and and Bobby why don’t you tell me a little bit uh kind of about how you guys what your origin story is like what does it look like how you and Chris and uh and Adam kind of hooked up to form Strategic Capital?”
Bobby Russell: “Yeah so um Chris and I have known each other for going on 10 or 11 years now um we work together at the same firm and um Adam actually worked at that firm with us as well Adam and I were College neighbors we were next door neighbors in college and um we decided to break off from that Old firm and start Strategic Capital so we’ve been working like I said we’ve been working together for 10 or 11 years now and um have been doing doing good things since then um Adam specializes in business planning so he works specifically with businesses where Chris and I work on the personal planning so finances like medicine it’s very broad to be an expert in everything and it’s too hard to be so we’ve designed our business to be where Adam works with specifically business planning and Chris and I work on the personal planning.”
Chris Hernandez: “If I can add to that one of the cool things that I thought about Bobby was he actually started becoming an advisor while he was a senior in college so it was kind of cool to see him take the initiative of he knew what he wanted to do he got licensed and started doing it while he was still studying in school and I just I thought that was really great of him to to know what he wanted to do and do it.”
Local And National Accolades for Strategic Capital as a Affluent Wealth Management Advisory Firm
B (Moderator): “Yeah for sure and uh yeah I can tell Bobby is is one of those guys where he he has that extra initiative when it comes to stuff so uh that’s an interesting thing to say because I I think uh what I’m hearing from you guys is and like you said as cheesy as it sounds or as corny as it sounds you know you really want to help people I I get that feeling from you guys having talked with you uh several times over the last the last couple of months about the things that you’re doing in Austin uh recently Chris you were uh listed I’m sure this is more indicative of a firm wide success but you were listed as one of the best advisors in in Austin tell us a little bit about uh that Accolade and and you know what it means for the firm.”
Chris Hernandez: “It was great to to receive that uh they reached out to me and let me know and I was humble and happy to accept it um but like you said it all goes back to the firm all of the things that I get to promise working so closely with Bobby he makes sure that we execute it on the back end so it goes back to that team approach and I think when people look at our Google reviews or read it you will see Chris and Bobby or Bobby and Chris, Chris Bobby and Adam like everybody that gets a feel for our firm knows that it’s a team approach it’s not just me coming in or Bobby or Adam uh so I think that’s one of the cool things about the culture that we’ve built is how can we build each other up to help more people.”
What type of investors and people are well suited to work with Strategic Captial (a Registered Investment Advisor in Austin, Texas)?
B (Moderator): “For sure so before we get into the specifics of why you guys are able to do the type of thing that you that you’re able to do and and I think there’s some definitive kind of road map and strategic things that you guys do that that really set you apart especially in the Austin area but I’d like you to just tell me and either you can field this question tell us a little bit about who and I know that this sounds a little bit um you know to the point but who is a a good partner for you when it comes to a client to the client side like when you look out for the ideal partner and and put yourself out there as an ideal fit for somebody who’s looking for a financial advisor who’s that person that comes to mind?”
Chris Hernandez: “Do you want to answer that Bobby or do you want me to?”
Bobby Russell: “Um yeah I can answer it so I think that the ideal client for us you know I guess it it works from top down we we like to work with people we call them plus people like us people that have um a nice outlook on on like people that we would like to work with and so we kind of start there with one word when clients are interviewing us we’re somewhat interviewing them as well on whether or not they’re going to be a good fit for our firm so um that’s kind of where we start and then as far as moving into you know um career you know we have a broad aspect of clients and Chris if you want to kind of touch on that I think that would be a great place for you to kind of come in.”
Chris Hernandez: “Yeah when when we’re talking with people one of the things that I noticed is if they’re working with an advisor and they’ve got a lot of money and they’re like oh I’m looking at this stock or this Bond they’re talking about diversification we like to think of diversification in the forms of product diversification so we might look at some alternative Investments like private companies private Equity private debt that sometimes they just didn’t know what they don’t know didn’t know they had access to those types of things and that’s one of the main things that our firm can bring is the access to Alternative Investments when everyone thinks of investing they just think public markets uh so we do like to work with people that have a higher net worth that are just looking for more options than just the apples or Googles or Amazons of the world so that’s what we focus on while still delivering the service from a small boutique firm.”
B (Moderator): “Yeah absolutely, so, I I think what I’m what I’m getting from some of those statements and of course every advisor would say we’d love to work with the highest net worth individuals that we can right I think that’s sometimes uh the concept of what you get when you’re talking about financial products or product service offerings in the financial you know advisory Arena but I think it’s important to understand you guys are a fee-based firm um and that doesn’t necessarily mean that everything you do is 100% covered under a fee but what it does mean is that it gives you guys an opportunity to uh really explore some Concepts that are ideally suited to the individuality of the different clients that you have can you just talk a little bit about some of the leeway and some leeway is a weird word in financial services how about some of the um lack of restrictions on options uh within the financial services Arena that you guys are afforded by being able to work as a fee based firm.”
Chris Hernandez: “Yes, I think that’s where being powered by Waterloo Capital really comes into play for us so prior to 2021 um in August we were affiliated with the brokered dealer and the broker-dealers are governed by both the SEC and finra and when you have two governmental agencies you know battling it out to be the top agency it limits what the advisor can do so we were at a broker dealer that was a part of like 10,000 advisors something crazy like that so all of the product offerings that they made available had to be suitable for all ten thousand advisors so it limited what we could offer because they wanted to make sure that what was being offered was was suitable for 10,000 advisors so when we moved over to Waterloo capital and is only governed by the SEC as a registered investment advisory that allowed us to be able to access more tools and be able to do more comprehensive planning because we weren’t constrained with you can only offer this or you can only offer that so now we were able to sit on the same side of the client and say what are you looking to accomplish what do you want to do and then we could go find the tool that corresponded to that as long as they met the requirements of being an accredited investor or qualified client or qualified purchaser there are some guidelines that we have to follow but now we have more offerings to be able to say this is how we’re going to help you accomplish your goals.”
B (Moderator): “Yeah I want to butt in there for a second and just and clarify you mentioned accredited investor and qualified purchaser and some of the other tier level uh Concepts that are that are covered under the more sophisticated investors that you would normally uh work with but I want to make sure it’s clear that the firm itself or I’ll ask you guys to kind of clarify the firm itself doesn’t only work with accredited investors they don’t only work with qualified purchasers it’s you’re saying specifically on a per item or per service or per offering basis if someone meets those standards and it is an extra sophisticated product or service that you can then offer it on top of Normal public markets options Futures those types of things is that correct?”
Chris Hernandez: “You you are correct the point I was trying to make before was we were limited with the accredited investors or qualified clients or qualified purchasers um where we couldn’t offer more now we don’t have those constraints so we do have a firm minimum of two hundred and fifty thousand dollars um so so that is something that that is built into what we do for people uh if they decide to to work with us but we’re not limited if someone comes in and says I just sold my business for 300 million dollars what am I going to do they can’t outgrow our firm we’re just able to bring in more companies to be able to service them right.”
How being connected to Waterloo Capital is a huge strategic Advantage for this firm
B (Moderator): “I also want to hear kind of the Waterloo side of things because Waterloo Capital well while this isn’t necessarily a plug for Waterloo Capital they’re pretty impressive group of people who are growing pretty rapidly as well and being that they handle a lot of the back end stuff uh not necessarily from the client side of things but from the technology and service provider uh aspect and the oversight and compliance aspect it’s important that you guys are are wedded to a company that really has their stuff together when it comes to this can you talk a little bit about that team and and how they interface with with the end user consumer that you guys are dealing with?”
Chris Hernandez: “Yeah, so, Waterloo is amazing um a lot of people especially if you’re listening to this in Texas uh will remember the crazy storm that we had two years ago or three years ago now coming up um when Texas was shut down one of uh one of my buddies had to come stay with me so I have a family of five he has a family of five his house had lost power and his house was like 40 degrees so they came and stayed with us for about three nights and the second night we had heard one of the neighbors was having a little bit of a shindig and some guys were playing pool so he and I went over there and played pool against John Chatmas who’s the CEO of Waterloo in one of John’s buddies and we battled it out for a few games we had a really good night and at the end of the night he asked what I did for a living and I said I was a financial advisor and he said huh maybe we should talk after the storm you know passes so we did we were introduced to Waterloo Capital everything that he was building his chief investment officer Ben Woodward who’s been doing this for over 40 years he is the um or he was the chief strategist for ING as well as the Texas teacher retirement pension fund um the director of Alternatives Don Simoneaux who has some really great relationships in Austin sits on a few boards in Austin and that’s one of the main resources that we have to be able to get institutional Investments for our individual investors so they just had a really impressive registered investment advisory or our RIA and we spent the next six eight months doing due diligence on each other and we wanted to be a part of Waterloo we wanted to be powered by them so we could have access to all their tools we’ve done a good job at getting our name out there and we wanted to keep the Strategic Capital name but be powered by Waterloo and we just feel like it’s been a really good partnership everything they said they were going to do they’ve done and I feel like everything we’ve said we were going to do we’ve done so it’s just been a really really cool merging of companies and we’re excited to be powered by them.”
B (Moderator): “Yeah Bobby do you want to add anything or…?”
Bobby Russell: “Yeah I mean and they have a they have a great team of um analysts that work uh with Ben and Don on the back end um and just the trading platforms um you know we’re we’re an independent Financial advisory firm so we are able to work with a lot of different companies and different custodians so being able to package all of that together uh one platform for us to be able to bring to our clients is super beneficial because we’re not pigeonholed on what we’re able to offer or companies that we have to work with whereas if we worked for um you know and Edward Jones or Merrill Lynch we would only be able to offer what those companies are offering so it’s it’s great that they’re able to use take all these custodians put them on one platform and then be able to use the technology behind um the scenes that the clients don’t see but they get access to so it’s just it’s a great formula for Success uh when putting Waterloo and Strategic Capital together.”
B (Moderator): “Yeah and I I think I want to highlight something too I think for those that are listening here and those those that are listening here are probably going to be more skewing towards the more sophisticated investor generally because this is you know kind of an exploration of you know an Ria firm uh which according to this SEC you really have to call yourselves a registered investment advisory right and uh I think that’s interesting because everything you guys do is really back you know on the on the back of you know compliance on the back of you know good advice and you know like you said you started out a little bit you know in this in this conversation you know we really want to help people well yeah you really do want to help people but you’ve got to do it the right way and I think what some people may not understand is when you talk about things like the the teacher’s pension fund and stuff like that in Texas we’re talking about like a top three or a top five you know uh pension retirement plan in all of the United States right I mean there’s a significant amount of money there right and that’s just one part of one person on the Waterloo team’s background right so I think maybe to give some context to some some of those that are listening um when you’re talking about partnering and and in the sense that you guys are partnering with Waterloo Capital maybe we can talk about some of the insights that that uh that that allows for you guys to do because I think people don’t necessarily understand this isn’t uh your typical broker dealer type partnership where a Linsco Private Ledger or uh or a Raymond James or something will come in and they’ll do some basic stuff on the back end like providing technology services this is where you guys sit down weekly with the Waterloo team and actually Define road maps and make strategic product offerings for the type of client that you guys are in place to be working with going forward is that kind of you know capitalize on the idea of that partnership a little bit better or?”
Chris Hernandez: “Yeah you’re spot on so I think it’s important for people to know or that are listening what we do is we custodian our clients money at either TD Ameritrade Charles Schwab or Fidelity so our clients money isn’t with Strategic Capital or with Waterloo it’s with one of the giant institutions they can log in they can see their money at any time our team is going in and handling the day-to-day Investments though so so that’s I think what’s important to know and that’s why we are on a call every week with Ben and our analysts trying to you know figure out what’s going on in the markets and and make changes in our clients accounts so the money is custodian at the giant accounts or if we’re on the private Market side you know we’re using companies like Blackstone or Partners group or variant like that’s just an example of of what we’re doing in the money’s custodian there so I like to make it really clear to people that we are never taking receipt of people’s money it’s it’s not coming to us and then the road map that we built from our initial few meetings on the financial plan is what’s determining how that money is being invested so when we’re meeting with couples that are the baby boomer generation and they are needing their income Now versus when we get some young tech people that are just saving for retirement those plans are two very different plans and need to be invested in very different ways so everything is customized to what the client needs it’s not a cookie cutter approach where everyone who works with us just gets this or just gets that.”
B (Moderator): “Yeah I think it’s it’s an interesting step up especially for a mainstream investor who may be an entrepreneur as well or has some growth in their business or uh you know possibly you know made a lateral movement that then you know work to their advantage financially you know say moving from a small business to you know like uh one of the big Aviation Giants or oil and gas giants or you know Tech giants that are that are really starting to like build up in Austin or around that area um can you guys talk a little bit about uh why why being a registered investment advisory and why having such a progressive Forward Thinking partner in Waterloo as far as the tech offering and the ability to to work with uh the levels of stewardship and money that you guys are normally working with on a client basis as you said your your minimum investment to work with the firm is is essentially 250 000 there’s a little bit of room I think they’re you know on either side but generally that’s where you’re targeting because you’re a fee based advisor can you talk a little bit about some of the value that that brings to the type of clientele that you’re working with in in Austin specifically?”
Chris Hernandez: “Yeah I think it comes down to the freedom so Bobby and I experienced this firsthand uh with us living in Austin with us being found easily uh whether it’s through Google or social media I think it’s no surprise that a lot of Californians have made the move from California to Austin specifically so they wanted to work with someone locally we would meet with them we would have a really good conversation we would build a plan and then when it came to the recommendations part they would ask questions like well where are the private Equity offerings where’s the private debt offerings are there opportunity zones we could invest in what about hedge funds and when we were on the broker dealer side the access was very very limited we couldn’t do some of the things so then we would have to go back to the clients and say we literally can’t do that because our compliance department is not allowing us to do that and they would say we like you we like your approach but we need more and that was one of the things that got us talking about we need to be able to evolve to provide clients what they want and when we met Waterloo that’s exactly what Waterloo was able to offer and we said this is where we need to be to be able to have the freedom to offer our clients what they need to help them accomplish their goals.”
B (Moderator): “Yeah definitely, exactly, I think I think I think one go ahead… no please Bobby…”
Bobby Russell: “I was I was going to say I think one of the things to point out is that um and this is going to be a topic probably for a whole nother day but Waterloo also has built some artificial intelligence that works behind the scenes for our analysts and Traders to utilize in the portfolios and so it’s a proprietary artificial intelligence named Newton that we have and so um that I think is a Cutting Edge that gives us an advantage against our competitors as well.”
B (Moderator): “Talking a little bit about the types of clients in the Austin area you have a pretty broad mix of individuals and and corporate clients and can you talk a little bit about not necessarily what your clients do or who they are but uh how the diversity of Austin just in general works well with the way that your firm is set up?”
Chris Hernandez: “So one of the things that we’ve learned really quickly working with corporations is the employees of those corporations are really thirsty for financial education uh when Bobby and I first got our starts we started working with Educators public Texas teachers and they have a pension so where they weren’t as focused on saving for retirement because they knew they were contributing to their pensions and maybe some money to their 403 B’s or Roth four or three b’s they knew they were going to have a base income when they retired when Adam came to the firm and we shifted over to working with corporations the employees we were talking to did not have a pension to fall back on and are really relying on the education we provide and helping them build that skill set to have nest eggs for when they retire and not only have nest eggs but how did they take the nest egg and turn it into monthly income because that’s usually how the bills come so when we shifted over to the corporations we have found that we’re spending a lot of time talking about the differences of a traditional 401K versus a Roth how much should they be saving what will if they stay on that course look like in retirement to be able to keep their same lifestyle minus taxes but with inflation and will they run out of money those are the types of things that we’re calculating so people can see at a younger age do I need to save more do I need to work longer or am I right on track for the older clients or more experienced advanced in age clients I should say that we’re working at the corporations getting ready to retire they were asking things like how am I going to provide guaranteed income for myself or just maybe not guaranteed income but just how am I going to cover these expenses and then we were creating those income distribution plans to show them everyone’s different though sometimes people are like I want to leave kids a lot of money and sometimes they’re like nope I want to spend all of my money so that’s why it’s really important to have those conversations with each individual person on what do you want to do and how can we accomplish that.”
B (Moderator): “For sure so I I want to talk a little bit about how uh you guys look at a business relationship or as you know that you guys look at with the individuals when it comes to a more holistic style of of planning and that is you know things like for instance you have clients that are small business owners or medium business owners that need you know simple business planning like you know business Buy sell agreements and you know key man disability uh you know uh policies and things like that but you also have clients that are looking at long-term care policies you have clients that are looking at I’m a you know teacher you use the example of being in the you know teacher’s pension where their pension is generally taken care of from a from the pension side or from the administrative side because there’s an extra set you know pool of money that goes into retirement for them but they also have the option of going into a 403b or a four five seven or you know whatever it is uh you know on their specific uh payroll side you guys kind of handle a lot of that you have a lot of inroads on the payroll aspect on the business insurance aspect on the Open Enrollment aspect uh through Chris and other channels that you you work on a daily basis but you guys are also taking on individual clients that you will that you don’t necessarily have a relationship with the businesses that they work for talk to me a little bit about how that holistic idea of being able to like look at every facet of their financial life and adapt to it with not only a specific product offering but also with the understanding the broad base of knowledge and experience that you guys have in dealing with those types of things how does that help you help clients on a daily oh sorry go ahead Bobby.”
Bobby Russell: “I was just gonna say I think being independent is what really helps us um be able to to do that because having the knowledge in a lot of different areas is very helpful for our clients when and we’re not just specifically targeting um this because our firm is telling us to so you know we work with companies that have one employee all the way up to companies that have 3 000 employees um and then on the business side and then on the personal side you know we’re working with um clients children who are just starting college and are saving you know um x amount of dollars per month while they’re in college to professional athletes so we have a wide range of clientele by being independent um I think is the the key advantage to helping being able to service those types of clients and being able to have knowledge in those areas that those clients are needing.”
Chris Hernandez: “And if I can piggyback off of that when you were asking about like the businesses or the personal side when we are working with our entrepreneur clients it’s interchangeable on the business dollars and the personal dollars so that’s where we really bring that team approach in where Adam is focusing on setting up their business as it should be set up taking advantage of everything that we can for the clients and then Bobby and I come in and show them how what they’ve set up on the business side will help them on the personal side when they retire so we’re always working together to make sure that the clients know hey I’m taking care of on the business side I’m taking care of on the personal side I’m happy that I’ve got this team approach and then this they aren’t directly related to our firm but we do have a lot of CPAs that we partner with and attorneys that we partner with to make sure that the client is taken care of from a holistic point of view just like Bobby said earlier monies like medicine it’s too broad to be an expert in everything so sometimes we do have to bring in attorneys we do have to bring in accountants to make sure that the overall plan is working well and it’s going to put the client in a better position.”
Some important aspects about working with a Registered Investment Advisor
B (Moderator): “I’m glad that you touched on that because I think something that many don’t understand when they work with a registered investment advisor and and work with a an advisor at the level that you guys are at is that you’re a fiduciary first and foremost can you talk about the specifically the fiduciary responsibility that you guys have as a firm relative to some of your peers in the industry that don’t necessarily have that fiduciary responsibility.”
Bobby Russell: “Yeah we have to morally and legally work in the client’s best interest so we have to prove what we’re recommending and why we’re recommending it puts them into better in a better position and that is how we approach every relationship uh I tell clients that we try to be their CFO their Chief Financial Officer but they are the CEO they are the boss this is their money and we never lose sight of that so we bring strategies and recommendations that through our modeling we have proved put them in a better position but it’s up to them if they want to implement those strategies or execute on them great so I want to I want to the rest of the industry good sorry oh sorry and so if you’re not acting in a fiduciary capacity where you have the licenses to be registered as a fiduciary you those advisors are just making Investments that are suitable so they have to be suitable for the client but it may not put them in a better position um however if it’s if it’s suitable for them they’re able to recommend that where we we have to um legally work in a fiduciary standpoint for our clients and hold those licenses to do that which you know I I think is a no-brainer for everyone to to become the acting in the fiduciary standpoint but um but that is kind of what sets us apart from working in a fiduciary capacity versus a suitability capacity.”
B (Moderator): “Great I think that’s one of the interesting parts that that maybe kind of sits in the background of the jump up between you know a an online broker or a you know a broker dealer in the traditional sense and when someone is becoming sophisticated enough to explore the financial landscape uh and looking at a fee-based advisory right because I think sometimes as people are getting to be more sophisticated they’re understanding you know maybe I can’t manage my money exactly all on my own all the time or maybe it’s taking too much time to stock pick or research I really need to add some valuable members to my team some of the stuff that maybe gets lost in the background is the idea that a registered investment advisor can do those types of things as a fiduciary and really add kind of an extra stop Gap to the protective site you know to the risk management side of things while still opening up Concepts that would normally be considered more risky that aren’t necessarily risky when you’re trying to diversify so I want to I want to talk along those lines uh you know being in in Texas obviously you guys have a history of you know from an alternative investment perspective of oil and gas and those types of of Industries just because of where you’re at in the Panhandle there um essentially but can you talk a little bit about the types of an alternate Investments that you would be able to offer somebody say at the accredited investor level.”
Chris Hernandez: “Yes, so a lot of people don’t realize this about Austin but it is one of the major Financial hubs of the world and it’s because of the endowments and the pensions that we have here so University of Texas endowment is here Texas Tech recently moved their endowment from Lubbock to Austin and then we have like the Texas teacher retirement pension fund which is a hundred billion dollar fund the police pension and some County pensions so there’s billions of dollars located in Austin and fund managers from around the world will travel to Austin to try to get these endowments or pensions to invest with them and that’s what I was talking about Don Simoneaux sitting on a few boards that’s where he’s able to get access to that institutional Investments and help offer those two individual investors um whether they’re accredited which means that they have an income of 200 000 or if they’re married an income combined of 300 000 or at least a net worth of a million dollars a qualified client has a net worth from 2.1 million to 5 million in a qualified purchaser has a net worth of over five million dollars so as more money becomes available more companies are opened up for the accredited investors will we’re able to work with like a black stone um or a cliff water it just depends on what the clients are eating so for your typical client.”
How a Registered Investment Advisor can properly advise on Alternative Investments that are designed for the client – and some notes about Fiduciary Responsibilities
B (Moderator): ”Give me a little just insight about what those types of alternative Investments look like, is it mostly things like real estate um private Equity VC funds uh more mainstream hedge funds those types of things that you guys are normally working on yeah and to kind of Stay Stay compliant.”
Bobby Russell: “We can’t really go into the specific details of it but um but yes you are our um spot on with saying that you know we have corporate lending structure strategies we have REITs there’s um hedge funds private debt private Equity there’s a lot of different alternative Investments that we use life settlement funds there’s um so so we have a vast variety of Investments we’re able to use but unfortunately on this calls we are not able to kind of go dive into those specifics due to compliance but um but I hope that kind of gives a nice overview of of what we’re able the kind of the broad spectrum it’s not just real estate that we’re focusing on or it’s not just um private debt or us using hedge funds only you know where we have a a good uh menu of options available.”
B (Moderator): “I appreciate you saying that because I think uh that that re-highlights the the idea that you guys are a fiduciary and every single financial plan that you that you help Implement at the financial advisor level requires a an in-depth analysis of the suitability for different Investments or different vehicles within the investment advisory space for those individuals and and not only is it an SEC thing it’s also a suitability for the client thing that that you’re talking to when you say you know maybe we don’t dive into the details of the specifics of the investment because I think what you’re saying is a lot of your clients are coming to you and saying saying can I be in this can I can I access these things and that’s where you guys are looking at the suitability at that point and saying you know this is truly a one-off plan that we’re building with you as the client as you said you know we’re the CFO you’re the CEO let us provide you with you know what it looks like and you can tell us the direction to steer um and then everything will be not only compliant but also exactly how you want it built.”
Chris Hernandez: “And it protects the client because sometimes on the private side they might just look at rates of return and be like oh I want to do all of my money in that and then if an emergency happens because they’re on the private side they’re not as liquid as the public markets it puts them in a bad spot so that’s why everything is tailored to the individual situation that someone is in again not going back to it here’s this blanket plan that everybody gets that works with Strategic Capital.”
What are some of the companies and types of W2 Employees you work with as an investment advisor?
B (Moderator): “Yeah can you tell me uh some of the bigger firms um that are in the area how are you working with some of their employees because for instance as as I work with different clients uh I see people say from the Fang companies or you know the Googles and the Facebooks and the you know Boeings and the big companies of the world and yet those people are probably a big core of your clientele they’re not necessarily working with you through their companies but they are working with you as highly compensated individuals uh you know highly compensated employees and and accessing your guys uh strategic advantages as someone who has a net worth you know that’s building or as somebody who has an income that’s building can you talk a little bit about uh you know from a clientele perspective how you’re engaging with those that level of employee?”
Chris Hernandez: “I think they’re coming to us for Education um when they’re at the bigger companies they can log into their 401k and and read what what they’ve provided but they’re not getting a lot of education so people are just kind of winging it they’re coming to us for hey how much should I be putting in my 401k should it be pre-tax should it be Roth what do I do with my restricted stock units what do I do with my other stock options so that’s where they want the communication they want to be able to call us and talk to us as bonuses are happening like what we’ve already got a game planned on how much is going to go to Lifestyle how much is going to go to Investments how much is going to go to savings what are the short-term goals what are their long-term goals so we’re taking those employees creating a plan for them and then making sure that we are consistently talking with them to execute on it and the way we’re able to do that is through this team approach it’s not just me trying to take 100 calls a day it’s Bobby Adam and I working to make sure that the clients that we do decide to work with because again like Bobby said we’re interviewing them as much as they are interviewing us we want it to be a long-term relationship we have a really high persistency so when clients decide to work with us they stay and I think it’s because of our communication and the relationship building that we do with people.”
Bobby Russell: “Yeah yeah I think things could kind of piggy back on that there’s there’s a um you know there’s just there’s a lot of different concerns um when people are working with a firm and they have let’s say a large concentration of stock in that firm um you know should they diversify what are the strategies for doing that or um just even if they’re close to retirement and they they have a large stock concentration in one company how are they able to um best navigate taxes or um diversifying that that strategy so there’s there’s a lot of things that we can do inside of working with a um an employee of a large firm like that.”
B (Moderator): “So I think it’s important to understand uh the types of clients again and we talked a little bit about this already but um you know the types of clients that will will benefit from a fee-based architecture but specifically for working with Strategic Capital can you guys talk a little bit about the workflow and the type of client you know as as you made it clear relationships are incredibly important over the long term and that’s especially true as your amassing wealth and then looking to protect that wealth and potentially grow it to generational wealth uh over the long term can you guys talk a little bit about uh the intake of working with you know let’s say an ideal client in the Austin area or Beyond as you have clients all throughout the United States but specifically you know for your typical client that would contact you and have questions what does the workflow look like for you?”
Chris Hernandez: “So what we do is we always start with an introduction to our firm and like I said that’s about 10 minutes uh depending on how many questions they have but the reason we like to start there is we want to give people a clear understanding of who we are our philosophies and our fees I think fees are always important so we want to make sure that we’re covering that after we give that 10-minute introduction if it sounds interesting to the prospective client if they’re like this makes sense then what we do is we gather their information and then we request their documents whether it’s statements from their 401ks or or stock options whatever it is they securely upload that to us and then we have all of the information that we need to create a rough draft financial plan and the reason I call it a rough draft financial plan is when we have that first meeting and present them their plan I’ve yet to have someone not make a change and said well what if I did this versus did that so we give them a current scenario had they never called us had they never met us whatever Investments whatever assets they have however much they’re saving and then we create that probability of success score with their ideal retirement age keeping their same lifestyle again with inflation minus taxes and for example let’s just say that they have an 82 percent probability of success meaning 18 of the time they’re running out of money in retirement we will then do an income distribution plan side by side where we’re looking for efficiencies to make that plan better we’re still using the same Assets in the same dollar amount that they were currently saving we’re just finding ways to be more efficient in the plan so through our income distribution planning let’s just say that we increase it to 85 percent well that still means that 15 of the time they’re running out of money which they may not feel comfortable with so then we’ll have different conversations of should the client be saving more or should they be working longer but a lot of times they’re getting to hear this years before they’re making that decision so they can make some changes so I think that’s really important and that’s why we start with the financial planning in the recommendations if we feel like we can make their Investments better through our artificial intelligence or through private markets then we’re going to make those recommendations as well and then they can decide if they want to hire us on as their advisors and Implement those strategies so we’ve got a two-step um relationship where the first one is creating the financial plan so we can have the road map sometimes people will decide to just take the financial plan and self-implement or they will take it to another advisor whatever they want to do that step one is creating the plan and then step two is where we would officially become working as client and advisor.”
B (Moderator): “Great I think it’s important to to mention at this point too not all clients who would want to work with a Strategic Capital are necessarily in a position to work with Strategic Capital whether it be firm minimums because you have custodial agreements uh with the the large firms so one I want to talk about that for just a second and then two I want to talk about the fact that you can also provide these services for for a fee um you know like the road mapping the Strategic Road mapping at first for clients who might not necessarily be ideal clients for you or for really you’re not necessarily ideal for them um at this point in time in their financial Journey but who want to align themselves to work with a registered investment advisor uh in the future or want to build you know good habits to to amassing wealth over the long term.”
Chris Hernandez: “so the first thing I want to talk about is specifically you are you you have a custodian Accounts at the major uh Financial firms in the world right so it’s not like somebody’s wiring money to Strategic Capital we talked about this a little bit earlier but essentially you have a custodian account there and what you’re doing is giving they’re giving you permission to make trades and act on their behalf from a fiduciary perspective but their money still in mostly are vastly the same types of places that it would have been to begin with can you talk a little bit about that yeah and that’s a really good point again we never take receipt of people’s money it goes to the big institutions whether it’s Schwab TD or Fidelity so that’s where the client money sits everyclient that we work with will sign a client agreement that officially makes us their advisor and the initial saying that we have discretion over their account meaning we are able to have our trading team make trades within their account we can if their money is at TD Ameritrade we can never just move it to another company without their permission uh we’re just able to trade within the TD account so I like to be really clear on that and yet that process isn’t it it’s important but it isn’t necessarily a 10 day or 15 day process right it’s a couple of forms can you talk a little bit about that that uh kind of workflow as it results with the custodianship yeah so if their money is custodian at like Edward Jones or Merrill Lynch we go through the process of opening a brokerage account and transferring the Assets in if they are non-qualified assets we transfer them in kind so there’s no taxes just all the positions they had at Edward Jones they now have at let’s just say TD Ameritrade.”
B (Moderator): “And then when you say non-qualified assets you mean things that are not tied to say a qualified retirement plan?”
Chris Hernandez: “Yeah like not a 401k or an IRA great so so we transfer those in kind because we don’t want the transfer to cost the clients money and taxes and then once we have the cost basis and the values then we’re able to say if we liquidate these positions it’ll be x amount in taxes we just want to make sure that the clients have full information so they can make the decision on on that on the qualified side as long as they’re not taking money out of the qualified account and spending it it’s going from qualified account to qualified account there is no taxes or penalties so so that one’s a little bit easier to move it into the positions we wanted to because there’s no taxable liability for the clients and then they have their funds at TD Ameritrade now and our investment team is doing the day-to-day trading on those accounts.”
B (Moderator): “Great and uh can you guys add a little bit about some of the other outside of the so there are some active and some passive uh uh Financial products and portfolios that you guys would Implement on behalf of clients uh but can you talk about some of the other things that you offer as a firm as well I mean maybe some of the risk management aspects and maybe some of the specifics on the insurance side that you’re capable of helping someone navigate not necessarily that you’re the person implementing them as the the broker or as the agent on the line but those types of things that factor in for instance strategic tax planning insurance vehicles those types of things can you talk a little bit about those?”
Chris Hernandez: “Yeah so when we’re doing the data Gathering phase we are asking them about their insurances because our philosophy of preserve grow and protect is how we approach every relationship so we want to help people preserve the money they have have grow their new dollars as well as protect themselves and their family because if something catastrophic happens and they didn’t plan for it and we didn’t talk about it it blows up the plan so all the money they had saved may go to that so we do look at insurances as a way to either mitigate or eliminate risks whether we’re implementing it which we can or someone else’s we want to bring it to their attention and say hey we ran the analysis and we think you’re underinsured for life insurance by this amount or if you haven’t talked about disability insurance and you are the one that is bringing in the money if you are no longer able to work because you were too sick or too hurt what’s going to happen to your financial plan so they may or may not implement the protection strategies but we want to make sure that they’re aware of them.”
B (Moderator): “Right and you guys already have some pretty interesting uh trusted advisors you’re working with and so for clients who would be right at the threshold of of working with you that may not have explored you know a CPA or an estate planning attorney or you know some other trusted advisor there are already pre-vetted people within your stable of the people that you work with that can help them to accomplish those things who have track records of doing that talk to me a little bit about you know how you interface with your own group of trusted advisors and how you would interface with someone who brings them to the table as a client.”
Chris Hernandez: “So, again all of the other professionals we work with have their own firms their own fees we’ve just been working with them over the last 10 years building relationships so if we have a client that does need a CPA we’re able to know which CPA to refer them to because CPAs also specialized we’ve got business owner CPAs we have accountants that work with W-2 employees so just whatever the clients are needing we’ve worked really hard to build relationships that we know we trust them they do a good job they tie their planning in with ours I think it’s very important to know if we ever refer one of our clients out to another professional whether it’s a CPA an attorney or a mortgage broker or Property and Casualty agent we do not receive any Kickbacks there we never wanted that conflict of interest of a client saying oh you want me to use your CPA so you can get paid we we never wanted to be in that position so we spend a lot of time with these types of contacts we work with them closely for our clients so that way we can make a team approach um to better put our clients in a situation.”
How can people interested in investing and working with a Registered Investement Advisor in Austin, Texas, help themselves to be prepared this upcoming year and at the start of the year in general?
B (Moderator): “Perfect I appreciate that the clarification so being that it’s a new year uh the all the not maybe not all but a lot of the tax planning and stuff that’s that’s normally done you know end of year and you know reconciliation uh from a financial perspective um most of that is done there’s still some carry forward that that happens here in some some things that you have to plan for but from from the perspective of uh a registered investment advisor or someone who is helping people to get uh the proper road map defined for you know future success in the financial industry or with their specific uh money management are there some things that you think in January and February makes sense for someone who might be listening to this that may not be a client and may never be a client of the firm um and for clients alike that they can look in January or February so that they don’t have any of the issues you know mid-year and last quarter of 2023 to deal with with?”
Chris Hernandez: “I think the main thing is get started and I know it sounds like oh yeah I just need to get started but whether you decide to work with us or someone else I think contacting a professional and just saying this is what I have this is what I want to do and getting started on a plan like a lot of times sometimes clients will say to us wow this doesn’t seem like rocket science and I will say it’s not but it’s the execution of the plan that’s important who are your accountability partners and that’s a lot of times what we serve as is that accountability partner where Bobby and I are getting reached out and reaching out to a lot of our entrepreneur clients right now and saying hey it’s the start of 2023 let’s meet to discuss your goals that’s what is super important for people is to just get started I think on financial planning the first two to three weeks are kind of the hardest as far as getting documents gathered talking about these you know what you want to happen reflecting on what you’ve done in the past but once you implement the plan a lot of things are automatic like if we’re starting to save in your 401k at 10 and you’re starting to save in a brokerage account at five percent every time you get paid you’re automatically contributing to the 401K and then on the brokerage account side we’ve set it up to where TD or Fidelity or Schwabs requesting that money automatically on the 15th of every month let’s just say you can pick the date but once we get through the planning phase the actual systematic savings are all automatic and now you get to be on autopilots we’re doing the day-to-day management of the money you’re just getting to save and then a year from now we’re able to look back and say is your lifestyle better look at your brokerage account look at your savings because we had the systematic plan or we had the plan and then we systematically put it in place do you feel like you’re in a better situation and a lot of the times the answer is yes and they kind of piggyback off of that question you know there’s there’s things throughout the year that clients can do to help put themselves in a better situation and things that change throughout the year so for example there’s a lot of legislation that passes at the end of the year that rolls into the next year so um you know kind of learning about that legislation I think would be helpful for someone that’s listening to this to know about the changes that are up and coming for that year I think a lot of people also don’t know that um you know you can you can make contributions to IRAs SEP IRAs Roth IRA traditional IRAs in 2023 for 2022 contributions to either lower taxable income or put yourself in a better place I think another thing that at the beginning of the year someone listening to this um you know understanding if they are later in their work experience understanding how Social Security Works what age that they can file for Social Security are they coming up to that age this year are required minimum distributions coming up that you’re going to start taking your rmds from your qualified accounts how is that going to affect you so there’s just a lot of things that happen at the beginning of the year that I think clients can look at to put themselves in a better position and I think it’s important for people to know the secure act 2.0 was signed into law on January 3rd and that has moved the required minimum distributions from age 72 to age 73 at the start of this year so things like that is what we pay attention to to be able to let our clients know that turned 72 this year hey you don’t have to worry about taking an rmd because a lot of times they don’t want to take RMD’s they’re just having to do it because it’s a required minimum distribution so that’s a small example of how we’ll be reaching out to people to let them know things like that.”
B (Moderator): “Yeah I think sometimes uh people forget how important it is to have that strategic partner to kind of keep you aligned with what’s happening in the background because No One’s Gonna; first of all in order to read the Internal Revenue code it would take multiple lifetimes I’m sure uh but to be abreast of all of the different legislative changes and all of the different things that are happening from a tax perspective and a financial perspective is very difficult for a Main Street investor to be able to do that uh whereas when you’re working with someone who has the institutional capabilities that you guys have in addition to the relationship you know part of things with your clients it is a really streamlined approach to be able to get it all on one pane of glass so to speak one one channel of communication and I think that’s sometimes lost in the idea of uh you know working with a registered investment advisor or fee based advisor because at the threshold that you’re looking at doing that you you’re obviously becoming more of a sophisticated investor in general but you’re also probably craving uh nuanced ways to optimize your portfolio and look at you know driving growth and protection going forward I think I sometimes lost yeah on the back of that I’d like just a quick couple of comments from you guys about financial volatility you know the market volatility and some of the concerns that your typical clientele might um you know come across at the start of this year with you know changes in fed rates with changes in you know uh Market behavior um do you have any commentary that you want to add you know as far as like Outlook and you know specifically about Market volatility and how to handle it uh from the perspective of your normal clientele.”
Chris Hernandez: “So we don’t have a crystal ball I wish we did um but what we rely on is what we’ve set up for people meaning if they are younger and they’re seeing the market go down well we’re talking to them about things like dollar cost averaging and taking advantage of a market being lower where they’re getting to get better price breaks for the shares that they’re buying for our clients that are in retirement that can’t see big losses they are already in more conservative positions and we’ve worked on protecting them because if we had another 2008 which is really fresh in their memory they didn’t want to see themselves lose half of their money so for our clientele we’ve specifically built plans to that individual so like a lot of times when I meet a new person and they’re like oh you’re a financial advisor are you just getting blown up because the market has been going down for the last year my answer is not really because we’ve specifically built plans for those individuals and we’ve communicated with them along the way our clients aren’t calling us and saying what’s going on our clients are calling us saying I’m happy we’re sticking to the plan I would say because we establish different types of accounts as well in the sense of you know we may there may be an IRA that is specifically for long term for the next 50 years and then there may be that so the the volatility that the client is seeing in there they’re okay with because they know that that’s going to be for a 50-year Time Horizon where they also are going to need money because they’re retiring in the next two years so we have another type of account that has a lot less volatility So the plan is structured and laddered to where um if there is a lot of volatility in the market someone that’s nearing retirement may not be under the same stress as if they had it all in one portfolio or all-in-one type of account that didn’t have a strategy behind it and I think it’s important that people know when they’re working with us they can reach out to us and have these conversations because they’re not always going to remember oh yeah I did have two different IRAs for those different reasons so just being able to call us and say hey can we please have a 15 30 minute meeting if they’re feeling uneasy and we’re able to jump on and say this is what we planned for this is how everything is set up a lot of times I’ll say you know that that makes sense and I’m happy that’s why we implemented it”
B (Moderator): “So I think this was a pretty valuable way for those that are interested in working with a registered investment advisory firm or a fee-based advisor on the financial planning side in Austin and the the area uh to get to know who you guys are and and in future discussions we’re going to include uh uh Chris Chris Bobby and Adam as well um so that all of them can give insights you know to the questions and things that we’re discussing um but I I appreciate you guys spending some time to to kind of like show somebody who might be listening to this you know what it is you do on a daily how you uh adhere to compliance principles and and what you want to do with them going forward so that you can really help them strategically map out what’s important and help them understand how to align their goals in the financial services industry um and in their personal finances with their lifestyle choices and things that they’re doing um you know from an individual perspective or family perspective I want to just chat a little bit about um how people can get in contact with you and before we do that um I just want to mention the information about the type of work that you guys do is out there and for those that are interested in working with uh with your term in the Austin area and Beyond there are a lot of really positive responses about the work that you’ve done with current clients in that area and that information is readily available for those that want to do amore in-depth research and kind of vet you uh from the third party perspective so I just want to make sure that that’s clear um you know how they can look you up and find information about you online because it’s it’s pretty prevalent but specifically tell us how somebody who is right at the minimum threshold or Beyond you know above it can get in touch with you guys and um and work with you in 2023?”
Chris Hernandez: “That’s a that’s a good question thank you for asking that I I am biased so I think that people should work with an independent advisor no matter who it is if you would like it to be Strategic Capital and go through that process of learning a little bit about us uh you are more than welcome to Google Strategic Capital Austin Texas I think you’ll be able to see what people have said about us we’ve got a website strat-capital.com familiarize all of our contact information is there and you can actually reach out to us on the website as well and we’re more than happy to jump on that initial meeting spend 10 or 15 minutes together and find out if we might be a good fit for one another and if we are we’d love the opportunity to work with you and if we’re not then we will be the first ones to virtually or in person shake your hands and wish you the very best on your financial Journey.”
Bobby Russell: “Yeah I think to kind of piggyback off of what Chris was saying um you know we we appreciate the opportunity and um you can call us via our cell phone um office phone or reach out to us um via email and we would love the opportunity to speak with you and um you know offer any help that we can offer you throughout the first initial phone call and then if we do decide to work together throughout your financial Journey.”
B (Moderator): “All right I appreciate your guys’ time today and I just wanna I I know that that was kind of the wrap up but I think it’s so important what what Bobby just finished with and that is you guys can call them on their cell phone and and in a business where relationship matters so much uh it’s really cool that you guys uh give that personal insight and the you know have that availability um even after hours and in some cases uh for those clients that you that you want to help moving forward on their financial plan.”