Focus on the Investment Factors You Can Control

There is plenty to distract you when you're building wealth and investing in your future. Our ever-connected world means that your investment portfolio is under constant attack from world events. From the War in Ukraine to COVID shutdowns, strained supply chains, inflation, and legislative changes – it's enough to make any investor weak in the knees. Events on the other side of the globe can impact your life in retirement. 

Daniel Gilham, Manager Director of Advisor Strategy at Farther, has some advice: "Take a deep breath."

"It's true: this generation of investors has seen some unprecedented events. While it may seem like this adversity is unique to us, it's not. Each generation has seen their share of history-making moments that affected investment strategy."

Our strategy at Farther is to focus on the factors you can control – and ensuring that clients are insulated from events through a balanced portfolio. Here are some elements that the savvy investor can control: 

Taxes

Of course, taxes are inevitable and unavoidable – but the amount that you pay and the specific timing can vary drastically. If you own a business organized as an S-Corp, you have more flexibility. You have a choice on when you take gains, and when you leave cash in your business for reinvestment purposes (or for a more favorable tax situation). You can also hold high-yield fixed income in IRAs that grow tax-free. Great CPAs and financial advisors work together to understand your total financial picture to maximize losses against capital gains. Gilham recommends having your financial advisor on "speed dial" and inviting them to be an insider on your business and understand how you generate revenue. 

Your financial advisor should regularly review your investment strategy and consider aspects like alternative investments, which could help you defer capital gains for years. If you're nearing the end of your career and planning to sell your company, you'll want to bring in your advisor to help with estate planning before the deal is finalized. How and when you get paid could have substantial tax implications. For business owners, it's not uncommon to have the majority of one's wealth tied to their business. 

The Price You Pay

The specific time that you decide to purchase an asset can make a significant difference in wealth accumulation over the years. However, some investors struggle with a seemingly simple concept: buy low, sell high. 

Like any other goods or services – investable assets go on sale, too. It could be because of a missed earnings target, bad behavior from a company executive, increased raw material costs, or dozens of other reasons... That's when you should consider purchasing. Stable, long-term companies with a firm place in the market will almost always rebound. 

Interestingly though, less savvy investors do just the opposite: they sell when bad news hits the airwaves and diminish their net worth with a self-inflicted move. "Don't take a defensive posture," Gilham says. "Always be looking for bargains."

"Be fearful when others are greedy. Be greedy when others are fearful." - Warren Buffet

Nelson Bradshaw, Farther's Managing Director of Banking Strategies, concurs: "Pay attention to P/E ratios: just because the price may be down, it doesn't mean that the company shouldn't be valued higher. There could be other external factors at play. Pick the winners when they are on sale, and buy when prices are appealing."

Allocation

Every investor has a different tolerance for risk, but the gains can be significant for those willing to invest in non-traditional assets. While legacy investment firms may not have access to all available assets, a firm like Farther does. You can diversify your holdings with private equity offerings, hedge fund investments, venture capital, real estate, crypto, NFTs, and art. For the large brokerage houses that do offer these types of investments, they tend to only grant access to people willing to commit several million dollars to the strategy. At Farther, we offer access with account minimums as low as $25,000.

Fees

The investment industry does a good job of not talking about the fees they collect with most transactions. Large and established investment firms must approve the products that their advisors can offer. This policy limits flexibility for the advisor and investor, but maximizes the revenue that the firm collects.  

You can mitigate these fees by having your advisor allocate to ETFs for lower cost with great benchmark results, but with a significantly lower internal management expense structure.

"We're upfront on the fees that we collect, and we don't have the same cost structure as our competitors,” Gilham says. “We want the money that's normally collected for fees to go back into reinvestment.”

About the Contributors

Daniel Gilham, CFP®, is the Managing Director of Advisor Strategy at Farther. Over the past 15 years, Daniel has helped business owners, entrepreneurs, and families realize their financial aspirations through goals-based planning. This comprehensive approach and coordination of all assets brings clarity and confidence to financial decisions: each client has a unique situation, and Daniel’s tailored approach is vital to achieving their goals.

Daniel is a former Systems Engineer and Product Manager at AOL, and he transferred those skills to assist clients with financial planning. A current doctoral candidate at the University of South Florida, Daniel’s research is focused on uncovering the inhibitors and motivations for planning.

Daniel is an Advisory Board Member of GrowFL and the University of North Florida, as well as an alumni of Leadership Jacksonville and 40 Under 40. Daniel and his wife, Carol Dobbs, live in Atlantic Beach with their two children, Kennedy Grace and Wilder James. Daniel enjoys all outdoor activities – whether it includes golf, the ocean, the top of Mt. Rainier, or braving tent camping with a 2-year-old.

Nelson Bradshaw is the Managing Director of Banking Strategies. Nelson brings over 35 years of financial experience to Farther – with most of that time spent managing wealth, private banking, and commercial groups for BBVA, one of the largest international banks (later acquired by PNC Bank).

Nelson leverages this experience to help Farther build a network of bank-related products commonly used by its clients. With his own client base, Nelson focuses on helping owners of privately held businesses with all things financial — focusing first on the elements of planning, whether it’s related to corporate, personal, and/or employees.

Nelson is a graduate of Louisiana State University and also completed executive management programs at the University of Texas at Austin and IESE International University in Europe. He is the incoming chairman of the Gator Bowl organization and is deeply involved in the Florida business and non-profit community. Nelson lives in Jacksonville Beach, Florida with his wife of 30+ years, Judy.

About Farther

Farther is a new kind of financial institution: combining expert advisors and cutting-edge technology to deliver a comprehensive, personalized client experience. Backed by Bessemer Venture Partners, Context Ventures, Cota Capital, Khosla Ventures, MassMutual Ventures, and Moneta Venture Capital, Farther caters to high-net-worth professionals who are building generational wealth and need a more holistic approach to managing their money.