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TAILWIND WEALTH MANAGEMENT

Maximizing your wealth, not your advisor's...


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You're Paying Thousands in Hidden Fees...

Many investors fail to realize the multiple layers of expenses embedded in their investment accounts. Advisory fees, management fees, wrap platform fees, administrative fees, new issue underwriting fees, commissions… these are only some of the expenses that reduce an investor’s overall return.

It is not unusual for total fees to exceed 2%, even 3%, on an annual basis. Let’s put this into perspective -- if your before fees/expenses return is 10%, 2% total fees reduces your return by 20% (2% divided by 10%) per year! In other words, you would only keep 80% of what you earn every year? Another way of looking at it -- $100,000 10 years later would grow to $259,374 before expenses, but only $215,892 after expenses… a difference of $43,482!

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Does Your Dinner Check Arrive with a Scale?

The story gets worse… imagine you order a nice steak at the local restaurant. Your spouse orders the same meal. You both enjoy a dinner cooked to perfection, and when the bill comes, it’s taped to a scale! The price of your steak is adjusted up or down by your relative weight. You weigh 200 lbs, and your spouse 150 lbs… you pay one-third more for your meal, even though it took the cook no longer to prepare the dish, and the ingredients/inputs were identical.


Applying this to your financial advisors fees -- why should two otherwise identical clients pay different amounts, just because one has an account larger/smaller than the other person? Investment solutions require no physical exertion to enact. Money doesn’t “weigh” anything. The only item that is “consumed” is an advisor’s time, so arguably more complex solutions should command a slightly higher price, but once that solution is implemented across an investor’s portfolio, fees should revert back to standard.


Finally, asset-based fees lead to numerous potential conflicts of interest. For example, client wants to buy a second home - the reduction in investment savings will result in lower fees to the advisor. In addition to that, advisors have an inherent tendency to pay more attention to larger accounts, when it’s oftentimes the smaller accounts that need to most help building wealth.

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Money in Your Pocket, not Your Advisors!

Welcome to Tailwind, where investors have access to high quality advice at a much more reasonable price that is not impacted by the size of your assets. For about the same as a cup of Starbucks every day, Tailwind will provide ongoing monitoring and investment recommendations that will put more money in your pocket through lower fees, and deliver a long-term investment strategy tailored around your goals and objectives.

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Putting You First - Always

Helping you keep and grow what you've earned, accelerating your path to retirement

Delivering more for less, better...

Most people invest without having a complete picture of the ongoing fees they are paying, that eat away at their savings and much-deserved retirement. Tailwind structures your portfolio around investments designed to put returns in your pocket, not advisors.


You worked long and hard for your savings, and should not be paying certain unjustified fees that eat away at your wealth over time.


CALL US TO DISCUSS HOW YOU COULD SAVE THOUSANDS A YEAR

617.991.4787

Achieve your unique goals...

What are your dreams? What do you want for your children? At Tailwind, nothing is more important than helping you achieve these goals. Through optimizing your investments and customizing this approach and how we communicate with you, we eliminate complexity and improve results. 

Lifetime Strategies...

Managing your lifetime savings is one of the most critical responsibilities, but doesn't come without related challenges -- and we are there to help. 


As individuals face the excitement as well as related anxiety of a 30-year retirement ("How will I pay for everything?), it is increasingly critical to plan early and plan often. We're there to help you navigate toward a successful, relaxing retirement.

Step #1: Enhancing Return by Lowering Expenses

Enrich yourself, not your advisor. Tailwind will provide a thorough analysis with recommended changes to improve the cost efficiency of your investments. Oftentimes similar mutual funds, ETFs, and the like are available for dramatically lower prices.

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Step #2: Aligning Investments with Your Goals

What are you saving for - a child's college education, a new home, retirement? Investment strategies should not be overly generic, or one-size-fits-all. What are your "Someday" Dreams, and how do we get you there...

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Step #3: Periodic Rebalancing of Investments

No road is forever straight. Adjustments are required to stay on-course, while also accounting for life events - marriage, divorce, changing careers, etc. Your investment portfolio needs to be adjusted accordingly, as well as for basic market movements over time.

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Step #4: Integrate Investments with other Forms of Personal Wealth

Your total net worth often includes not just your investments, but your home, your future earnings stream, and potential insurance coverage/payments, just to name a few. The most effective financial plan treats each of these inputs as pieces of a larger puzzle.

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Tailwind's History and Qualifications

Tailwind Wealth Management represents the founder Douglas Beck's lifelong dream to help individuals pursue financial independence through identifying and maintaining a personalized, prudent investment discipline and a cost-conscious approach.


Fidelity Investments - Head of Fixed Income Investment Product

(Boston, MA - October 2013 to December 2016)

Responsible for product development, management, strategy and advocacy for $1 trillion in AUM across retail, institutional and intermediary channels.


Deutsche Asset Management - Head of Product / President of Deutsche Funds

(New York, NY - August 2006 to October 2013)

Responsible for product development and management across institutional and intermediary channels, as well as President of three legal entities (open-end, closed-end and trust company platforms).


UBS Global Asset Management - Head of Product / President of UBS Funds

(New York, NY - November 2002 to August 2006)

Responsible for product development and management across institutional and intermediary channels, as well as President of three legal entities (two open-end and one closed-end platform).


Merrill Lynch - Head of Global Equity Manager Research Team

(New York, NY - March 1998 to November 2002)

Responsible for global equity manager research across ~$400 billion mutual fund wrap and separately managed account platforms.


Raymond James & Associates - Portfolio Manager

(St. Petersburg, FL - March 1993 to March 1998)

Founded fund-of-funds investment advisor, managing three distinct investment strategies: Global Equity, Taxable Fixed Income, and Municipal Fixed Income.

Raymond James & Associates - Head of Closed-End Fund Research

(St. Petersburg, FL - August 1990 to March 1993)

Structured and managed closed-end research department.

Education


University of California, Berkeley / Haas School of Business

BS in Finance - graduated with honors

CFA charterholder (#27252 - attained in 1997)

Tailwind Library

An ongoing series of informational entries

Markets and Uncertainty

January 1, 2017

After a prolonged period of "easy money," the Fed appears to be adopting a more "hawkish" stance. As an investor, what should you do? Let’s break down the opportunity, as well as the risk side of the equation… REMEMBER, you want to protect what you have, as well as take advantage of opportunities to earn a higher rate of return!


RISK: Interest Rates go UP, bond prices go DOWN - usually… This is true if the bond is a traditional “fixed” coupon bond. An alternative does exist, in what are referred to as “floating” rate bonds, where the bond coupons move up/down depending on what the market (often led by the Fed) does.


Several types of floating rate bond fund choices exist:


Bank Loan Funds: Ideal for an environment of gradually rising rates and an improving economy


Treasury Inflation Protected Security (“TIPS”) Funds: Ideal as a long-term inflation hedge, but don’t necessarily track changes in short-term interest rates as closely

Adjustable Rate Mortgage-Backed Security Funds: Ideal as a shorter-term instrument that’s higher quality than Bank Loans, but carries its own unique risk of “prepayment risk” should rates rise too quickly


OPPORTUNITY: Bank loan / floating rate funds benefit not only from modestly-rising interest rates, but also a stronger economy, as they are lower credit quality in nature. This means that if a scenario were to play out of gradually higher interest rates, but a stronger economy at the same time (admittedly this can be a somewhat delicate balance), investors in such strategies can experience capital appreciation as well as higher monthly distributions.


Note: These types of investments are never substitutes for money market funds. If you want to “earn more on your cash,” then you will always be incurring additional risks.


As with any investment, it remains critical to keep an eye on the underlying expense ratio. Although Bank Loan funds are a little pricier than what I’d typically like to see, as long as you keep it below 1%, this is a higher-intensity product when it comes to credit research and certain settlement processes that we won’t get into in this forum.

Finally, keep in mind this is a “tactical” position -- something to keep your eye one as eventually you’ll want to exit the investment. Don’t overstay your welcome. Better to get out early and lock in any gains you may have, then to run the risk of the Fed over-tightening or the economy losing too much steam, both of which would likely result in inferior returns within this type of strategy.

Reclaiming Your Journey to a Successful Retirement

March 15, 2017

If you are like 99% of people who read this title, you are thinking “I didn’t know I needed to reclaim it, haven’t I been earning it?”

Unfortunately, a large portion of what you have earned and will continue to try and grow as successfully as possible is being whittled away by insidious forces that most investors somewhat blindly accept. In fact, many investors are actually taught to view what are perennially consistent detractors of their wealth as benefits! Warren Buffett in his 2017 annual shareholder letter estimated that $100 billion has been wasted over the last decade on the unsuccessful pursuit of active management and excess fees. Boiling it down to an average investor, fees are causing an estimated 10%-20% negative impact on annual returns.

Let’s jump to the culprits, then provide potential solutions as to how you can do better - pay less and retire with more! Sounds too good to be true. Actually, it’s what should be standard practice.

Culprits:

1) Asset-based pricing

Why should you pay more for the same advice? Does it take any more time for a financial advisor to manage a $1million account as compared to $500 thousand. Absolutely not.

SOLUTION: Time-based compensation approaches, with an AUM “lower of % fee option” for smaller accounts. This eliminates the otherwise perverse incentive for an advisor to skew their time toward the “bigger fish,” and also compensates advisors for those clients needing extra attention due to more complex investment needs and challenges.

2) Layered, non-transparent fee structures

Most friends and former colleagues of mine - a large percentage of whom are in the financial services industry - are unable to tell me what their overall investment expenses are. I was in the same boat -- this is not something that is found anywhere on a monthly brokerage statement. Many are shocked when they discover they are paying 2% +/- 0.5% when taking into account wrap fees and underlying investment fees if using SMAs, mutual funds, or ETFs for instance.

SOLUTION: Ongoing reporting/calculation of weighted total expense ratio across combined investment accounts. Personally, my view is that nobody should be above the 1% level for a balanced account comprised of bonds and equities. While this requires a healthy presence of passive index funds, this too helps improve tax efficiency. My own account runs at approximately 0.2% overall. (This is about one-tenth what many investors pay in fees/embedded costs!)

3) Inefficient “asset location”

Tax-efficiency can result in significantly higher long-term returns, as compounding becomes that much more powerful if you’re able to defer taxes on investment gains further into the future. Unfortunately, many “one-size-fits-all” wrap accounts do not allow for true asset location strategies across investors’ qualified and non-qualified accounts.

SOLUTION: Any advisor worth his/her salt should be demanding that you provide all data pertaining to overall household assets, regardless of where they are held. Regular analysis and “spot checks” can be performed by any investor around holdings across various types of accounts. Flags to watch for include similar or even identical holdings in both one’s taxable and tax-free account, as well as any pattern or lack thereof when it comes to index vs. actively-managed funds and where they are held.

4) Lack of coordinated active/passive approach

Last but not least, realizing that long-term outperformance is more difficult in the larger asset classes, lending itself to low-cost index funds in such spaces while complementing with actively-managed funds in less efficient strategies.

SOLUTION: As referenced in the previous section (asset location), there’s a place for passive, and a place for active. From a tactical perspective, there’s also a timing element that will result in periodic rotation of active vs. passive from one to the other. Having an investment advisor who’s versed in all this, and can implement it not just in a one-size-fits-all but specific to your needs can be a long-term home run.

Keeping Some Powder Dry for an Imminent Buying Opportunity

March 15, 2017

Another Fed rate hike…

...continued signs of inflation

...geopolitical crisis (choose a flavor)

...domestic crisis precipitated by the new Trump cabinet

...Russian hacking scandal

While the “Wall of Worry” continues to grow, scaled by one of the more impressive bull markets of modern day, the list of catalysts that could precipitate a panic sell-off is growing longer by the minute. Instead of worrying about the inevitable, we suggest that investors maintain a conservative but balanced stance, keeping an additional 10-15% in liquidity on the sidelines as dry powder that can be deployed when prices become more attractive.

Maintaining a diversified portfolio remains critical, and we believe that a core/satellite passive/active approach is most prudent. Passive in this case represents the “core,” more efficient asset classes such as large-cap domestic equity and investment grade bonds, while active complements passive in areas that are less efficient and managers stand a better chance of outperforming over time - small- and mid-cap equities, high yield, municipal bonds and emerging markets for instance.

Not only does the passive/active approach help lower overall expenses, but it is typically more tax efficient. Lower expenses, less taxes… who could ask for more!

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