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Should I Invest in Private Equity?

Should I Invest in Private Equity?

In recent years, the private equity sector has attracted a lot of attention, especially from high net worth investors asking, “Should I invest in private equity?” These investments are in private, non-publicly traded companies, so many investors in mutual funds and stocks don’t necessarily have access to this sector. Private equity firms you’ve probably heard of include The Blackstone Group and The Carlyle Group.


Mechanics of investing in private equity


Typically, private equity investors are investing for ownership in mature businesses. Ordinarily, they claim to invest to maximize the company’s value and then sell it at a profit. In this, they’re similar to venture capitalists (VCs). 

However, unlike VCs, they usually purchase a majority ownership stake of 50% or more in the target company. Private equity firms own several businesses, known as portfolio companies, at the same time. It’s diversification in action, avoiding putting all their eggs in one company’s basket.

The strategy for private equity firms is to raise money from limited partners (LPs) to form a private equity fund. Once the capital goal has been reached, the fund closes. It then invests in the portfolio companies they’ve targeted. The firm’s team begins the work of turning around the portfolio companies and bringing them to profitability. 

The ideal candidate for private equity investment is a company that’s either stagnant or in some trouble but, with some capital and management oversight, has the potential for good growth. It does take time to turn troubled companies around, and the lifespan of a private equity fund is typically ten years. It’s not a fast cash strategy.

When the fund successfully sells a portfolio company, profits are returned to the LPs after fees. On occasion, the company goes public instead.


Who can invest in private equity?


It’s been a somewhat exclusive club for a long time because many investments are only available to accredited investors. The SEC doesn’t regulate Private companies that don’t trade on a public exchange. 

Therefore, accredited investors must have a net worth of at least $1 million and an income of $200,000 or more ($300,000 for married couples) over the past two years. These investors have to have more investing experience and therefore are up to doing their research and making decisions about private firms.

The buy-in for traditional private equity is usually pretty significant as well. Though some funds allow a minimum contribution of $250,000, others require millions.

There are some other ways to invest for those who don’t meet the accreditation minimums. Equity crowdfunding allows you to buy an ownership stake for as little as $2,000, depending on income. As a bonus, the SEC regulates these platforms.

Or you can buy shares of private equity ETFs (exchange-traded funds). They’re publicly traded, like all ETFs, but invest in private companies.


Types of private equity to invest in


Often the deal is done via leveraged buyout or LBO. The purchase involves both equity and plenty of debt (hence the “leveraged”), which the company eventually must repay. Once the company regains and improves its profitability, the debt becomes less of a burden.

Another type of private equity investing is “distressed funding,” which involves companies filed for Chapter 11 bankruptcy. Sometimes the goal of the fund is to restructure the firm and turn it around to sell at a profit. Other times it’s to strip the business for spare parts and gain on the assets, which is why some private equity firms have a bad reputation.

Venture capital is a type of private equity investing. Unlike other private equity funds, however, VCs usually don’t buy an ownership stake. They go after promising new businesses to take to profitability and sell instead of mature ones.

Finally, there are specialized LPs, which often invest in real estate. Most of their investments are in commercial or multifamily real estate. Specialized LPs may also take on infrastructure projects like bridges and roads.


Advantages of private equity investing



Potentially high reward

Because these are private companies, the information publicly available is minimal. Good private equity funds have a substantial investment team that picks great candidates for turnaround. The potential profit from rescuing a portfolio of troubled businesses and turning them around is massive.


Passive income

As a limited partner, you’ll just be sitting back and letting the money flow. The fund’s investment team are the general partners (GPs) doing all the work.


Disadvantages of private equity investing


Illiquid assets

Unlike public investments that trade on an exchange, you can’t just sell your stake in the fund any old time you feel like it. Investors are usually required to keep their money invested for a minimum of three to five years.

That allows the GPs to work their magic, but it also means that money is not available to you if you need it.


High fees

Think mutual fund fees are high? If so, you might get blown away by the payment structure of private equity, which is similar to hedge funds. They’re allowed to charge an unlimited amount of fees because SEC doesn’t regulate them, unlike mutual fund managers.

Performance bonuses are standard for the GPs in a private equity fund. The fee structure is usually the “2 and 20” approach. The annual fee is 2% AUM (assets under management) with a 20% performance bonus on the profits.


Potentially high risk

As you know, there’s no free lunch in investing! The high potential upside comes along with a high potential downside. Even a talented team isn’t guaranteed to turn every company around, and you could very quickly lose money in this investment.


Reporting issues

With publicly traded stocks on an exchange, it’s tough to fudge prices or performance. However, private equity firms typically use IRR (Internal Rate of Return) to demonstrate performance. However, that number isn’t realized until the business is sold. 

Therefore, over the life of the fund, they’re reporting interim, estimated IRRs. They can pick and choose comparable businesses to generate a number that looks better than the ultimate return.


Ways to invest intelligently in private equity


Skip the funds and their high fees

Investing directly into a firm allows you to avoid all the layers of the management structure. If you still prefer a more passive investment, use private equity ETFs.


Commit capital to specific deals

Instead of investing in one fund, you can agree to buy in deal-by-deal. This way, the management fees don’t start ticking until the money is invested. Not only that, you decide which deals you want to be a part of.


Diversification across GPs

Just as you diversify your stock investments in different companies and funds, do the same for your private equity investments. Research the fund managers and make sure you’re comfortable with their style.


Are you interested in further diversifying your portfolio? Please feel free to give us a call at 619.255.9554 or email us to set up an appointment.




Are you on track for retirement?

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Why you should be tax-loss harvesting

Why you should be tax-loss harvesting

Tax losses can be constructive when it comes time to add up what you owe Uncle Sam. Especially when you’re in a high tax bracket and especially in years where you have gains that you’d like to offset.

Losses need to be realized before the end of the year, December 31, to qualify for that tax year. There are a few other things that you need to know to take full advantage of them.


What is tax-loss harvesting?

If you have an investment that’s lost value compared to its basis, selling it at a tax loss allows you to offset other capital gains in your portfolio. You can even use some losses against your income. If you have more losses than gains, you can use an additional $3,000 more tax loss to offset your income. Carry the remainder forward into future tax years, known as a carry-forward loss.

After freeing up cash in the portfolio from the sale, you can buy another similar security. Or use the money available to rebalance your portfolio back to its intended allocation.
Tax-loss harvesting doesn’t work for your tax-deferred accounts, so only your taxable brokerage account provides you this opportunity.


Beware the wash-sale rule when tax-loss harvesting

The IRS doesn’t let investors take a capital loss of one security against the same security gain. The wash-sale rule prevents you from buying a substantially similar investment (or even an option to do so) within 30 days of the date the loss was realized by selling the security.

It’s critical to remember that the 30-day period applies before the sale in addition to after the fact. If you’re planning to buy a similar investment, you’ll need to do so more than a month before you sell the one for a capital loss.

Even if you don’t want to reallocate your portfolio, you can still purchase a security that’s like the original investment but not substantially similar to avoid falling afoul of the wash-sale rule. Investors often buy a mutual fund or ETF in the same sector as the stock they sold to maintain the same allocation.


Costs of tax-loss harvesting

If you’re planning to harvest losses every time the market drops, tax prep will be much more difficult. Remember that you probably have shares at different cost bases within your investment because you bought them at different times.

You’ll need to have records of the basis of every share so that you can sell the correct shares to generate the loss. This is why tax-loss harvesting can be very costly in terms of actually carrying out the program!

Given the costs of trading, make sure that the loss you’re going to harvest is of greater value than the expense. If you want tax-loss harvesting to be a part of your plan, you should do it more than once a year in December before the deadline.

Instead, consider rebalancing more than once a year. As you identify securities that you need to sell to rebalance back to your allocation, you may spot some opportunities to take losses.


Harvesting losses for improving your portfolio

Taking capital losses is especially important if you end up realizing short-term gains. The short-term capital tax rate is the same as your ordinary-income rate, so it’s best to avoid them whenever possible. The long-term capital gains tax ranges from 0 to 20%, depending on your income. Selling a purchase within twelve months of buying is considered short-term, and 12 months plus is long-term.

When it comes to the mechanics of your tax return, like-losses are applied against like-gains first. Long-term losses offset the long-term gains, and then short-term losses offset short-term gains. If you have more losses in one category and gains in another, the remaining loss offsets the gains.

For example, suppose you have $20,000 in capital losses, half short-term and half long-term, to offset $15,000 in capital gains, also half-and-half. The long-term $10,000 loss offsets the $7,500 long-term gain, with an excess of $2,500 in losses. The short-term $10,000 offsets the $7,500 short-term gain, again with an excess of $2,500, so you now have $5,000 of losses.

If you’re married filing jointly, you can take up to $3,000 of these losses this year on your income tax. (For singles and filing separately, it’s $1,500.) That means you have $2,000 to carry forward into the next tax year.


Tax-loss harvesting when you don’t have capital gains to offset

You still reduce your taxes by taking capital losses because up to $3,000 can be used against your income tax every year. By reinvesting your “harvest savings” back into the portfolio, you can accumulate a bit more to compound for the next few years.

Suppose you’re in the 30% tax bracket, and you have $3,000 of capital losses you could take. The immediate savings is $3,000* 30%, which is how much you’d otherwise pay in tax, or $900. Reinvesting that amount every year for the next twenty years, assuming a reasonable average rate of return of 6%, would result in an accumulation of about $35,000.


Other tax-loss harvesting considerations

Be careful when considering capital losses against gains on mutual funds. At the end of the year, most funds pay out capital gains distributions, in addition to making others throughout the year.

While you can use capital gains to offset long-term realized gains on mutual funds, they can’t be used against short-term distributions. Those are treated as ordinary dividends, and the mutual fund company will identify which is which.

You’ve probably already figured out that this strategy works best in high marginal tax brackets. If you take a year off with no income, that’s not likely to be the right time to wield this particular tool. Younger investors who are not in the high tax brackets yet may not see much benefit.

If you’ve invested your whole portfolio in index funds, you’re not going to squeeze many tax reductions out of your tax-loss harvesting. Because these funds are not actively managed, most of the securities are held for the whole year (or longer), with very few sales to generate either a gain or a loss.

However, if you invest in actively managed funds or ETFs, or stocks, you may find more opportunities to decrease your tax burden. Turnover in actively managed funds tends to be high, and all the buying and selling generates the potential for capital gains and losses.

Note that you don’t have much control over the gains that mutual funds distribute because an equal share is portioned to every owner of shares. You also generate gains or losses when you sell the fund yourself. By contrast, stocks are entirely within your control.

Are you interested in learning more about tax-loss harvesting for your portfolio? Please feel free to give us a call at 619.255.9554 or email us to set up an appointment.




Are you interested in tax savings by tax-loss harvesting?

It might be time to check and see if your investments are exposed to excessive taxes. An experienced Financial Advisor can help you navigate the complexities of investment management, advantage opportunities and avoid costly mistakes. Talk to a Financial Advisor>

Dream. Plan. Do.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

GameStop Gambling

GameStop Gambling

GameStop: A David and Goliath story or a cautionary tale of feverish gambling?

The GameStop David and Goliath story has given us a short break from 2020 doom and gloom. It’s a surprising story of how masses of small amateur investors managed to bid the share prices of three largely-unprofitable companies—GameStop, AMC Entertainment Holdings, and Blackberry—up nearly 1,000 percent, collectively. GameStop alone rose more than 14,300%—a record for a firm whose market share is eroding and which most analysts think is clinging to an outmoded business model. (The company sells video games through bricks-and-mortar retail outlets competing in a streaming internet world.)

The story was allegedly about David (the small investors) pitted against Goliath (several prominent multi-billion-dollar hedge funds). The only reason you heard about it is that the small investors won and nearly put the hedge funds out of business.

The GameStop short squeeze: a pessimistic gamble

Market professionals recognize the story as a classic short squeeze. Investors on one side (in this case, the hedge funds) borrow the stock of companies they think are overpriced, expecting to buy them at a discount after the price falls. They pocket a quick profit. These short sales have an expiration date, so if the stocks unexpectedly rise in price, the short-sellers have to scramble to buy the stock at the inflated price to limit their losses.

On the other side of the gaming table were a group of amateur investors who engage in online conversations on subreddit r/wallstreetbets, who ganged up to raise each others’ bids. When the hedge funds had to buy to close out their positions, the share prices went through the roof. The hedge funds, meanwhile, lost an estimated $5 billion on their bets. Roughly $1.6 billion on January 29, when GameStop’s stock jumped 51%.

The financial media neglected to mention that this activity is not investing; instead, it is a form of gambling, and the story tells us a great deal about the mindset of many retail investors these days.

When their goal is to make bets and destroy other gamblers at the table, the game for everybody else becomes increasingly dangerous. Take a look at the past six months of GameStop’s stock price and see if you can pinpoint when the gamblers started taking an interest.

GameStoppers take note: the gambler always loses


Toward the end of every bull market cycle, there is an invisible line crossed. The public starts to look at the stock market, not as participation in the growth and profits of public enterprises, but as a roulette wheel where the ball keeps stopping at a higher price. These shareowners cease to be long-term investors and bid prices up- not based on the underlying value of the companies- but on the expectation that whatever you buy, at whatever price, someone else will come along and pay even more.

Of course, markets only work that way for a short time, typically at or around market tops. Eventually, the share prices of GameStop, AMC Entertainment Holdings, and Blackberry will return to something that more closely resembles the real value of the actual company. Long-term investors have tended to win the kitty over every past historical time period. Gamblers have seen their short-term winnings evaporate in the ensuing bear market. The jubilant traders on subreddit r/wallstreetbets can enjoy their winnings today, but it may not be long before they’re counting their losses and wishing they hadn’t gambled away the money they could’ve used to buy shares when they finally go on sale.



Are you on track for retirement?

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Why You Need to Hire the Best Financial Advisor Today

Why You Need to Hire the Best Financial Advisor Today

With the advent of online trading platforms and information available for free on the Internet, many investors have decided to take a do-it-yourself approach to manage their money. Managing your portfolio is perfectly fine, especially those who are just starting, have little money, or have less complicated financial situations.


However, once investors begin accumulating wealth and add to their financial complexities by purchasing homes or running their businesses, it’s often a good idea to hire an advisor. There are several reasons people in these situations benefit from hiring an advisor to help them with their investment needs.

You don’t know what you don’t know


The world of finance is complex and ever-changing. If you have a full-time job that does not involve investments, it’s unlikely that you have the time, much less the inclination, to keep up with the continual adjustments in the space.

You may have a solid grasp of the fundamentals of stocks, bonds, and mutual funds. But do you know what the rules are on employer-sponsored retirement plans and Roth/IRAs and when you qualify for each? Do you understand the difference between HSAs and FSAs, and how to use them as an investment vehicle? Are you clear on whether you should pay down your mortgage, increase your savings, or do something else with your raise?

A financial advisor is required to keep up with changes in the marketplace. They understand how things like the CARES and SECURE Acts might affect your finances. They also know what they don’t know when it comes to finance, and will pull in other experts when necessary.


Goals and guidance: the best financial advisors do more


  • Help you determine your goals

Most investors understand that they need to save for retirement, given the lack of pensions and the uncertainty around Social Security. But what other goals do you have when it comes to money? Many people have goals that will impact their finances, but they might not realize how short-term goals can have big impacts on their future retirement plans.


  • Provide a sounding board 

Just as business owners have an advisory board to help them get unstuck when facing issues and provide advice to help them grow, your advisor can provide commentary and guidance when it comes to your money.


There are many financial decisions for which there is no objectively correct answer. Whether to invest in a traditional IRA versus a Roth is one example. There are circumstances that better fit one than the other, but because they rely on assumptions about future taxes and earnings, there’s no right answer.


Similarly, people often need help thinking through the wisdom of buying into a retirement community or continuing care retirement community. Or even deciding whether to pay down the mortgage or invest some extra funds. Again, there are no objectively correct answers. Bouncing your questions off a third-party who’s knowledgeable about the issues can help you reach a satisfying decision for you and your family.

The best financial advisors provide a steady hand


Emotions often get caught up in finances. When tech stocks prices go through the roof or housing finance options are attainable for everyone, it’s easy to be carried away by exuberance. No matter how irrational it might be. 


The financial press will cover these types of booms in breathless detail, adding to the perception that everybody’s doing it, and you’ll miss out if you don’t.


Similarly, during market volatility, watching your portfolio value decrease every time you look is painful. Many investors soothe the pain by selling out. It’s not a rational response, because it locks in the losses that would otherwise only be on paper. 


But at least when all the money is in cash, there are no fluctuations. Of course, leaving it too long exposes the capital to inflation, which eats away at spending power.


When other people are selling out, it seems like the smart thing to do to avoid being the last one left holding the bag. The stock market doesn’t work like that, but it’s persuasive messaging since the financial press will have been covering the bust in breathless detail.


Having someone who can talk you off the ledge and prevent you from doing long-term damage to your portfolio is priceless.


The best financial team

Once your finances start getting complex, so does your tax situation. Your accountant focuses on reducing this year’s taxes, but that may not be the right thing to do for the portfolio overall. You need someone who understands investments from a taxation point of view.


Similarly, as you increase wealth or develop a blended family, your estate planning needs increase too. In California, most people who have accumulated assets need a trust. 


If you have children from a previous marriage, you’ll need to protect their inheritance, no matter what happens with your current spouse. Most of these issues are too complicated for people to do it themselves, even though there are plenty of forms online of the unwary. 


While your advisor probably doesn’t do estate planning, they’re aware of the different kinds of asset ownership implications. They can often recommend an estate planning professional who will take care of you. 


No professional wants to recommend someone who isn’t competent, because it reflects poorly on them. A good advisor will only want to recommend the best estate planning attorney and tax professional too.

Here at Platt Wealth Management we’re working remotely, and we’re happy to answer questions or schedule a virtual meeting. Feel free to call us at 619.255.9554 or email us.

Sleep well at night with the best financial advisor

  • Understand your risk tolerance

What do the words “aggressive” and “conservative” mean? It depends on the person. For someone very comfortable with investment risk, “conservative” might mean having 20% of the portfolio in cash and bonds. Others with a lower risk tolerance would consider that aggressive.


A financial advisor will tailor the risk of your portfolio to the point where you can sleep at night. A portfolio invested entirely in small company assets and international stocks, particularly emerging markets, has demonstrated high performance. But very few investors can stomach the roller coaster ride it takes to get there. 


For investors who are very afraid of risk or not very knowledgeable about the market, the advisor may coax them into taking on a little more risk or else the portfolio won’t grow. 


Still, a good advisor wants you to be comfortable and able to sleep at night. They’ll try to find the sweet spot where you are relatively comfortable and yet earn some return on your money.


  • Objective advice

Have you ever noticed that when your friends come to you for help, you can easily see the problem? You have no problem explaining the consequences and pros and cons of their decision. Yet when it comes to your own life, you don’t even know where to start when a problem arises.


Your financial advisor has that objective viewpoint that you need. They see the market as a whole, not just the parts of it that concern you. They can widen out and look at the bigger picture, which is hard for individual investors to do when faced with a decision.

Need some objective advice or want a second opinion on your investment portfolio? Feel free to give us a call at 619.255.9554 or email us.

Questions You Should Ask When Looking for a Financial Advisor

Questions You Should Ask When Looking for a Financial Advisor

Choosing a financial advisor is an essential step in taking control of your finances. You’ll want to complete your due diligence before you even start talking to an advisor you’ve selected as a possibility. 

Find a financial advisor


If you have friends or family who are happy with theirs, you can ask for an introduction. But don’t stop there. Look at their website and social media sites. Most financial advisors should have a profile on LinkedIn.

In most cases, advisors who manage money and make stock, bond, and mutual fund recommendations must register with the regulatory agency FINRA (which used to be the NASD). You can look them up by name on BrokerCheck and see if they have any violations or complaints. 

If there’s more than one, you should probably move on to another advisor in your search. Most financial professionals have none, but a disgruntled client can make a complaint. However, more than one charge (or violation) is a worrisome trend.

Once you have a name or two that appear to be a good fit, you can start meeting with them and asking them questions. Feel free to write the questions down and bring them with you, because you want to make sure that you’re comfortable with the person you’re entrusting with your money.

For most investors, having more than one advisor doesn’t make financial sense. People sometimes aren’t sure whether they can trust one advisor, so they split the difference with two. Using two advisors causes issues with your portfolio since neither advisor has a full view of your money. With an incomplete picture, they may not be able to make the right recommendations.

Find an advisor you trust, by checking their bona fides and getting satisfactory answers from them. You may not invest all your money with them at once, but give them a portion to manage for at least a few months, to determine your comfort level with giving them more.



The financial advisor fit for you

Before you meet, ask if they offer a free consultation or “get-to-know-you” meeting. Good advisors usually don’t take all the clients who come to them. They want to have long-term relationships with the people who entrust them with money. 


You want to have a good relationship with your advisor. You need to be comfortable calling them if you have questions. If you feel that they don’t take you seriously or talk down to you, you won’t be able to build that level of trust you need to consult with them when necessary.


Your financial advisor should assist you with different financial decisions: buying a home, choosing a retirement community, saving for college, etc. Make sure you have someone with who you feel comfortable discussing your finances.


The relationship may not be a good fit, and it’s best to find that out ahead of time. If the advisor doesn’t offer free initial consultations, scratch them off your list and move on to the next.


Many people prefer to meet in person, but with the current COVID-19 restrictions, that may not be possible. See if you can set up a video conference so that you can see them and with potentially other members of the team. Just bear in mind that web conferences are a new technology for many financial advisors, so there might be some technical glitches at first.

Look for a fee only fiduciary

You want an advisor who tells you they act as fiduciary. This ethical promise is common in firms that are Registered Investment Advisors (RIA) and financial advisors who are also CFP® professionals. They are fee-only and must abide by strict fiduciary guidelines. 


A fiduciary is someone who has the legal duty to put your interests above their own. That means they have to recommend an investment right for you, and cannot receive product incentive pay or product commissions.


Advisors who are not fiduciaries have less restrictive suitability standards. That means they only need to recommend suitable products. They can suggest a product that pays them better over an equivalent that might be cheaper for you, as long as it’s suitable for your portfolio.

Financial advisor investment approach

  • What is their investment philosophy?

Depending on your risk tolerance and what stage of life you’re in, the financial advisor’s philosophy may or may not match with your own. When you’re young and looking for growth from your investments, you don’t want an advisor who says they’re conservative and focuses on protecting investments. You want a financial advisor to build a custom portfolio for your life priorities, time horizon, and risk profile.



  • Do they perform a risk assessment with their clients?

The asset allocation, or how much money is in different kinds of stocks compared to bonds, is an important indicator of how much and how volatile your portfolio performance will be. The best financial advisors will match your portfolio to your risk tolerance, within reason, so they need to know what your risk tolerance is.


If they don’t use a risk assessment with you, they’re most likely to use a cookie-cutter allocation for everyone. You may not get the performance you need to achieve your goals or take on too much risk for your time horizon. 

How does the financial advisor get paid?

There are many different ways advisors get paid, some of which come with conflicts of interest. The advisor should disclose all fees and methods of payment to you.

Fee-only is an excellent way to align the advisor’s incentives with the client’s. The more your account grows, the more your advisor’s compensation grows too. Many advisors use the Assets Under Management (AUM) model and get paid a percentage of the assets under management, which should be well under 2%.  

Or you may be charged on a retainer basis. 

The other model is commission-based, and you should steer away from financial advisors who are either 100% commission or fee-based with some investments on commission. Here you’re charged a fee for each transaction. There’s little to no incentive for the advisor to grow your account, and they do have incentives to keep you buying and selling, which is known as churning.

  • How often will you contact me?
    • Meeting schedules vary widely, and it’s up to you to decide if that frequency works for you. Typically, for accounts that are less than six figures, you should expect less contact and fewer meetings.


    • Who will have custody of my assets?
      • You want the advisor to have a third-party custodian. TD Ameritrade and Schwab are popular ones, but there are others. Having a third-party custodian provides you the ability to look at your accounts and see your account statements. Advisors who offer custody can make their account statements, structuring them in a complicated or misleading format.


        Without a third-party custodian, major crooks like Bernie Madoff got away with millions. He created fraudulent statements that showed the client making what he’d promised them.

      What are the financial advisors qualifications?

      There are websites where you can check what specific designations mean. If you’re starting out investing, you might be OK with someone else who has a bit less experience and is currently working on their qualifications, because they will likely charge you less.

      A financial advisor should have a minimum of five years’ experience, preferably through years of market volatility. Credentialed financial advisors, such as CFP Professionals must complete rigorous study and experience requirements. To keep their credentials active, they attend conferences and classes to stay informed and knowledgeable. CFA, CPWA and other credentials deepen an advisor’s knowledge and expertise to apply to complex planning and investing.

      Ideally, you want to see on the advisor’s website and hear from the advisor that they are familiar with your specific issue and that they’ve helped clients like you. 

      If you own your own business, you’re better off with an advisor who specializes in such clients because they know the typical problems and can help you solve them. 


      Interested in meeting with us for your initial consultation? Give us a call at 619.255.9554 or email us for an appointment.

      Operating in a Covid 19 Summer

      Operating in a Covid 19 Summer

      We at Platt Wealth Management hope that you enjoyed a safe and sane Fourth of July weekend. The dog days of summer are indeed upon us, and we thought it might be a good time to address some of the uncertainty that many of our clients and others are experiencing.


      Summer in the time of COVID-19


      Hanging out inside bars is one of the worst things you can do if you want to stay healthy and avoid infection. The good news is that being outside, especially on a neighborhood walk, is relatively low risk. See more details on what’s safe here

      If you’re outside and keeping a distance of six feet between your family and other people, you’ll probably be fine. Feel free to enjoy your outside activities, unless they involve packing into a small area where you can’t maintain the distance.

      What researchers have discovered about the novel coronavirus should guide your decisions about how you have fun this summer. The good news is that you don’t have to stay in lockdown! Being outside at a safe distance from others is healthy. 


      Enjoy your summer, stay healthy



      • You don’t have to show symptoms to infect other people. You could inadvertently spread the virus to anyone because you’re unaware that you have it. You might have come into contact with another asymptomatic person and received it from them. Unknowingly, you could give it to someone who has an underlying condition. 

      That’s why it’s still important to take precautions, even if you’re healthy and not in a high-risk group. Not only are you protecting yourself and your family, but everyone around you.


      • The virus is typically transmitted through droplets from an infected person within a radius of six feet.

      When you stay farther away, the virus has less chance of spreading.

      The droplets are why going to large venues is so dangerous, especially if you’re in a choir or cheering on a team. Singing increases the amount of virus that an infected person emits, as you’ve seen in all the news articles about people in choirs getting sick.

      Large venues that don’t practice social distancing also accelerate the spread of the virus, because talking also increases the volume of droplets and the volume of contagion from someone infected. The person may not know it, but they could create a lot of sickness.


      • Masks reduce transmission, and paper or fabric masks protect others from you.

      These types of masks are breathable because air molecules are much smaller than the water droplets you emit while breathing and talking. You can breathe in air and still prevent the spreading of disease if you happen to be infected.

      Some people are concerned about whether masks increase the amount of carbon dioxide that you breathe. Doctors and nurses wear masks for most of their working day, and they function just fine. You’ll wear the mask without any side effects when you need to go to the store.


      • The US is still in its first wave of infections, and there are still hotspots with significant transmission.

      It briefly appeared that the US was experiencing a decrease in transmission, but that was because New York City, which was one of the first places hit by the virus, get a handle on it, and their infection rate improved. However, the rest of the country is still getting sick, and rates of infection have increased in hotspots.

      Most of these are places where no distancing or masking is practiced, or where the temporary closure of stores and offices was lifted too early. We are not out of the woods yet. 


      • Though some places are open, it may not be safe for you to go there.

      The barbershop and hair salon requires people to be very close together, so think carefully about whether you can hold out for a little longer. 

      If you do go, make sure they sanitize surfaces often because the virus can survive on smooth surfaces for the duration of your visit (and longer).


       Spend time together, take care of each other



      • People with underlying health conditions are the ones who suffer the most.

      COVID-19 appears to target the lungs, particularly, so anyone with lung issues needs to be careful. However, they’re not the only ones. Anyone with heart disease, immune system issues and diabetes, among others, needs to be careful.


      • Younger people still spread the virus, are infected by it and can die from it.

      Although most of the people who get sick and die from the coronavirus are elderly and/or have underlying health conditions, that doesn’t mean that younger people are immune. Please don’t assume that because you or your kids are in their twenties that it’s safe to go to packed events where everyone squeezes in like sardines.


      • PWM continues to work remotely and offer virtual meetings to keep ourselves and our clients healthy.

      Although we love to see and visit with our clients, we’re still careful to ensure that we keep everyone as safe as we can. Here at Platt we look forward to long-term relationships, and we don’t want anything to stand in the way of that!

      Investing during this time


      As you’ve no doubt noticed, there’s a lot of uncertainty in the economy, and the stock market is subject to rollercoaster rides right now. Unemployment remains high, and the Fed agrees with many economists that the first round of stimulus was not enough to keep everyone afloat.

      However, nothing has fundamentally changed. Retail was already in decline, which has accelerated due to COVID-19. Although we don’t know when the infections will ease, we know that this is most likely a temporary situation. 

      The virus requires behavioral changes in how we live and work, but not in how we invest. Once the pandemic slows, we can expect an uptick in the economy and market. Staying invested in your designed allocation is the best way to weather the current uncertainty.

      We know this is a difficult time because there is so much unknown. We’re happy to talk to our clients, review their current situation with them, and their investments. 

      If you need a refresher on why we chose the investments we did or feel nervous about the ups and downs in the market, please let us know. 

      We’re all in this thing together, and we want to help you pull through so you can sleep at night.


      Give us a call at 619.255.9554 or email us if you’d like to set up an appointment.



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