Mastering Wealth Management with Frazer Rice

Skeptic’s Guide to Investing hosts Frazer Rice, the seasoned Director of Family Office Services at Next Capital Management and author of "Wealth, Actually”.   Fraser helps us explore complexities of wealth management. Peer into the holistic approach required to harmonize investments, cash flow, and estate planning with your personal values—a symphony of strategies tailored for everyone from the mass affluent to the ultra high net worth. Frazer shares his emphasis on the power of meaningful conversations with clients. 

We dissect the allure of private equity and hedge funds for personal portfolios and take a critical look at the role of active management in today's market dynamics. Through our dialogue with Frazer, we also tackle the art and science of portfolio construction, weighing the merits and challenges of various investment vehicles and the impact of fees on the bottom line.

Finally, we tackle the intricate dance between tax planning, estate strategies, and family dynamics, where the technical intertwines with the personal. Our conversation sheds light on preparing for potential shifts in tax legislation and the nuances of preserving wealth across generations.   We leave you with a clearer vision of choosing a wealth management firm or family office that aligns with your financial aspirations, driven by transparency, comprehensive understanding, and a lifelong commitment to learning.

Join us for this enlightening journey through the multifaceted terrain of wealth management, where clarity and strategy lead to financial security. 

Straight Talk for All - Nonsense for None


Please check out our other podcasts:

https://skepticsguidetoinvesting.buzzsprout.com

Transcript

Clem Miller: 0:26

Hello and welcome to Skeptic's Guide to Investing with Steve Davenport and myself, clem Miller. In this episode we welcome a special guest, fraser Rice. Fraser, welcome, thanks guys.

Frazer Rice: 0:40

Thanks for having me on.

Clem Miller: 0:42

Fraser Rice is Director of Family Office Services at Next Capital Management, a wealth management firm in New York City. Like Steve and I, fraser is an alumnus of Wilmington Trust. Fraser is also author of the book Wealth Actually, which is available on Kindle and in audiobook form. We are going to discuss with Fraser the topic of wealth management. We know that some of our listeners may not be very familiar with the topic, so we're going to keep the discussion educational and non-technical. But first any tips for podcasters. Starting out, fraser.

Frazer Rice: 1:21

I think the biggest tip I can give is just start Get some experience getting in front of the microphone, make some mistakes and hear yourself talk. I think maybe some experience getting in front of the microphone, uh, make some mistakes, uh, and hear yourself talk. I think maybe getting it out in front of some friends to kind of get some other feedback is good. And then I think having a discussion format where you're talking to somebody else is a good idea. So having guests on, like me or uh other friends, other experts, that type of thing, uh, you get to have that good back and forth and it takes a little bit of pressure off you the podcaster to uh be Joe Rogan or uh you know, some sort of ultra charismatic light out there as you try to uh carve your own niche into this world.

Frazer Rice: 2:02

Yeah, you're our first guest and as a reason, you know we're glad to have you and we love the work you do with your podcast. Well, I appreciate it. Unfortunately, if it's audio only, you can't see me with my jazz hands. Uh, you know, tried to try to make it extra special and bright how would you describe wealth management versus investment management or um cash management?

Steve Davenport: 2:29

why is wealth management important for individuals and families?

Frazer Rice: 2:34

Well, it's a good question because I think it gets to the whole of you. Know what does the financial industry do for you? I think that wealth management in particular is sorry about the phone here, this will go off in just a second Wealth management in particular is the study of being able to help a client on all facets of their wealth component, which is not only the asset management but understanding their spending, understanding their estate planning and then really understanding what happens as it relates to how to sort of inculcate their values and their functions of their wealth so that they can raise good kids, that they can achieve their goals during their own lifetime and that they can have things like a comfortable retirement or fund their charitable endeavors that type of thing.

Clem Miller: 3:37

So, fraser, for a wealth management firm to accept somebody as a client, how much wealth would that person need? We often hear the terms high net worth and ultra high net worth. How would you distinguish between clients in these two categories, and maybe clients also in mass affluent?

Frazer Rice: 3:57

Sure, it kind of depends what you as a firm decide you want to do or which subset that you're interested in serving. I'll start sort of at the smaller end, the mass affluent. I think of that as a lot of income and capital gains tax planning and cash flow planning and building up an asset reserve so that, let's say, the spouses or generation one is able to fund a retirement, is able to fund the educational spending for their kids and other endeavors along that line. And you're not really dealing with the taxable estate component with that, because you're probably well under the different estate tax limits. That's not to say that estate planning isn't important and that that discussion isn't had, but that's kind of where I think about on the mass affluence side of things and I think of that really in sort of the with inflation these days, kind of in the 5 million and below level, In the high net worth level, you're starting to get into the world where current wealth, which is what I just described with the mass affluent, where you're dealing with your own cashflow, needs, spending et cetera at that level is starting to integrate a little bit more with what I would describe as the legacy wealth discussion, where you're thinking beyond your generation and thinking about what happens at the next generation. So the discussions around estate planning get a little bit more developed and things like life insurance et cetera becomes a bigger part of that discussion.

Frazer Rice: 5:22

I would then sort of move the niche up from, say, $5 million to, let's call it, $30 million, which is where I think you have significant taxable estate issues, such that you're probably in many cases you have enough money that you aren't as worried about funding your retirement or funding the educational spending issues and those types of things during your lifetime. You're now starting to think about the taxable implications and the structural implications of moving wealth down to the next generation and so on. Anyway, so the phone's going to ring for a second, but we'll let that get away, and so then I think at that 30 million level, that's where you start having that discussion more and more. Then I think at that 30 million level, that's where you start having that discussion more and more. Then I think you go on to the next world, which is what I would describe as the multifamily office and family office side of things, where you start having a lot of heft built around the structuring, the accounting, different tax games you can play in order to minimize your work on that front.

Frazer Rice: 6:27

That's really where we're, that's how I would divide it. And so firms to try to do all things or be all things to all people, can be difficult because, as you to to staff, uh, what you need to staff and build the structure around each of those different functions, that can be expensive and in many ways it requires a different thought in terms of investment management. Uh, you know, for a firm, I think it's usually a good idea to kind of decide what they want to do and where they want to hang their hat.

Steve Davenport: 6:56

I think it's interesting. We talk about family office, but really isn't it the founder of the family who's really the person that we're managing and worried about? I wish we were more focused on the whole family and how they all perceived money and how they all thought about the long-term plan and the charitable intention, but it really feels like for most of the family offices I've been associated with, there's one prime individual that is really the family wealth holder. How do you deal with that ego? Or a family office seems like a very nebulous term.

Frazer Rice: 7:32

There's no no question.

Frazer Rice: 7:35

Yeah, no question that it's a nebulous term and the sort of bromide that's out there is if you've seen one family office, you've seen one family office. It's tough to take the lessons learned in dealing with one and extrapolate it to another when you have such idiosyncrasies with respect to personality, with structure, with just the types of wealth that created the let's call it the family office or the structure for the family. To me, dealing with people and egos and so on really gets to the point of communication, and communication ultimately to me is the biggest threat to wealth, oftentimes the investment management and the tax planning and those types of things. There are a lot of smart people that expend a lot of calories doing the right things for clients on that front and to me that's the most doable aspect of what's happening. That's the most doable aspect of what's happening.

Frazer Rice: 8:32

The bigger issue to me is making sure that the why of the wealth management, either at the investment management or structuring or estate planning end of it, is communicated and understood at the client level and then, as you start talking about multi-generational discussions, that that why is then integrated into the discussion in terms of moving not only the value of the wealth to the next generation, but the values that created it.

Frazer Rice: 8:56

And so that first of all involves having some agreement as to what's going on on that front and then understanding what those principles are and then designing a framework in which those values get down to the next generation, communication-wise, either through education or through just general discussions.

Frazer Rice: 9:17

But when you don't have that, I think there's sort of a natural law that the liabilities of a family increase geometrically while the assets in general increase linearly, and so that delta between the two is sort of a what's called a natural equation that we're always fighting as we get wealth from one generation to the next, and at that point, if you have bad communication, it just widens the delta. So I think when I try to get involved with it, I try to make sure that all parties understand, have a base knowledge of what's going on on the wealth management front, and then, uh, that there's a plan in place to help, uh uh, sort of not only the generation that created the wealth but the further generations on understand what's happening and why, so that when life intervenes and people get married or people die, or people get sued or whatever, that the structures are flexible enough to deal with those situations but durable enough to protect the wealth over the course of time.

Clem Miller: 10:20

So, Fraser, how do wealth managers typically assess a client's financial situation and goals?

Frazer Rice: 10:27

Well, I think step one you're really flying in the clouds without instruments if you don't have the full balance sheet.

Frazer Rice: 10:34

I think if someone presents to you a pool of money that you want to manage and they don't give you much other information beyond that, you are strictly an asset manager and you develop an investment policy statement over that pool of money and you kind of move on and the conversation stops there and you're evaluated on whether you performed at or above that benchmark.

Frazer Rice: 10:56

A good wealth manager, in my opinion, starts to look a little bit more like an accounting firm and slash lawyer, in the sense that in their intake process they try to get a real good sense of the total picture of what's going on with the family. So that starts with the balance sheet. At a minimum it goes to the family tree, then you start getting into taking in the different structures that exist or don't exist for the client and you start understanding what's in place there. That's sort of the minimal route, I think. If you just sort of stick at I have an LLC with $10 million in it and I wanted to invest it for growth you kind of stop at that because that LLC is probably part of a much larger spiderweb of planning that's going on, either intentional, hopefully, or unintentional, and that's where a good wealth manager goes in and tries to A, spot the issues and then B figure out what parts of the ecosystem need to be involved to either maximize what they're trying to do or fix a problem that's metastasized over time.

Steve Davenport: 12:03

Do you think, fraser, that when we try to customize these asset allocations for these various family structures of which, like you said, there's no two that are alike it feels like in this market where there's so much uncertainty in terms of what's going on with AI, what's going on with some of the things on the edge here, with the wars in Ukraine and Gaza, how do you make sure that whatever you're doing really does satisfy those individual asset allocation needs for clients?

Frazer Rice: 12:38

That's a tough question. It may be the million or a billion dollar question that everybody tries to solve. I think the big thing it goes back to creating a sort of understanding and having a framework where you have a way of thinking that is durable enough so that you have long-term success. And I think that starts with having an investment policy statement that reflects what each of the different pools of money are tasked with doing. And so I think not having that creates longer term let's call it spaciness around what the purpose of the money is, and it allows for just the interjection of ideas that may or may not make sense but don't have much of a process around whether they're appropriate or not. So I'd start with that and say you know, sort of an investment policy statement, sort of start to analyzing what the function of a pool of money is and how it should be invested, is where I would begin in your thinking that thou shalt be a 60-40 or else, because that would ignore different scenarios.

Frazer Rice: 13:51

And I look at what we looked at in the fixed income world in the past couple of years, where a spike in interest rates probably did a lot of damage to different portfolios because there were people who had gotten used to a let's call it a 30 or 40 year trend of declining interest rates and kind of assumed that fixed income was going to behave in a certain way, and when things spiked, that ultimately created some havoc with sort of a framework around fixed income that may have been five or 10 years old.

Frazer Rice: 14:27

That wasn't appropriate or nimble enough to deal with what was going on at the time. I think also you add onto that that the thinking these days around the appropriateness of alternative assets whether it's private equity, private credit, hedge strategies, options, real assets, et cetera they're becoming more available to more people, and so I think the idea of being nimble enough to accept the idea and then analyze its appropriateness for that particular pool of capital, I think that's extremely appropriate, and I think that's where wealth managers have to be intelligent about things in terms of again sort of balancing durability and flexibility with respect to the investment framework.

Steve Davenport: 15:12

One thing I thought of when you started talking about that is when I was in this business. I noticed that we seem to be always taking what is sophisticated institutional advice and transferring it over to large families of a similar size. So if I have a $30 million endowment and I have a $30 million family, that $30 million family assets start to look like those institutional assets which are wisely allocated by these investment committees. But then I look at the whole question about alternatives whether these alternatives illiquidity and pricing and the way they do things are really accurately reflecting the returns they're generating. So I look at all of the people in the institutional space arguing for equity and fixed income and the alternatives. Value add really hasn't been there because there's too much money chasing too few investments. Josh Youngquist, phd.

Frazer Rice: 16:08

Well, I'd also add onto that that institutions are not people, and time horizons of institutions are usually different than they are for families, depending on what the pool of money is for families, et cetera. The value for liquidity, I think, in the strictly human being family space is my prejudice would be to say that it is more or at a higher level than it is at the institutional level. Now there are a lot of allocators that would say you don't know what you're talking about. I kind of think I do on that front, and so I think that to translate the Yale model or the New Zealand Superfund model directly to an individual because it's worked for an extremely specific institution, I think is folly.

Frazer Rice: 17:03

That's not to say that there aren't lessons that those situations can't teach us. Uh, they can, and I think the the whole democratization of alts trend is an outgrowth of that. But that's taken 10 to 20 years and the evolution of the investment vehicle itself in the alternative space to be appropriate for the individual family. Um, and so I think that's where it's important for people who engage with the financial industrial complex to have an ecosystem around them so that they understand not just what's out there and what's available but what's actually being quote unquote, sold to them. It's very easy to take that type of thing and translate it over to the family space, and those time horizons may not be similar.

Steve Davenport: 17:53

You used the term democratization. I think that sounds wonderful, but it feels a little bit too altruistic. I'm not sure that giving people the opportunity, as you said, to be into some of these investments so late in their cycle is really a great opportunity, as much as it is. Taking something that they need to liquidate and get out of and offering it to other people is not always as kind and generous as we should suspect, is it?

Frazer Rice: 18:31

Well that's why it's called the Skeptics Podcast because you're looking at it and saying where is this coming from?

Frazer Rice: 18:34

And, if I'm being particularly curmudgeonly about it, I'd say is this active management's last gasp?

Frazer Rice: 18:43

And that's a huge overstatement of where the industry is going on things. Uh, the industry itself would say look, there's a liquidity premium. There is, uh, there's an expected return in the alternative space that is above what you can get in the uh liquid markets, and that's something that the uh, uh, that the let's call it the retail investor should let's call it the retail investor should in air quotes have access to, and why are we not doing that? The broader thing here, though, is to say look, the fact of the matter is that the financial world is built on gathering assets to manage and charging a fee on it, and if the index phenomenon has driven the asset management fees in the liquid space down to tens of basis points or lower, those margins have to exist somewhere, and that's where we've naturally gone, and it's up to good wealth managers to understand where good active management takes place and to translate those good concepts of taking advantage of the illiquidity premium such that it exists and applying it to the family.

Clem Miller: 19:55

So, fraser, sort of taking off on that point about active management, do you yourself build client portfolios from individual stocks or bonds, or do you actually use these outside active investment managers? And also, what kinds of vehicles do you use? Do you use mutual funds? Do you use ETFs? Do you use separate accounts? How do fees play a role in that as well?

Frazer Rice: 20:21

Sure. So at Next we charge an account level fee for our advice and then the implementation occurs on all three of those vehicles you just described, depending on what's appropriate for the clients. So, especially in the liquid markets, we're probably not going to be putting people into expensive, actively managed large cap mutual funds because we don't think there's a lot of value added there. So maybe a lower cost ETF or a lower cost mutual fund is appropriate on that front, depending on what tax attributes need to take place. Separate accounts are definitely within our capability and so you know, especially for those folks who see value in having the individual names in their portfolio and maybe a little extra control around that front, we use all those different vehicles depending on what the client needs and if we're getting different advice from their tax advisors, et cetera, as to how things should be set up getting different advice from their tax advisors, et cetera, as to how things should be set up.

Steve Davenport: 21:35

So I'm sure your clients are concerned about some of the talk of a recession this year. Slow down, whatever we want, and the election. Do your clients consider using options for downside risks or other option strategies to try to hedge their portfolios, or are they all long-term investors who can live through the downturns?

Frazer Rice: 21:54

So certainly we preach the idea of having the long-term investment horizon. So we aren't, I would say, aggressive in terms of using options to hedge sort of the broader indices of the markets. But people come to us with large single positions and so to that extent, yes, options are a tool in our pocket to make sure that we understand not only so that we manage the downside risk as we think about longer term investment implementation for those types of clients as it relates to specific options around themes, in a way that you're not taking outsized risk for having some sort of weird event happening in the next year or two that could cause a large drawdown. That would be kind of a bad footfall, I'd think.

Steve Davenport: 23:02

Yeah, we're in the month of April and we're all very honored to be able to send some money to the government I haven't sent it already and I know that taxes are a huge concern for ultra high net worth and high net worth families. They're a concern for everyone's families, I think the one thing that makes us all. You know that we can all count on death and taxes us all. You know that we can all count on death and taxes. So what role if I were to put a circle and say you know, ultra high net worth planning and wealth management, how much is taxes a part of that discussion? Or is it becoming so hard to judge in the future what the tax rates will be for these people if they were in the past, that we start to wonder, um, whether we're really adding as much value as we think. If we can't, really, I have a clear vision of where we're going tax-wise. Do you guys have so?

Frazer Rice: 24:01

uh, sort of two parts of that question. The first one, which is how important is tax planning in sort of the wealth management discussion, and I would say it's central to it for a couple of reasons. Number one, clients are interested in it. And number two, that is a large source of value that can be added above and beyond the investment return that people can see. An example of that would be if someone is selling a company and you're able to reduce their tax rate, either at the income or capital gains tax rate or at the estate tax rate, by 10% in one way, shape or form, that's a big chunk of money that the investment return would take a long time to get to in order to achieve that same type of result. So add on to that, you know heirs are always very interested in what they receive from the previous generation and if you're able to do some work on the estate planning front that gets a couple extra million into their domain, you're going to have some interested people in that conversation to see what you can do on that front.

Frazer Rice: 25:05

The second question, which is do we have a crystal ball vis-a-vis taxes? The answer is decidedly not. Now we're based in New York, I live in New York and so I assume that I have a target on my back personally and with clients. We have a national practice. But I mean, the world is such that when you look at the different deficits that are out there and you know whether you're a MMT, stephanie Kelton fan or not, at the end of the day, politically there's going to be something that requires a gesture towards funding the deficits that have been created over time. That would indicate to me that tax rates are not in a hurry to go down. Now you go into an election cycle where you have you know potential of Trump, you have, you know Republicans here or there that may, that may, take over at the Senate or Republican level. Those prognostications are razor thin and 50, 50 at the moment, so all three branches of government. So it's difficult to make a full, strident move on the tax front based on where we are today politically and with the polling. I think that's not a great idea because lots of things could happen between now and then, not least of which either of the major presidential candidates may not be the presidential candidate by the time.

Frazer Rice: 26:25

November kicks around, one for health reasons, the other for legal reasons, and you know that changes the dynamic instantly and in a way that requires a lot of different analysis. So the second question is you know, with all of this uncertainty, what do you do to tell clients to sort of think about their tax ramifications? I would say the major thing is to sort of understand that, as a larger trend, tax rates are likely not going down just as a theme. They may in the short term, just on a short-term political spasm, but as a longer-term component, social Security needs to be funded. We need a big military, healthcare, et cetera.

Frazer Rice: 27:13

These are big costs that have to be funded in one way, shape or form politically and that comes from a larger tax base, larger tax increase, et cetera, increase, et cetera. All of that would sort of lead me to the advice saying if you've got things that you can lock in or take advantage of now, that would be my prejudice in terms of the advice to tell people. And so, as an example, in the estate tax world in 2026, the estate tax exemption is going to go from about 14 million per person down to 7 million per person, and so there is a tidal wave of planning that's going on between now and then to lock in that 14 million exemption, because not doing it runs the risk of getting that exemption cut in half. And why would you do that to yourself if you've got the means and the ability to fund that?

Clem Miller: 28:22

if you've got the means and the ability to fund that. So, fraser, just sort of taking this tax and elections theme a little bit into more detail, do you have any clients who actually ask you to run out some what if scenarios on Trump and Biden in Congress and ask you what you would do during as a result of these, uh, what if scenarios? You know what? What would your firm recommend if you know scenario a happens, or what do you? What would you recommend differently if scenario B happens?

Frazer Rice: 28:55

So, uh, the short answer is no, we don't. We haven't. No one's asked me to do that yet. What they've asked me to do is to say what does the world look like if, certainly on the estate tax front, if things are cut in half, and so we'll run those projections out? We'll run out what the asset base looks like 10 years, 20 years from now, assuming a rate of growth and assuming you did nothing and assuming you did something that type of thing On the income tax front and the capital gains tax front.

Frazer Rice: 29:28

The fact of the matter is that it's so difficult to predict what would or wouldn't happen congressionally, even if a Trump gets elected, because the horse trading that goes on on that front no one knows.

Frazer Rice: 29:45

Anyone who says they know is, I think, inaccurate. I try to deal with the law that's in front of me and the facts that I have, and so I've got enough of that in many ways. With this 2026 component, where the law sunsets, I can see that as clear as day with the legislation, and I can see that as clear as day with the legislation. It doesn't take any congressional action to have that happen. So that's sort of the X and Y axis that I deal with in terms of that sort of analysis, and then I assume, sort of assume, that that's going to be in place and so any of the other you know sort of tips and tricks that we think about on that front. We go along with it on that side of things. And then you know, at the state level, we kind of assume that things aren't going down at any state in terms of being able to fund their different commitments.

Clem Miller: 30:47

Okay.

Steve Davenport: 30:49

When you think about your biggest role, fraser, is it the idea of making sure that the assets and the values are translated to that next generation for ultra high net worth, and high net worth through the estate planning? What are some of the most important considerations when you start to think about the estate plans for these families? Is it in terms of avoiding the pitfalls of the past? Is it to try to prepare them for the opportunity of the future? How do you weigh the characteristics of the group and how to come up with that estate plan?

Frazer Rice: 31:29

Well, that's a great question. I think so on the technical sort of number side of things like taxes, to be sure, but other creditors, that whether it's soon to be ex-spouses or lawsuits, things of that nature. That's sort of the technical aspect of it. But then you know, as I said before, the family dynamic, slash, communication, end of things, the overspending, the protecting the heirs from themselves discussion becomes very central as well, because that's a definitive threat to wealth.

Frazer Rice: 32:22

And what I try to do here at Next and Beyond is really operated as sort of on two levels. The first one is half chief operating officer, which means that I'm there side by side with the client, helping to make sure that things get done. That, to me, is the pure function of a family office, is to know what you have, spot the issues, execute on that and make sure over time that the understanding of what's in place continues to be understood and that it eventually gets translated to the constituencies that need to know about it and that you build the framework for communications amongst and between the generations and the broader ecosystem so that the wealth can persist over time. Uh, the half, the other half of it is that wealth strategist front which is me sort of uh, you know, in conjunction with the ecosystem sort of understanding what's out there in terms of estate planning and tax planning.

Clem Miller: 33:23

So, fraser, just sort of taking that last point forward a bit, I imagine there are sometimes disagreements among family members regarding the estate planning. Do you sometimes get pulled into these disputes? How do you actually handle these disputes, being sort of an outside advisor?

Steve Davenport: 33:44

Is everyone always glad to see Fraser come into the meeting? Or what it's going to lead to in the ultimate responsibilities and control?

Frazer Rice: 33:53

It's my ultimate superpower. I think I like to consider myself to be a golden retriever with a German shepherd mind, and not the other way around. So the idea that the world is seamless and that everyone communicates perfectly just doesn't exist. Even in the most perfectly functioning family environments, there are going to be different income needs, different needs for the investments, and that will act in conflict, even if everyone gets together well at the Thanksgiving table and so on.

Frazer Rice: 34:25

The broader question is how do you, as an advisor, manage that conflict or act as a bridge or get you from A to Z in terms of the planning? And the answer is you try to communicate A, you understand fully who your client is and you over-communicate what the issues are so that the clients can make good decisions as to how information and tactics and things like that get communicated to the different constituencies. Do I get pulled into these discussions all the time? Do I get excluded from these discussions? Sure, that is in many ways the client's choice.

Frazer Rice: 35:05

I like to think of myself as a resource to help provide the technical knowledge and then a decades of experience around uh uh issues that that families have faced going forward and hopefully, uh, an additional resource to help educate people, to help them graduate, to having adult level discussions around big sums of money? Um, so the larger answer on all of that is uh, I think the good framework is understand who your client is, uh, communicate, over-communicate on that front so that you understand and have a plan of attack, communication wise, and then be available as the different decisions are made as to how that information is communicated and when.

Steve Davenport: 35:47

Yeah, it must be, very difficult because I look at families and say, you know, okay, I have a founder or a family head who is 60 years old. I mean, you still have a very long period before you're going to be worried about how the children get those assets, because that person's got a lifespan. You know an additional 25, 30 years, 35, 30 years and then with a younger wife you could be talking 35 years before the children see the majority of those assets. So it feels like it's clear who your client is, but then if an individual dies suddenly and the people haven't been prepared, it feels like the things are going to spiral down very quickly.

Steve Davenport: 36:38

One of the hardest issues I have discussing with some clients is charitable contributions, because charitable contributions you think are part of their legacy and part of what they want to do, but they're just not necessarily. The question is do I focus on growing my existing assets and keeping that going so I'll have more assets to be charitable with later, or do I give some to charities now where I can see the impact and see how it affects things? I've talked to various families and no one seems to everybody believes that they're holding onto the assets is going to generate better returns than the charitable entity or vehicle. Do you have some insights as to how some of the larger families look at this trade-off?

Frazer Rice: 37:26

Sure. So from a charitable standpoint, you have sort of two components of your question there. The first one is sort of touchy-feely-wise Do you give the assets away currently so that you see the benefit of them, versus put a lot of different structure around it so that the charitable impulse that's being harnessed here can persist over a period of time and have a different kind of impact than maybe the actual dollars to the actual charity impact. That is a family decision. There's lots of taxable ways to do both. It's as simple as taking a highly appreciated stock and donating it directly to something, and it's as's as complicated as uh starting your own foundation and having uh a governance structure in place to make sure it works and that you've got uh backup people to help administer and that the the mission of the uh charity uh persists and you can make it complicated enough to take in outside money and do those types of things, get complicated enough to take in outside money and do those types of things.

Frazer Rice: 38:37

And so I would say that all of those components are part of the blend of sort of describing what happens, with sort of describing what a family wants to do and sort of helping them do it.

Clem Miller: 38:49

Great Fraser. What factors should individuals consider when selecting a wealth management firm, including a family office?

Frazer Rice: 39:04

So from a wealth management firm perspective, I think among the things that I would look, colored by side deals or conflicts of interest, that type of thing, that's something I'm not particularly interested in. That's not to say that good advice doesn't come from firms that have conflicts of interest to them, but I would be very certain I understood what those conflicts were and that I understood how they got paid. That would be job one. On the wealth management front, I personally would want not only sort of a good track record of logical investment advice, but I would want some capability to understand my broader balance sheet and structuring slash, estate planning components, so that I had an extra sounding board as I thought about structuring my affairs.

Frazer Rice: 39:57

From a family office side of things, to me the best family offices and I'm thinking single family offices where they bring a lot of things in-house to me the best ones of those look initially like accounting firms, because job one is to understand what you have and what the impacts of distributing assets to people have from a taxable component. So that accounting spine, I think, is what. That would be my predilection as to how to build a family office where you're then using outside vendors to fill in other gaps like investment management and concierge services and trust companies and all that stuff. If you don't know what you have and how people own it and that really happens best at an accounting firm level, in my opinion and from a reporting standpoint I think you start ending up making tactical decisions without any strategy attached to them and you can get into something five or 10 years down the line that looks like a real mess.

Steve Davenport: 40:53

Thanks, fraser. One of the items we have in our podcast is called the mailbag, and I'm going to reach into the mailbag and pull out a question. And it looks like this is somebody who wants to talk about the future, and since our futures are gone, we can talk a little bit about our past.

Clem Miller: 41:10

Talk for yourself, Steve. We can talk a little bit about our past. Talk for yourself, Steve.

Steve Davenport: 41:13

The younger people who are going into this industry, when you think about what the future will hold with AI, with how individuals will use crypto and other various currencies. So what do you think are the tools or the certifications that individuals should try to get in order for them to be fully able to contribute in this wealth management industry? Do you have a? I mean, I think everybody has a perspective, but I'd like to start with Fraser, then Clem, then I'll end with mine.

Frazer Rice: 41:49

Sure, sure. So at the college level, if you're committed to being in the wealth management space, I would say the course of study that I would follow of scenarios, I think you're going to be better equipped to provide advice later. On the technical aspects, whether you have a law degree or CFP or CFA, those can be built on later I'm a lawyer by background can be built on later I'm a lawyer by background. I am very happy to have my law degree and have practiced a little bit before I got into the wealth space, because I think it gives me, a a different perspective, b certain confidence in front of other individuals and a really sharp sense of issue spotting. That I think in other fields takes a much longer time to develop. Now, that's an expensive way to get into the wealth management space, but I think anything where a CFP or a CFA gives you some exposure into the issues that wealth situations get in front of your desk, I think that that's always going to be helpful.

Clem Miller: 43:16

So, as for me, um, so I've got a CFA, which has been, I would say, extremely helpful in being able to understand investment markets. Uh, I have an MBA uh, which actually, uh I think is complimentary to a CFA in terms of providing information about management and marketing and other things you don't get in a CFA program. But I also want to talk, and then I have a bachelor's degree from Georgetown School of Foreign Service in International Economics, and I think that's been extremely helpful throughout my career as well, because if you look throughout my career, there's been a sort of a theme of international whether that be international economics or international banking, international trade, finance, international investments. So you have this theme. That really began back when I got my bachelor's degree from Georgetown School of Foreign Service and I'll emphasize Georgetown School of Foreign Service once again because I'm once again teaching there. So I'm sort of come full circle from having been a student there to now teaching a class there geopolitical risks in international business. So that was good.

Clem Miller: 44:45

I would just add one more thing too, which is that I think it's been helpful to my career that I had an inflection point, I would say, in the middle of my career. So I was doing international economics, slash banking, slash trade finance during sort of transactions, relationship management, et cetera during the early part of my career during the early part of my career. And then I made a switch over into the asset management world in terms of looking at international firms, asset management firms in terms of running an international mutual fund. So I think that inflection point and having a career that's been sort of multifaceted has really helped me be able to analyze and interpret the world.

Clem Miller: 45:39

And at the risk of extending this a little more, I'll say that I totally agree with Fraser on his comments about psychology. I've talked to a number of investment management firms over the years and a lot of them talk about how they actually prefer to have liberal arts people, those who have studied and have gotten degrees in the liberal arts or in social sciences, because they of more open minds, they'll say, than maybe some who have just focused more narrowly on accounting or even narrowly on finance. So I would give a shout out for social sciences and liberal arts. I think many investment managers look at that as a good criterion for hiring. Thanks, guys.

Steve Davenport: 46:36

My perspective as an engineer in the field of finance is that I think you just have to keep learning throughout your career. I don't think you need to think about it as a prescription that everyone has to go get an MBA and then everyone has to go get a certification, and then everyone has to go get an MBA, and then everyone has to go get a certification, and then everyone has to. You know, I like the idea of go where you're challenged, go where you're learning, go where you have a process in place to support your learning. Does your organization fund and pay for some of the, you know, degrees and certifications? Go to that firm, not because you want a CFP, but because you just want to have options. You want to have the capability of taking advantage of your human capital and enhancing it as you go through your life.

Steve Davenport: 47:25

I look at us doing this podcast and say there's an opportunity here for us to boil down some of these concepts into more finite and understandable terms, and when we do that, we become better, and I think that that's the goal is really just try to keep learning, and I don't think there is a. You know, I think that's going to change. I think the risk management is going to become bigger. I think that I agree that the legal aspect is important. I agree the international aspect is important, but I guess what I'd say is whatever excites you is where you should go, and I think that careers are really about making sure your journey is through an interesting path and through an interesting valley, not necessarily what valley it should be through.

Frazer Rice: 48:19

One thing to add, as I thought about it for people who are in the intermediate components of their career, something that I've found valuable is if you can get for-profit board experience, to me you are then really understanding what worries wealthy people, because, especially when they have their own family businesses or illiquid situations, if you're able to be in that discussion at that level, you are able to add value immediately. You are really learning a lot fast and the ecosystem around those decisions I think turbocharges a wealth management career. So for-profit board experience I would add on to that and I distinguish that from non-profit because I think that that's a different animal. That isn't quite the same thing. You really learn what being a fiduciary is with a capital F if you're in that environment.

Steve Davenport: 49:12

Thanks, roger, thanks for joining us today. I really appreciate your insights and, as always, let's keep in touch and keep communicating.

Frazer Rice: 49:20

Thanks, fraser, loved being on. It's fun to catch up with you guys and if I can help out later and we can talk about other stuff, I'd be happy to do it.

Steve Davenport: 49:31

Thank you, thank you. Thanks for listening.