Archive for category: HB Updates

Private alternatives have been a key part of Homrich Berg’s investment philosophy for over 25 years, and we believe they are as relevant today as they have ever been. 

With the potential for rising interest rates (or conversely, continued low interest rates), heightened public market volatility, and lingering inflation, we believe this is an excellent time for investors to consider private alternatives as a potential source of yield, diversification, or capital appreciation—or a combination of all three. 

The range of opportunities in this asset class is vast—and continues to expand. In fact, more than $23 trillion is expected to be invested in private alts by 2026, up from $13 trillion today. 

This magnitude of rising allocations toward alternatives supports our desire at Homrich Berg to educate investors about this asset class and continue to expand our clients’ access to private market opportunities.

As a leader in this space among independent fiduciary RIAs, our firm has been investing in private alts since the early 1990s. Since then, we’ve grown to be one of the leading independent RIA firms focused on these investments. The amount of client assets under management that are invested in private alternatives is nearly $1.5 billion (as of 3/31/2022), and we have a dedicated team of analysts who source, evaluate and monitor private investments. This includes CFA charterholder Dan Ziznewski, who oversees Homrich Berg’s sourcing, due diligence, and manager selection for private alternative asset classes and is a frequent commentator on the topic. 

Homrich Berg has access to a wide range of institutional brand-name firms as well as smaller niche players, including funds on the platforms of other wealth managers. Because we are a fiduciary independent firm, we are not driven by a motivation to “sell” a specific investment based on financial incentives. Rather, our sole focus is to invest with the managers we believe have the greatest potential to generate the best risk-adjusted returns for our clients. 

For those who might not meet the minimums of some private funds, we assemble internal funds of funds (with no extra management fee or incentive fee of any kind), which are diversified portfolios of alternative strategies. We’ve created nine such investment vehicles since 2000 with 100+ manager relationships inside those funds.

We work with each client to understand how best to implement alternatives into the overall financial plan. Depending on the client situation, investment options may differ. This includes understanding whether the client is an Accredited Investor, a Qualified Client, or a Qualified Purchaser, as defined by U.S. securities laws.

Learn more about the opportunities in this asset class and how our firm helps clients navigate this complex category. 

Contact us to learn more about how Homrich Berg can help you find the potential fits for your portfolio. 

 

 

KEY DISCLOSURES:  Above is a general discussion from Homrich Berg of current investment themes, asset classes, and specific investment segments. The discussion includes our opinions and forward looking thoughts and analysis as of 04/07/2022 and is not a guarantee of future investment results.

Actual client portfolios are often customized and do not necessarily represent an exact replication of, if any, allocation discussed. This presentation focuses on a wide range of economics and finance issues in order to educate you on the linkages between these topics and their impact on the overall economy and investment markets. The content of this presentation represents the opinions of Homrich Berg regarding these educational topics and should not be interpreted as direct investment advice or marketing of HB services. This presentation includes third party sources which we believe are reliable but have not been independently verified. Investing involves risks including loss of principal. This document does not constitute legal, tax accounting or investment advice.

Private alternative investments are not for every client. You must be qualified to invest in a private investment based on your net worth and/or other criteria, and you may qualify to invest in some alternative investments while not be allowed to invest in other alternative investments. Alternative investments are not risk-free, and there is no guarantee of achieving superior performance compared to similar liquid investments. Past performance is not a guarantee of future results for any investment. Please consult your Homrich Berg client service team to determine if private investments are suitable for your overall investment portfolio and to determine the appropriate allocation to private alternative investments if used in the portfolio.

In a previous post, we talked about the importance of helping our kids March Toward Financial Security by having conversations about saving and how best to allocate a paycheck – or any money that comes their way.

We want to continue that theme by exploring ideas to help them save and invest on their own. An obvious first step is to open accounts like savings and checking accounts. You can walk into your own bank with your teen and open accounts like we did when we were kids. (Anybody remember having a “passbook?” Yes, I am that old.) Some banks allow teens to have their own account in their name prior to age 18; others may require a parent to be a joint account holder. Regardless, I recommend setting up balance alerts or some other method of monitoring because there are likely to be a few “oops” moments as your teen is learning the mechanics of banking, and overdraft fees are not cheap. (Although offer a good teaching moment!)

There are now many online options for teens to open an account from the convenience of a phone. Do your research and check ratings and user comments. Sites like NerdWallet and The Balance have ratings for such accounts and a quick online search will lead you to articles and resources to help analyze the options. The important part is to make sure that you help your child understand how these accounts work and what tools the online app has for monitoring and tracking.

The more interesting part comes in working through the mechanics of depositing paychecks and setting up automatic transfers to savings and investment accounts. What a gift it is to teens to get them primed to have a formula for receiving money:

• X% to charity (if that’s important to your family),
• Y% to the emergency savings account, and
• Z% to long-term investing.
• Maybe you add a C% for saving for college or a G% for paying for gas each week.

Teaching teens how to allocate their earnings to important goals and priorities sets them up for financial success throughout their lives. They don’t need a job to be introduced to this structure. It is great to set priorities for any money they receive.

This is also an opportunity to teach them about the differences between interest on a savings account and opportunities for dividends and investment growth in an investment account. Savings accounts have low interest rates because the safety of the principal is guaranteed – lower risk, lower reward (interest). Investing carries a risk of loss so must provide greater reward (higher interest rate, dividends, or the opportunity for increases in the value of the investment).

When your teen does have earned income[1] (wages from a job), we recommend they open a Roth IRA account. The beauty of a Roth IRA is that the owner can invest those funds and as long as they follow the Roth rules, they will never be taxed on the returns from those investments (called “unearned” income in tax lingo). Wow – that is a great deal! Interest, dividends, and capital gains over their lifetime build up and are never taxed (under the current tax rules anyway). Unearned income in a non-retirement investment account is subject to tax at “ordinary income” rates which go from 10% to 37%.

It is important to note that the contribution amount is limited to the lessor of earned income or the limit set in the Tax Code which is $6,000 for 2021 and 2022. Other important points:

• The contribution can be made from any source so a parent could incent savings by matching the teen’s contribution. So, if the teen is going to contribute 20% of their income to the Roth, a parent could match that and gift the teen the money to contribute an additional 20%, thus, doubling the contribution to 40% of income. The limit would be that total contributions cannot exceed the $6,000 limit (2021 & 2022).
• Everyone has until April 15^th to make the contribution for the PRIOR tax year so you can fund 2021’s contribution until April 15, 2022. (They must have earned income for 2021, though, so if they just got a job this year, they would be funding their 2022 contribution.)
• Your teen should report the contribution on his or her tax return for the year of contribution but is not required to. If no return was required to be filed or they have already filed for 2021, they can still make the contribution. They should track their contributions, and the custodian of the account will send a Form 5498 each year, usually in May, which they should keep for record-keeping purposes.

How should they invest those funds? That is a topic for a different day, but this is a great way to get teens interested in and exploring the differences between stocks, bonds, ETF’s, and mutual funds. All of the online investing platforms like Schwab, TD Ameritrade, and Fidelity have tools and resources to help people learn about investing and are reputable sources of information. Time is a real friend in terms of investing so starting early and investing consistently will make their march toward financial security that much easier.

As part of our Financial Foundations series, we have a free webinar on April 6^th at noon on Investing Basics for our clients.  These webinars are a great resource for children of our clients to learn more about the basics of personal finance.

[1] Earned income is a tax-related term and indicates that wages and other such income is available for contributions to retirement accounts like IRAs and Roth IRAs while unearned income, like interest and dividends, is not available for such contributions.

Homrich Berg is pleased to announce that CEO Andy Berg was named to Atlanta Magazine 500 Most Powerful Leaders in 2022. Andy co-founded Homrich Berg in 1989 with the belief that high-net-worth individuals need access to conflict-free financial planning and investment advice. Over 30 years later, Berg has been named to the Atlanta Magazine’s 2022 Atlanta 500 list of influential business leaders.

Andy developed HB’s model for serving clients’ wealth management needs on a fiduciary, fee-only basis.  Andy offers his diverse clientele hands-on counsel and oversees the management and operations of the firm. Andy’s expertise spans the wealth management profession and includes financial and estate planning, taxation, and investment strategy.

Please see Important Disclosure Information Regarding Awards and Recognition

As many RIAs migrate to Florida, we always knew it was a natural fit for our expansion out of Georgia. Read more about this trend and our very own President Thomas Carroll’s take via Barron’s.