Intelligrations

Assessing Risk in Your Small Business

November 2, 2023 by Hans Blake, CFA, CPA

Reading Time: 3 minutes In this episode, we had the pleasure of interviewing Bethany Winston, owner, and Editor-in-Chief of Kidding Around Greenville, as she shares valuable insights on assessing risk in your small business.

Small Business Financial Risk: The Peaks and Valleys

At Intelligent Investing, we emphasize four dimensions of risk:

Your willingness to take on risk
Your ability to manage risk
Your need for risk to meet your financial goals
The actual risk present in your investment portfolio

Bethany Winston highlighted the financial challenges inherent to her small business, which relies predominantly on advertising revenue. It’s not uncommon for income in this sector to fluctuate throughout the year. The feast-or-famine dynamic can make managing finances nerve-wracking

Financial Safety Nets and Resilience

Bethany wisely shared that she maintains a clear distinction between personal and business finances, a practice we strongly advocate. She sets aside specific amounts for personal income, ensuring that, even during lean periods, the business can continue to operate and pay employees. COVID-19 was a stark test for businesses. Bethany’s experience mirrored many entrepreneurs’, with traffic and client advertising taking a hit. However, she emphasized the importance of having a financial safety net to weather such storms. By diversifying her content and addressing the changed needs of her audience, she managed to not only stay afloat but also experienced increased traffic in 2020.COVID-19 was a stark test for businesses. Bethany’s experience mirrored many entrepreneurs’, with traffic and client advertising taking a hit. However, she emphasized the importance of having a financial safety net to weather such storms. By diversifying her content and addressing the changed needs of her audience, she managed to not only stay afloat but also experienced increased traffic in 2020.

Living Below Your Means: A Wise Financial Habit

We discussed the critical principle of living below your means, which acts as a buffer during times of financial stress. Having a game plan and the ability to pivot is pivotal to surviving and thriving through challenging times. Risk management is at the core of Intelligent Investing’s financial strategies. We offer a complimentary risk assessment to help you understand your risk tolerance and assess your portfolio’s risk. Reach out to us to get started. Small business owners face unique financial risks and rewards. When it comes to risk management, especially in your finances and financial goals, we encourage a prudent, diversified approach. The COVID-19 crisis highlighted the importance of having a financial safety net. Ensuring you can manage expenses and continue operations during challenging periods is crucial. We always advocate living below your means and having a solid financial game plan in place to navigate financial uncertainties. Schedule a short discovery call or meeting We’ll be interviewing Bethany on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Bethany Winston Bio

Bethany Winston is the owner and editor-in-chief of Kidding Around Greenville & Kidding Around Spartanburg. She enjoys exploring parks, discovering local events, and meeting the people who make Greenville an amazing place to live. Kidding Around Greenville is known for tapping into the heart of Greenville and bringing readers firsthand reviews of the best things to do and see in the Upstate and Southeast region. Readers use Kidding Around® to find things to do, places to visit, and businesses and resources they need, helping them to make wonderful memories with their families. Credits: This blog was written in part by ChatGPT, an AI language model developed by OpenAI. The content of this blog reflects the knowledge and opinions of ChatGPT, may or may not reflect the knowledge and opinions of Intelligent Investing, and is protected by copyright laws. Please do not reproduce or distribute without giving proper credit to ChatGPT and OpenAI.

The Finances of Starting a Business

September 21, 2023 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes In this episode, we had the pleasure of interviewing Bethany Winston, owner, and Editor-in-Chief of Kidding Around Greenville, as she shares valuable insights on the finances of starting a business.

The Profit-First Approach

Bethany shared valuable insights into her experience and how she has applied financial strategies to ensure her business’s success. She highlighted the book “Profit First” by Mike Michalowicz as a valuable resource. This book discusses transforming a business from a cash-eating monster into a money-making machine. One key lesson Bethany learned from “Profit First” is the concept of setting up separate bank accounts and allocating income into various categories. This method involves segregating income into different accounts, such as operating expenses, dividends, taxes, and profit. By doing so, entrepreneurs can ensure that they’re not only generating revenue but also consistently turning a profit.

The Importance of Manual Management

Bethany found that a hands-on approach allows her to assess her financial situation regularly and make informed decisions. While there might be automated solutions, the act of personally managing the finances provides a deeper understanding of the business’s financial health. We discussed the significance of planning for taxes, especially in a small business setting. Setting aside funds for taxes prevents financial stress when tax season arrives. It’s a practice that not only saves money but also eases the burden on the family and ensures the business remains in good financial standing.

The 10, 20, 30, 40 Rule

In addition to Bethany’s insights, I shared a simple financial plan, the “10, 20, 30, 40 Rule,” which encourages entrepreneurs to allocate percentages of their income to different financial categories. This structured approach includes dedicating a portion to giving, savings, housing, and discretionary spending. It’s a framework that can help business owners strike a balance between enjoying their earnings and securing their financial future. Bethany’s experience and the financial strategies she shared serve as a valuable resource for entrepreneurs and small business owners. Navigating the complexities of business finance requires careful planning, discipline, and the right mindset. By adopting strategies like those discussed in this episode, entrepreneurs can chart a path to financial success in their ventures. Schedule a short discovery call or meeting We’ll be interviewing Bethany on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Bethany Winston Bio

How to Set and Attain Your Financial Goals

August 2, 2023 by Hans Blake, CFA, CPA

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Personal and Business Financial Goals

Bethany opens up about her personal financial goals, which include purchasing a home with her husband. After living in church housing for 14 years, they finally achieved their dream of buying a house next to their closest friends. Additionally, Bethany and her husband aspire to secure a comfortable retirement without burdening their children with financial responsibilities, including providing debt-free college education. On the business front, Bethany discusses the rebranding of her company as “Kidding Around Media.” Her future plans entail expanding the brand beyond Greenville, aiming for Columbia, Charleston, and Charlotte. However, she recognizes the importance of maintaining the quality of content across cities and is open to adjusting expansion plans to ensure a healthy work-life balance.

The Importance of a Written Financial Plan

Bethany’s journey highlights the significance of having a written plan to achieve financial goals. As we often say at Intelligent Investing, “if you fail to plan, then you’re planning to fail.” We understand the value of a well-structured financial plan for our high-net-worth clients, revisiting it annually to ensure they stay on track. At Intelligent Investing, we leverage our proprietary Intelligrations® to seamlessly integrate our clients’ financial lives. By organizing their financial details into a one-page integrations report, we simplify their journey towards financial success. Our goal is to minimize financial stress and maximize the quality of life for our clients. Schedule a short discovery call or meeting We’ll be interviewing Bethany on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Bethany Winston Bio

Why Ignoring Your 401k or 403b Could Cost You More Than You Think

April 24, 2023 by Hans Blake, CFA, CPA

Are you maximizing your wealth potential? A recent study found that high-net-worth individuals have over half their wealth in IRAs and 401ks. If you’re like many investors, you may be overlooking a crucial component of your financial portfolio: your 401k or 403b accounts. These accounts, known as held-away assets, can play a significant role in your overall investment strategy.

In this blog, we’ll show you why considering these held-away assets is essential for investment diversification, risk management, and increased efficiency, and why you should consider having a professional financial advisor optimally integrate these assets into your overall portfolio and financial plan. If we reference a 401k, and you have a 403b, just keep in mind it works the same way. It is just another held-away asset.

Here’s the punch line: Intelligent Investing is able to monitor, manage, and trade 401k, 403b, or other retirement assets while you are still employed. We can do this using our Intelligrations® and it helps minimize our clients’ financial stress so they can maximize their lives.

What are Held-Away Assets?

Held-away assets are investment accounts that are held by an investor at a financial institution other than the one where their primary investment portfolio is managed. These assets typically include 401(k) plans, 403(b) plans, 529 plans, and other employer-sponsored retirement plans. Held-away assets are typically not managed directly by a financial advisor or wealth management firm, but rather are held with a separate institution, and managed by the individual employee. Despite being held separately, these assets should still be considered and incorporated into an investor’s overall financial strategy and investment portfolio, making it important for financial advisors to consider them when working with clients.

A 401k or 403b is considered a defined contribution (DC) plan. A defined contribution (DC) plan is a retirement plan that’s typically tax-deferred, in which employees contribute a fixed amount or a percentage of their paychecks to an account that is intended to fund their retirements. In addition, the sponsor company can match a portion of employee contributions as an added benefit. Employers like DC plans because the risk of the underlying investments are placed upon the employee. This is why America has shifted away from having pension plans (defined benefit plans) where they were on the hook for the underlying investment results.

Let’s take a look at some of the benefits of integrating your held-away assets into your overall financial picture.

Benefits of Integrating Your 401k

Improved Investment Diversification

Investment diversification is a key factor in reducing risk and maximizing returns in a portfolio. However, holding assets in multiple accounts at different institutions can make it difficult for investors to achieve true diversification. This is where considering held-away assets can play a crucial role. By taking these assets into account and incorporating them into an overall investment strategy, financial advisors can help clients achieve a more diversified portfolio.

Improved Tax Efficiency

When managing a portfolio, it’s important to consider not just the type of investments being held, but also the tax implications of those investments. For example, qualified accounts like 401(k)s and IRAs offer tax benefits, but also come with limitations on when and how funds can be withdrawn. On the other hand, taxable accounts (i.e., brokerage account) offer more flexibility, but may have higher tax implications. By integrating your 401k, financial advisors can assist clients in balancing the tax location of investments and create a more diverse portfolio that takes into account both qualified and non-qualified (taxable) accounts.

Improved Risk Management

If you’re like most employees, you do not know what kinds of risk there are in your 401ks at any given point in time. If you don’t get the risk right, then you may not stick with the portfolio and financial plan.

Risk management is a critical component of any successful investment strategy. By integrating held-away assets, financial advisors can help clients better manage risk and achieve their investment goals. One of the primary benefits of incorporating held-away assets into an overall investment strategy is that it allows for a more comprehensive view of your financial situation. This increased visibility can help financial advisors make more informed decisions about the allocation of investments, allowing them to manage risk more effectively.

For example, you might have a bunch of U.S. large cap equities in your brokerage account, and then you decide to buy a U.S. stock market ETF index for your 401k. By not considering both buckets, you could essentially “double-up” and have a concentrated risk position.

When financial advisors have access to all of a client’s 401k and retirement plan information, including held-away assets, they can better track investment performance and rebalance as needed to manage risk. This can be especially important in times of market volatility, when swift action may be needed to protect a client’s investments.

Increased Efficiency

Employees are often busy with their job or their family and don’t have time, nor the expertise to research 401k options or rebalance their 401ks.

Incorporating held-away assets into an overall investment strategy can streamline the investment process. When assets are held in multiple accounts at different institutions, it can be time-consuming for clients to manage their investments and keep track of their portfolio performance. By considering held-away assets, financial advisors can provide clients with a more comprehensive view of their investments, reducing the need for them to constantly monitor multiple accounts. This can save clients time and increase efficiency, allowing them to focus on other aspects of their lives.

Expertise Management

Managing a 401(k) can be a complex and challenging task for individual employees who lack the necessary knowledge, skills, and experience in trading and asset allocation. Without a proper understanding of the markets, investment risks, and the various investment options available, employees may make costly mistakes that can have a significant impact on their retirement savings.

For example, an employee may be too aggressive or too conservative in their investment decisions, leading to a portfolio that is either heavily invested in risky assets or lacking the diversification needed to mitigate risk. In some cases, employees may even miss out on investment opportunities due to a lack of knowledge or a tendency to make emotionally driven decisions based on short-term market movements.

Moreover, managing a 401(k) involves more than just selecting investment options. Employees must also monitor their portfolios, rebalance as needed, and make trades based on their long-term investment goals and risk tolerance. Without the expertise and resources of a professional financial advisor, it can be difficult for individual employees to effectively manage these tasks and make informed decisions that align with their investment objectives.

Studies have shown the shortcomings for investors managing their own 401(k)s and retirement accounts. These studies by Vanguard, Russell, and Envestnet conclude that having professional management on these accounts may generate up to 3% better performance each year net of fees.

How Our Intelligrations® Integrate Held-Away Assets

At Intelligent Investing, our passion is to minimize financial stress and maximize lives. Efficiency is a critical component of any successful investment strategy, as it allows clients to minimize their time and effort.

Previously, the tools were not available to fully manage held-away assets, which can be a significant part of clients’ overall portfolios. However, recent technology has allowed us to be able to manage these assets alongside the other assets we manage, giving us a fuller understanding of our clients’ financial picture.

Using our proprietary Intelligrations®, we now can use innovative technology to provide even better service on these accounts. Intelligent Investing is now able to make sure the entirety of our clients’ portfolios are taken care of including their 401(k), 403(b), and other retirement accounts. Our clients receive a personalized risk number that encompasses their entire portfolio in real time (assets we are directly managing, and assets that we manage in their held-away accounts (i.e., your 401(k), 403(b), etc…)

When markets get fearful or greedy, we can trade assets including the ones in their 401(k) or 403(b). We think this is a fantastic way to minimize their financial stress and maximize their lives.

Now our clients don’t have to wonder, should I be doing some rebalancing or making trades inside my 401(k), or wondering what their asset allocation should be inside their 401(k).

We can now proactively manage, monitor and trade these accounts just like your other assets with us. We are really excited about what this can do for our clients to make sure all of their assets align to their goals. This truly is intelligent investing.

Learn More About Intelligently Integrating Your 401K or 403b

Conclusion

In conclusion, considering held-away assets can provide numerous benefits for both financial advisors and their clients. It can improve investment diversification, allowing for a more comprehensive and balanced portfolio. It can also improve risk management by providing a more complete picture of a client’s financial situation and reducing the risk associated with an over-reliance on any one particular investment. Additionally, considering held-away assets can increase efficiency by streamlining the investment process, reducing the need for frequent transfers, and allowing financial advisors to more effectively track investment performance. By considering held-away assets and incorporating them into an overall investment strategy, financial advisors can help clients achieve their investment goals with greater ease and confidence.

At Intelligent Investing, we have the ability through our proprietary Intelligrations® to monitor, manage, and trade within accounts that are held-away (401k, 403b, etc…).

How Intelligent Investing Leverages Financial Technology

One of our unique factors is to leverage technology, and we have leveraged financial technology such as artificial intelligence to help craft the above blog. We have modified the results of the blog to reflect our opinions. Leveraging this technology helps us be more efficient and serve our high-net-worth clients in other ways.

If you would like to learn more about our proprietary Intelligrations®, we’d love to have a complimentary call or coffee with you. Click here to get started.

Credits: This blog was written in part by ChatGPT, an AI language model developed by OpenAI. The content of this blog reflects the knowledge and opinions of ChatGPT, may or may not reflect the knowledge and opinions of Intelligent Investing, and is protected by copyright laws. Please do not reproduce or distribute without giving proper credit to ChatGPT and OpenAI.

How Did Riskalyze Work During the COVID Pandemic Selloff

December 1, 2022 by Hans Blake, CFA, CPA

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Reading Time: < 1 minute

On today’s Intelligent Money Minute, we interview Aaron Klein on how Riskalyze worked during the Covid-19 pandemic selloff. During this episode, Aaron talks about the market “snap back” and how his company prepares for various scenarios. Aaron reflects on the early days of the pandemic and how Riskalyze helped intelligent investors weather the storm of uncertainty.

If you are looking for a financial advisor who can be your accountability partner who will help you with the emotional rollercoaster of financial markets. We believe in a data-driven approach to help minimize our human tendencies to sabotage our portfolios and improve the chances for success in sticking to a long-term plan.

Intelligent Investing is a boutique wealth management firm serving high-net-worth individuals and families. We’d be honored to take the first step with you by having a complimentary and confidential call or coffee.

If you are interested in becoming our next high-net-worth intelligent investor or want to learn more about our philosophy on risk management, click here. We’d be honored to have a brief confidential call or coffee with you to learn about your needs.

Aaron Klein Bio

Aaron Klein is co-founder and CEO at Riskalyze, the company that invented the Risk Number® and empowers the world to invest fearlessly. The company is headquartered in Auburn, California, and serves tens of thousands of financial advisors.

He is husband to Cacey Steward Klein, dad to Spencer (born in South Korea), and Emma and Teddy (born in Ethiopia). Aaron and Cacey cofounded Hope Takes Root, an initiative to use vocational training and life mentoring to change the future for orphans and at-risk kids in Ethiopia. He also sits on the board of Invest in Others.

How Riskalyze Helps Concentrated Portfolios

October 6, 2022 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

On today’s Intelligent Money Minute, we interview Aaron Klein on how Riskalyze helps concentrated portfolios. Riskalyze is an investment risk software that powers the world’s first risk alignment platform that is built on top of a Nobel-prize-winning academic framework.

You may be an executive with a concentrated stock position, or if you have a legacy stock holding with a low-cost basis that has appreciated over the years and you are afraid of selling it due to the tax ramifications. As Aaron and I mentioned, we have tools available that can help round out your portfolio and balance out the unintended tax consequences.

We’d be happy to show how we work with our high-net-worth clients and de-risk their portfolios that may have an unwanted concentrated position. As a CPA, I want to help you minimize your taxes and help build a portfolio that you will be able to stick with based on your risk tolerances.

At Intelligent Investing, we use Intelligrations™ or Intelligent Integrations to make sure that our clients’ goals-based financial plan is integrated with their portfolio and to integrate their portfolio with our clients’ risk tolerance. As Aaron mentioned, we want to transform fearful investors who make bad decisions into fearless investors who make great decisions, and over time improve their financial picture. To learn more about our philosophy, subscribe to our podcasts so you can stay informed.

Aaron Klein Bio

Why Are Intelligent Integrations So Important?

September 8, 2022 by Hans Blake, CFA, CPA

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Reading Time: < 1 minute

On today’s Intelligent Money Minute, we interview Aaron Klein on the importance of intelligent integrations. Riskalyze is an investment risk software that powers the world’s first risk alignment platform that is built on top of a Nobel-prize-winning academic framework.