ReSolve Riffs with Alex Chalekian on What It Takes to Build a World-class Wealth Management Business

This is “ReSolve Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day.

Like virtually all segments of the investment industry, the financial advisory business has undergone significant shifts over the past two decades. Gone are the days where a pasteurized, assembly-line approach with catchy branding is enough for a thriving enterprise. In the digital age, investors – like everyone else – want authenticity. They seek a personal touch. They yearn for a real connection. Alex Chalekian (founder and CEO of Lake Avenue Financial) lives by these principles. In our conversation, we explored:

  • His journey: from studying to become an accountant, to investment entrepreneur
  • Allowing others to learn from your mistakes and trying to extricate one’s ego
  • Understanding the unique skill set you and your team members bring to the table
  • The importance of proper communication: staying true to your message while navigating the regulatory landscape
  • The appropriate digital forums and the difference between them
  • Building and giving back to your community

Alex also shared some of the investment themes and new projects his team is excited about, and there was even time for a brief discussion on the hottest investment topic of the day – Bitcoin and the world of crypto.

Thank you for watching and listening. See you next week.

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Alex Chalekian
Founder and CEO
Lake Avenue Financial

Alex is the founder and CEO of Lake Avenue Financial. He has been dedicated to assisting his clients in working towards their financial goals for over 20 years. He works diligently to help them crystallize their financial goals, and then develops a comprehensive plan to build and manage financial assets toward these goals.

Throughout his career, Alex has also coached many advisors on how to transition their practice, grow their business and become successful in the financial industry. After multiple acquisitions, he has become one of the industry’s fastest growing advisors.

Alex received a business management degree from Pepperdine University. He began his career in the financial planning industry in 1997 and founded Chalekian Wealth Management in 2003. Then in 2014, he started Lake Avenue Financial, which is an RIA in Pasadena, California.

When he is not working, Alex commits his energy to his family, friends and community.


Rodrigo:00:01:09Alright, we’re live here with Alex Chalekian. How is everybody doing today?



Rodrigo:00:01:20What do you got there, Alex?

Alex:00:01:22Let me put this down and grab the bottle here. It’s been a crazy week as we could say. So, I decided to go with some tequila. This is the Roble Fino from Partida. It is a tequila, but it was put in cheery/oak casks so it has the taste of a whiskey. So that’s what I’m enjoying today.


Rodrigo:00:01:45A tequila. I guess this week has been worthy of tequila for the Americans right, and the world man.

Alex:00:01:53I enjoy tequila but this is like a double.

Rodrigo:00:01:56You don’t even have the rocks on there.


Rodrigo:00:01:58You’re good man. Jason, what are you drinking today?

Jason:00:02:02I got an armagnac. I’ve been known to drink water on these podcasts, but with the week, so we’ll have some armagnac because I’m in the cognac kick here lately.

Rodrigo:00:02:14Yeah, excellent.

Richard:00:02:15I got a beer going.



Rodrigo:00:02:18Got a cup of red wine. Nothing too crazy.


Rodrigo:00:02:22Alright. Listen, before we begin let’s just make sure that everybody understands that this is a free flowing conversation. None of it should be considered as advice. If you need any advice, contact one of Alex’s advisors and make sure that you get the right thing that’s suitable for you. If you’re in Canada, you might want to reach out to one of us but just generally speaking, free flowing and none of it is investment advice. So with that, Alex we actually met like a year and a half ago in the LA FinTwit. It felt like 20 years ago, but that’s, we were out on the ocean, a nice little patio, had a great conversation and I’ve been following what you’ve been doing. Why don’t you tell the audience that may not know you what your journey has been? How you got into the business and tell us a little bit about your background.


Alex:00:03:18Yeah, shout out to Cory Hoffstein that helped put that all together, we have our LA FinTwits meetups, which like you just said, it feels like it’s been 20 freaking years since we last saw each other. But those have been fun. I’ve gotten involved with the Twitter community and everyone gets to know each other but it’s nice to be able to obviously meet face to face. So, a little bit of my background, I am the founder and CEO of Lake Avenue Financial which is an RIA based here in Pasadena, California. I’m coming to you live from my home, which I’ve been basically in since March of last year. We’ve done a great job as far as growing our firm over the years organically as well as through acquisitions and I’m more than happy to help. I know I think you guys get a lot of advisors that join in on these live streams. So, if there’s questions that people have, or comments or whatever, more than happy to help. As you mentioned, this is a free flowing conversation. So, thank you for inviting me guys.

Rodrigo:00:04:22Hey, man. It’s a pleasure to have you because I think it’s interesting we all started… Jason, you were also an advisor back in the day, right? Who with? You’re muted.

Jason:00:04:36Didn’t realize. Sorry about that. Yeah, Merrill Lynch and CIBC Wood Gundy, way back when it was Midland Walwyn in Canada. I was an advisor for over 10 years.

Rodrigo:00:04:48Right. A lot of us have like backgrounds on the advisory practice and we connect really well with the advisory space all over the world, Canada, US, globally. As I’ve been following what you do, you really seem to hit the nail on the head in many aspects of practice management. So we wanted to have you on to really talk a little bit about your journey because it really is, being an advisor is not just about knowing how to give investment advice, it has to do with entrepreneurship. It has to do with organizational skills, people skills, social media-

Richard:00:05:24Communication skills.

Rodrigo:00:05:25 … and you seem to do a pretty good job, I’ve always found your approach very engaging and I wanted to have you on to see if you could share some of that insight, as well as on the entrepreneurial side. I’m really interested in hearing a little bit about your views on building an asset management firm. But just tell us a little bit about what you think, like use in your organization’s forte is like… What is it that makes you guys unique?

Alex:00:05:52Yeah. Before I talk about Lake Avenue Financial, it’s funny you mentioned communication. I don’t know if my wife Rosa will agree with you on those but maybe different when it’s business as opposed to personal types of stuff. But we’re all trying our best especially given the circumstances, everyone’s cooped up at home and I got three boys, they’re older. So they’re all doing school from home and everybody’s here. Anyways, as far as Lake Avenue Financial is concerned it was a journey to get where we are today. I started in the industry back in 1997. I started at a firm, Sun America Securities, which later on became AIG. I don’t know if you guys are familiar with that one. I was a registered rep there working, trying to learn the ropes. Before I got there, the interesting part about my journey was the fact that I didn’t think I was going to come into this industry, I was studying accounting and while I was in school I realized that I really enjoyed investments. As soon as I got out of high school, my last economics class in high school got that little tingle in my head of, this is interesting, you can buy companies and be owners and so forth. And I started buying and selling, I had a broker at Dean Witter when I was 18, which was pretty funny. I would call him up and we would talk about stuff and Yahoo was going public and we wanted to jump into the IPO and so forth. Then e*Trade came along and started doing some online trading, and then eventually started buying funds.

If you guys remember Putnam from back in the day how popular they were, the Voyager Fund and all this stuff. So it was the rah rah days before 2000 and I was very much interested into it. But I thought I was going to be an accountant, so I started studying for accounting. I was working at an accounting firm clerking with them at the time. And probably one of the best things that ever happened to me in my life was, I would talk to the partner at the accounting firm and him and I would sit there and actually open up the Wall Street Journal that they would get delivered every morning and we would look at our stocks back in the day when you actually looked at the newspaper to see what the closing price was. I know a lot of the millennial and younger-

Rodrigo:00:08:05I don’t know what we’re talking about. Jason was reading the tape coming out.

Jason:00:08:12Yeah. Easy buddy.

Alex:00:08:14We would actually sit there and look at what did our funds do? What did our stocks do? And he mentioned to me, he’s like, you know so much about this, maybe you should focus on the investment side of this financial world instead of the accounting side.” And I never thought much of it, I continued on with college and while I was in school, getting into deep loans and debt because I didn’t come from a family that had money. So I pretty much worked three different jobs on campus while I was going to school and I sat there one day and I said that, I don’t really want to work for anyone. So I have two options, I can either go into making something, selling widgets where I need all this money and build a manufacturing firm and so forth. Or I can go into the service industry. And what better than going into something I’m actually passionate about? I was doing investments for my friends, for my family members, opening up Roth IRAs for them and just to help them out. So I’m like, I might as well get paid for what I’m doing. I’m 21. If I fail worst case, scenario Mom and Dad will take me back home. And I was at UCSB at the time. So, I was there for a couple of quarters in Santa Barbara and I left school, I dropped out, got the opportunity to go to Sun America Securities. They helped me get licensed, do all the things and I was there for a couple years before I realized this is just a sales job. And I wanted to focus on the financial planning side of things. So I left there in 1999, went to American Express Financial Advisors, which is the Ameriprise of today. I was there for a number of years, grew the firm and I knew that as we were growing organically and I was working with a number of other advisors and as part of our group, I wanted to start doing acquisitions. But Ameriprise wasn’t the right place to do that. You needed to be independent. A lot of the people that wanted to sell their practices, other groups or other brokers and they’re like, we don’t want our clients necessarily going to Ameriprise or to a captive audience.

So we decided to leave and start our firm, LPL Financial in 2003. So we went independent, I started Chelakian Wealth Management, which was what was the name of the firm was at the time, years later I decided to take my name off the door because I didn’t want it to be about me, I want it to be about the people, I wanted it to also be about growing the firm because that’s something we could talk about today. A lot of times you see people put their names on a door, but then it becomes an ego issue. And I don’t have an ego, I wanted to be the first one to say rip that name off the door, we don’t need that, I want people to want to come here and feel welcome, and want to work with the team. So were at LPL from 2003 and then eventually in 2014 went hybrid under their platform, started the RIA and then earlier last year, I don’t even know what it is. April last year, I decided to drop my securities license just focusing on the RIA side. Along the way, we’ve done a number of acquisitions, we’ve completed seven acquisitions throughout the time period. The first one I did was in, in 2008 and once I got the taste of it, I realized what to do. We made a lot of mistakes, but I ironed all that stuff out. We did another one in 2009, and so on and so forth.

Acquisitions and Growth

Rodrigo:00:11:40Excellent. Just curious. Why did you decide to grow with acquisition versus grow organically? I mean, you have limited resources, you can take one route or the other, what made it more attractive for you to go down the acquisition path?

Alex:00:11:58It’s like a quick shot in the arm but it comes at a price right. So if you don’t have the infrastructure, and if you’re not set up for it, it could be a disaster. You can buy a practice and let’s say you’re a solopreneur, you don’t really have a staff or a team, you all of a sudden went from having your existing 100 clients to now you bring on 100 new clients, you doubled overnight. But that doesn’t mean that you can’t service those people as well as your existing clientele. So there’s the pros and cons but one of the things I noticed is real quickly you can grow, you can expand. It was a good diversifier for us as opposed to just the organic growth. One of the things that a lot of advisors will ask me is when should I consider an acquisition? And what I will usually look at them and tell them is, besides market fluctuations, if your firm is growing organically 20, 25%, then don’t even think about necessarily doing an acquisition. It could probably become more of a pain in the butt than it’s worth. But if you’re not, then you need to look at acquisitions as an option. Because in this industry as you guys realize, if you’re not growing you’re probably dying. So we looked at acquisitions as one way to start creating a little bit of a bigger group, bringing in other advisors to work with those client relationships. Succession planning was something that I’ve been talking about since 2008/2009. The first practice I bought actually was from an advisor that literally was hit by a bus, went into a coma, a week later he passed away. And on one hand, his wife had to figure out his funeral arrangements and on the other hand, she had to figure out who was going to be his successor. He was an elderly gentleman, he was actually going to retire the year after, and he had not planned anything. I mean, it’s always ironic how much little planning advisors do. We do it for others, but we don’t do it for ourselves.


Alex:00:13:59Yeah. Look, we’re all guilty, right?

Rodrigo:00:14:04It’s crazy, as much as I know we still haven’t gotten there. The will’s done with their newborns, it takes them three to five years before they start doing that type of stuff. It really is “cobblers children go barefoot” and it is super important.

Alex:00:14:18Exactly. It’s interesting to see that. We had the conversation and just imagine the timing. This was December of 2008. This gentleman had had 35 plus years in the industry, had helped his clients grow their assets. Now, all of a sudden, he passes away, markets are melting down, people don’t know if the world’s going to come to an end, is the dollar going to be worth anything anymore? And individuals saw their retirement assets get slashed into half and all of a sudden, the new guy shows up. Now they got to be like, who’s this guy? What happened to John? I mean, I had meetings where people were crying because they spent the last 20, 30 years with this man and he took care of them and now there’s this young kid that’s going to have to try to fill these big shoes. And it was tough. So we had to be very careful in how we handled it, we had to console them, we had to hold their hands, we had to explain them the situation that was going on, and part of them, they were grieving and a the other half of them were trying to figure out what to do with their assets. So it was all hands on deck and that was our first experience. So after that, I learned if we’re going to go down this route, we got to bring in more team members, we got to set up our organisation to be able to go remotely, to be able to be scalable. And that was one of the things that we started to implement right away, kind of the, if you build it, they will come type of situation. And after that, we were able to get another acquisition and another acquisition and just started to steamroll from there.

Jason:00:15:55What does that look like right, now? Tell me a little bit about the organisation, the team. What’s the team look like and what are the roles and how much has changed recently?

Partners, Good and Bad

Alex:00:16:03Yeah, so we’ve had a lot of changes over the last couple of years, I would say. Unfortunately, I was in a bad partnership and then ended that a couple years back. Kind of the disbanding of what happened there, split the firm up a little bit, and not in a legal manner. My ex-partner literally started stealing clients and we had to go through a whole arbitration which was another crazy thing altogether. But with that individual, I was able to do three different acquisitions and so we brought all these firms on and then after a while it became… And we did them all over the place. So we bought a practice in Pasadena. And then we bought another practice up in Las Vegas, which we already had another practice out. So it was easy. It was go out there to meet with clients. And then we purchased another one up in Napa. Again, my wife loves wine so she’s like, “I’d love to be able to retire up there, or whatever the case is and have a small practice.” So what ended up happening was Alex was on a plane, I did meetings on Mondays in Pasadena, in Los Angeles, got on a plane Tuesday, Wednesday, was in Las Vegas, Thursday, Friday in Napa, and then went back and forth while he basically sat at the office and played some game on his computer. So the problem became when I had to have the Come to Jesus moment with him and say, hey, listen, I can’t be flying around and doing all these meetings while you sit here and play Solitaire on your computer, and then that just started to crumble the relationship. And it was both of our faults, as much as I tried to set the responsibilities and set up what needs to be done from the get go, it just never came to fruition. So if you’re going to build a team, it’s important that everyone knows what their roles are and they stick to that.

So it was a lesson learned and that’s one of the things, I’ve made a lot of mistakes, I’ve made a ton of mistakes over the years, over the 23 years that I’ve been in the industry. But I’m trying to learn from those mistakes as well as through my Advisors Unite platform, is try to make sure that other advisors don’t make those mistakes as well. And that’s where we talk about pros and cons and tips of acquisitions.

Rodrigo:00:18:22Yeah, so just- Go ahead Richard.

Richard:00:18:25Yeah, I was just going to ask, in your earlier point you were mentioning the emotional rollercoaster that you can have sometimes with clients. It’s just, I think most people aren’t really aware of the psychologist role that a lot of advisors need to play. So it’s part strategist, part psychologist. So the behavioral side of things is equally if not more important sticking to portfolios, understanding people’s tracking errors and biases. How do you think about that in the context of your practice?




Strategists and Psychologists

Alex:00:18:54It’s more important. I would say it’s a lot more important because as much as if I sit with a client, at the end of the day they’re a human. I can talk to them about performance numbers and charts and all this, but if I can’t connect with them on an emotional level, it’s over. They’re going to look to go somewhere else. Because at the end of the day a lot of stuff, whether it be us or some somewhere else, it could be commoditized. So they’re going to look at us and say, who can I connect with? This is a person that’s going to hold my hand and take this journey with me for the next 10, 20, 30 years. Do I want them in my life? Do they really get me? Do they understand my family? My situation? Or are they more of the technical side, where they’re going to say, here you go, here’s the chart, this is what it looks like, good luck. We outperform the benchmarks and what to do.  I mean, listen, there’s nothing wrong with that, if that’s what you want to do, but those people are not going to stay with you just because you outperform the benchmarks as much as you think that’s what it is. But there is the element of greed. We have to be honest, people are looking about their numbers and they say hey, if you’re doing a good job, as much as you’re quirky, I’ll stick with you. Just think about some of the professionals you guys work with maybe other accountants, attorneys, and so forth. You might say, they’re not the fun-est people to hang around with but they get the job done or I trust them, or they were a good referral. But if you find an attorney that you can really relate with and gets you and is someone that you want to go and grab a beer with possibly, then you’re going to say, that’s the person I want to stick with and work with for a long time.

Rodrigo:00:20:26Alex, how do you think about that perspective of giving them the personal touch as you grow a business larger? You’re going to have, I imagine through acquisition a slightly larger client base per touch, I would imagine. So how do you augment your personal touch through other means? If that indeed is your growth plan.

Alex:00:20:50Time is a factor. We all have the same amount of time, it doesn’t matter whether it’s me or Warren Buffett, it doesn’t really matter. It’s just how you utilize that time. So one of the things that I started to do early on was utilize different tools, technology, to try to minimize some of those times, whether it be a rebalance, or whether it be financial planning tools, whether it be risk analysis tools, portfolio tools, whatever it is. A lot of that stuff we started to adopt early on so we can focus less time on that and more on the relationships. But that being said, it’s a tough thing to do. I mean, you have to make sure that if again, if you went from 100 relationships to 200 relationships, you got to be ready to say, okay, I need to bring someone else on to help with those relationships, I can’t just be greedy and say that I’m going to have all 200 relationships, I’m not going to share the wealth type of attitude. And unfortunately, a lot of advisors have that. They just say, I could do this, what’s another 100 new households? And then all of a sudden, not only are the new 100 households not happy with the service that they’re getting, but your existing 100 households might be now going out the door. And that happens, it’s going to happen. So you got to make sure you can have those tools in place and have the right team which is also tough. I’ve experienced a lot of team members that have kind of come and gone, they were not the right fit for us.

We’ve got to make sure that you find the right people and once you find the right person, hold on to them tight. Make sure they’re compensated appropriately, make sure you’re able to give them equity in the firm. That’s another thing that’s very tough for a lot of advisors, if they grew the firm for 30 years, they’re like this is my baby, I don’t want to give this up. But then they shoot themselves in the foot because what happens is, at the end of the day, they don’t have a succession plan, and their assets dwindle away, and they might look at it as this is better than the Social Security or another pension plan and I’ll just hold on to this for as long as possible and while I’m healthy. But those clients are not getting served properly, they’re being selfish in that manner. They’ve got to find someone else-

Rodrigo:00:22:55It’s the ego that you mentioned. You talked about the ego. I think the advisors we’ve seen in our careers, Jason and I a lot of ego in that space. I remember when I started managing the asset management side of the business and less on the private wealth, one of the key issues was look, whomever I’m going to give this relationship to is not going to do it as well as I can, but maybe they’ll do 80% as well as I did, it turns out that they do a better job, because they’re more motivated, they have more time and they actually have a completely different connection. There was that gap I felt really, it was really tough for me to even contemplate or accept. And this I give credit to Mike Philbrick on this. Giving opportunities to younger advisors within your practice, give them a shot, have a couple of introductory sessions, you with them, and what I have found is that whatever fear I had, whatever ego I had involved in that relationship was false. And if you want to grow your business, that’s what you have to do. You have to be able to delegate and I agree with you. You get the right partner, you get the right employee, you hold on to them tight.

Alex:00:24:02It’s funny. So I brought this book along because I thought it might be helpful for your audience. It’s not by me, it’s by Dan Sullivan and Dr. Benjamin Hardy. It’s called “Who Not How”. I don’t know if you guys have read it. If you haven’t, if you’re an advisor, if you’re a business person, whatever it is, grab this book, it’s fantastic. It’s going to help you understand how to grow your firm, how to bring on the right people, because ultimately as entrepreneurs, a lot of times when we’re trying to solve a problem, whatever it may be, and I know Raul asked the question here, we think about how do I do this? The question shouldn’t be how do you do it? It’s like, who is the person that you need to get to help do that and that’s what you need to do, and that’s what you need to find. And it’s tough, you might have to go through 1, 2, 3, 4 people before you find that right person that is going to take the lead whether you want to pass the baton fully or not. But they’re going to take the lead and run with it and you’re absolutely right Rodrigo, I think it’s a lot of ego thing. They’re like, oh my god, no one else could do a better job than me, and then you come to find out your clients are actually very happy, they’re clicking and they know that they’re easier to get ahold of, they’re very responsive, they’re a little bit more tech savvy than you are, or whatever the case is and they enjoy that relationship.

They like knowing that I’m here or I’m behind the scenes and I’m still working with them with that advisor and if they need to back and jump in, or if there’s something that’s a little bit more complicated, estate planning wise, or tax planning that maybe this advisor is not as seasoned on, I can jump in there. But why don’t we look at it the same way as law firms do? You see the partners level, you see the attorneys, then associates and clerks and so forth. If we try to mirror that in our industry, it would work. But we don’t, it’s always like a solo practitioner trying to do everything, wearing multiple hats and then before you know it, it just turns into a failure or-

Jason:00:26:01I’ve been the Strategic Coach for years with Dan Sullivan and I’m a huge fan of anything he produces. He’s so into just understanding your own unique ability, and most importantly understanding what you’re not strong at, or what really pulls the juice out of you. And it’s important in a team to try to determine who fits best where, and sometimes you may be surprised for yourself, you’re better off in a different spot than you thought you were and it’s a key factor within the team.

Unique Abilities

Alex:00:26:32It’s perfect that you said that because a unique ability is what makes a big difference. Maybe this also helps out Raul. I realized my unique ability was more of the relationship aspect, working with the clients, talking to them, helping them come along to the firm, but my unique ability wasn’t necessarily sitting there and doing the financial planning behind the scenes. We can find someone, a team member that maybe doesn’t want to be client facing, but would rather be back there crunching the numbers, getting all that stuff ready. So you got to team up with them and knowing if even if that means I make less money let’s say on the client, or I share that revenue, I’d rather get 50% of something than 0% of something.

Rodrigo:00:27:15Right. Also, I think if I were to, from an external point of view look at your forte’s, I think you have thought outside the box and just the way you communicate on social media, how you bring your community, your California community, you bring them in, you give back to that community, you let know that community that you’re helping them out, you’re bringing people inside your home so that they know the type of values that you espouse. I think that is really rare for any advisor that I’ve ever seen. And that requires an entrepreneurial point of view, it requires some deep work that has you completely away from the business at times. And for you to be able to do that to come up with those ideas, to really move the business forward you have to be able to delegate, you have to be able to delegate. And to the point of finding your unique ability, as ReSolve has grown and put it up and we brought new people into the firm, I started being everything. I was the advisor, I was the psychologist, I was the trader, I was everything. And slowly giving away those pieces. I’m going to tell your audience every single time I gave away a part, I felt like I was cutting off a part of my body. And yet, you end up landing in your sweet spot and I think in terms of partnership, I also had prior to meeting these gents, I had a partner that it didn’t go well, and the reason it didn’t go well is because I partnered with him because he was an identical personality to mine. I thought if I’m good at this, then we’re just going to crush this business. But it turns out, you end up doing the same job, there’s too much overlap by one piece of advice in terms of partnering up is make sure that you’re partnering with people that are very different from you, complementary, so that they’re not stepping on each other’s toes. And it’s very common in the asset management business.

Alex:00:29:07Right. Having too many cooks in the kitchen. And it happens, everyone’s like, I want to play that role, and it’s like, maybe there is not enough business to play that role and we need to each divide and conquer. And it’s tough. It’s tough to find that person, which is why I think finding that individual if you do, make sure you take care of them, make sure they understand that they are as important to the firm as you are. And that’s tough for a lot of advisors to do.

Jason:00:29:35It’s tough to do and, I mean you got to manage money, you got to manage people and you got to manage the business in this world. And all three of them require less overlap than you might think.


Richard:00:29:49Alex, I wanted to shift gears slightly but still within the topic of behavioral, but bringing it from the abstract to the tangible I guess. The year, like 2020, one of the most… in living memory, it’s hard to think of a more rollercoaster year in markets. How was the stick-to-it-ness for clients and their portfolios and how are you able to thread that line when it comes to clients freaking out maybe in Feb-March and then wanting to maybe go back all in in equities, depending on how you guys reposition? How did that play out?

Two-fisted Drinking and 2020

Alex:00:30:27It’s funny, you mentioned 2020 and two of us grab a drink right away, just hearing that.

Jason:00:30:32Right. Pavlovian for sure.

Alex:00:30:34Just triggered it right away. So look, it was very difficult not only as an individual investor, but also for professional investors. We all know greed and fear is what runs the markets. And one of the things that we’ve done, especially a lot of our clients are older, a little bit more conservative, they’re not necessarily looking to juice the portfolios. One of the conversations we had late last year, and early this year was to start trimming within the portfolios. In February when I started paying attention to what was happening with the virus overseas, I knew that this wasn’t something that was just going to be a joke and stay there like it did with some of the other viruses from the past. Was I lucky? Yes. But I being in the industry for a long time, you start to say, okay, I don’t know how this is going to play out, so let’s do something, let’s take that into consideration. And part of our portfolios, I don’t necessarily buy into you have to be either all active or all passive, we have a blend of things. And then we also have a blend within the different areas. So whether it be for in fixed income, or equity, or alternatives. So we started to take some money off the table on the equity space. I didn’t realize we would see that type of a quick V-shaped recovery but we did. We didn’t experience as much of the downside, but then we started to come back a little bit back into the markets. I don’t want to say necessarily dollar cost average, that wasn’t necessarily what we did.

But when we saw opportunities, we shifted back into some of the equities that we had taken off. I guess we took out the choppiness. We tried to help smooth out the ride and that was something that I did years ago when in 2006, 2007, we started talking to clients like this is crazy, when your neighbor’s telling you that they’re on their fifth house that they’re buying and they’re leveraging to buy another property, I literally told my dad sell your house, we’re getting out of here. I had him sell his property. I’m like, you’re never going to get this amount of money again for the rest of your life on this house. And we and we started talking to clients about some of the concerns that we had, and were we early? Yeah, we were early, but I would rather be early to the party than late. And we started to transition, we had more of a core satellite model back then and we blew out of all the satellites, we held on to our core position which was about 30, 40% of the portfolio, if I’m wrong, I’m wrong and we’ll hold on to it.

But we blew out of the satellites that had a lot of emerging markets and foreign debt, and so forth. And that worked out for us. And we doubled that year, because clients were… A lot of clients were thanking us and talking to their friends that were losing their shirts, and saying, “Hey, you know what? You should talk to my advisor, he explained to us what he was doing.” A lot of clients fought with me. I’ll be honest, they fought with me, they’re like, “What are you talking about? Markets can’t go down, they only go up. They only look at the upside of things. We had to explain to them what we were trying to do and especially if they were going to be retiring anytime soon. People don’t think about that. So if our clients going back to 2020, a lot of them are either existing, or retired or about to retire. This is their nest egg. So we had to have a pragmatic approach to it and explain what we’re doing. And the communication is key with clients, even if you’re wrong because you’re going to be wrong a lot, you want to explain to them the logic behind it. Most clients thanked us for what we did, and it also depends on their timeframe. So, it’s different if you’re investing with me and you have a three year timeframe where you say I’m going to need this money or access it in three years, as opposed to I got a 20, 30 year time horizon. If it dips down and comes back up, who cares? I’m not really taking advantage of it.

Rodrigo:00:34:26Well, that’s an interesting point. Communication. We’ve always found it very difficult to communicate singularly, a single message when you have tiered client bases. I know that you do a newsletter for your advisory practice. How do you deal with communication? What do you handle on your email communication and what do you handle personally, and is there a difference?

Client Communications

Alex:00:34:53There is a difference. The newsletter is a little bit more generic in nature because of what you just pointed out. Everyone’s situation is a little bit different, everyone’s risk tolerance and timeframe is a little bit different. So we convey to them what our overall thought is. But that might not particularly hit what they’re doing. So if I’m talking about, okay, we’re getting back into the markets today, blah, blah in the newsletter, but then you’re a client that is in sitting in Muni’s because you really want no stock exposure whatsoever. It’s not going to make sense. So, then it goes to the communication to that individual clients of saying, your situation is a little bit different, this is what we’re doing. But for those clients that are maybe longer time horizon or want exposure in the markets, that would work for them. It’ll be interesting how this turns out because one of the things, one of my goals this year is to have this type of communication with our existing clients, something where I can do a YouTube live stream and have clients now login, be able to communicate with them, answer the questions on the side and be able to do it that way. Or now with Zoom. I can hold a Zoom meeting and invite 100 clients to it, it might be a little bit crazy, but almost hold like a town hall on a quarterly basis and get an idea of what they’re doing, let them ask questions.

Some people are not going to get into the weeds because they don’t want their personal information out in the open, that they’ll discuss that to you one on one. But there could be some questions that they have, like how is the election going to affect my portfolio? Should I be concerned that the Democrats won the Senate? Or whatever. This type of stuff. I think having this type of a medium is good and that is my goal this coming year, where I’m going to do that. I’m also going to set up a community, an online community for my clients to be able to join, where they’ll be able to log in and I can record a video, or do it live, and tell them what my thoughts are, whether you want to do it on a weekly basis, a monthly basis, whatever it is, and then they could communicate within that community and know that it’s secure as opposed to it being on Facebook, or some other social media platform where they’re going to say, I don’t know who’s reading this, I don’t know who’s seeing this, I don’t need anyone else knowing my business. So it’ll become more of a secure tool. And I’m working on building that this year.

Richard:00:37:14You touched on your previous model core satellite for holdings. Are you able to give us a little bit more of how you’re currently engaging in that framework for portfolio building? Do you tier it with regard to risk tolerance? And do you also consider the particular tracking error biases that people have in order to build that portfolio for them for starts?

Alex:00:37:38Yeah. It all starts with the client’s risk. We have our models, and then we have to take into consideration what they have as well existing. So if you come to me with a portfolio and you’ve got a ton of stock from the next company that has a huge amount of gains, I can’t just tell you, we’re blowing all out of this tomorrow. There’s tax consequences there, it’s a little bit different if it’s in a retirement account and so forth. So we’re going to take all that into consideration, look at the big picture. But we’ll start with the risk, as well as their timeframe and what they’re looking to do and then from there we have different types of models based on their asset sizes. So we have our core portfolio that is made up of a majority of ETFs. And that usually is for accounts that are below 250,000. And then above the 250,000 threshold is our strategic portfolio, that is a combination of individual equities, ETFs, bonds, funds. So we’ll see what’s the best choice in that space, and we’ll do that. But the strategic portfolio, whether it be on a monthly basis, or if there’s an action we’ll make the strategic changes there and we can go out, blow out of sectors or countries or whatever it may be. But the core portfolio is more of a rebalancer like as clients are building their wealth, well, that will be the space for them.

Rodrigo:00:39:01I’ve always found it interesting the different types of advisors and what they lead with when trying to gather clients. A lot of them, old school traders, lead with how they trade, some lead with financial planning others lead with a combination of both. What do you see the hierarchy of needs? Or at least what do you see the hierarchy of how you sell and can gather organic clients.

Alex:00:39:29When I moved over to American Express Financial Advisors, one of the reasons why I shifted over in ‘99 is I realized that I don’t want to sell products. I don’t want that to be the leading conversation, “Hey, buy my mutual fund, because it’s better than your mutual funds.” That was not the way I saw the industry going. I wanted to focus on advisory and I wanted to focus on financial planning. So financial planning is still a big focus for us. But the investment world has changed a lot and you guys have probably seen this, whether it be the Robinhood’s of the world, or whatever else it may be, that communication, that conversation has changed where people now are saying, okay, I get it, financial planning, yeah. I got to do it but I really just want to start investing. I just really want to start saving now. If they’re doing it for greed purposes and they’re just like, I see this stock going higher and higher and I need to get in, that’s something different. You need to calm them down and talk them off the ledge. And sometimes you can’t. They’re going to do what they’re going to do. Unfortunately, some of those people have to learn by their mistakes and hopefully change that behavior down the line.

But for those that realize, yes, I do want to do this investment, but if you have the conversation of why do you want to have that investment? What’s the purpose behind it? Well, I don’t have anything saved up for retirement. Okay, so maybe we should set up a retirement account and then you can do those types of things in there, not necessarily in a traditional brokerage account, or an online account, or whatever it is. So we want to have that conversation but my point of bringing this up is, I realized that our industry is going like this. You’re going to either as… and you guys maybe aren’t necessarily on the advising side right now working with the public. But if you are, you’re going to have to start going further and further up the ladder. I think you’re going to have to start working with clients that are a little bit more technical in nature, are going to have more complicated tax needs, have more complicated estate needs. And if you’re saying, we don’t take clients under a million dollars, now you might have to come back and say, we don’t take clients under $10 million.

So, I think we’re heading in that direction. But what happens there? What about the rest of the investors that are out? They are going to get left behind and unfortunately just like we’re seeing right now with the middle class, I see that happening in our industry. So, you’re going to have to come out with the other option which could be for the clients that are maybe that are the do-it-yourselfers, but need some sort of advice. Maybe they don’t want to necessarily go to YouTube and get some free advice or go on to TikTok that some guy’s yelling at the screen and saying, hey, you should buy this and you should do that, and look, I made 1,000% in these options. They don’t want that either. They want to know they can go somewhere and get some decent advice but maybe they want to do it themselves. So, I think you need to provide that service, and that’s the other thing we’re working on launching this year as well where we’re going to be able to provide that side. Now if they have more complicated stuff, and they need to talk to an advisor, that platform will allow them to either pay on an hourly basis and talk to a CFP. Or, if they get to a situation where they have graduated, let’s say from there, then they can now start working with Lake Avenue Financial where they’ll have a lot more direct one on one. So, I think this industry is totally going to go into two different directions. Either you’re going to be part of that wave or it’s just going to crash on you.

Jason:00:43:01Yeah. I’ve seen this same thing. There’s a lot of advisors now taking $10 million as a minimum ticket, and lots of people are being left behind. But there are a lot of really good tools, and some great education. But there’s still a pocket in the middle there where people don’t want to dive into the great details of a budget. Budgets are like the raw material to make all this work. You want to save money? Well, you should know what are you making? What are you spending? Exactly. And a lot of people just don’t do that but it’s-

Alex:00:43:35No, it’s hard. I still have clients that have millions of dollars that don’t want to do budgeting. I’ve had to have this conversation with them year after year, even when we give them the tools and the financial planning and it’s like, just link your credit card to this, like this is all we got to do, we’ll get all the information in your bank account and we’ll figure it out. They would rather jump off a bridge. Like it’s not something that’s fun for them. But you said something interesting, because we’ve prided ourselves for not necessarily having account minimums. There’s certain types of accounts because of where they’re at, might have sort of a minimum, but I’ve tried to work with all types of clients. And that could be to the detriment of you end up having a lot more clients than you necessarily want, but I’m not the type that’s going to say no, you don’t have a million dollars, we don’t want to talk to you. And I understand why advisors do that but I might have a client that comes in or a prospective client that comes in and can have 5, 10 $15 million, but if they’re totally rude, I don’t want to work with them. I would much rather work with the person that’s got $45,000 but they respect my time, they respect my team, and they value what we’re seeing. I would rather work with them and help them out.

That’s been something that I’ve done and whether it be giving back to the community or other stuff it’s like I feel like this financial literacy wise, I’d rather teach these individuals what to do with their money and make sure they’re not taken advantage of. Unfortunately, a lot of the times people, whether it be a language barrier or something else, they get taken advantage of. Whether it’s in the Armenian community, or my wife is Mexican, in the Mexican community, that happens a lot as well. She will talk to them, today she had a conversation with someone that inherited the estate and he pretty much speaks Spanish and has no idea what to do. So, it’s easy for Rosa to get on the phone, talk to him, and make him understand what needs to be done and right away he felt a lot more comfortable than talking to someone and having that language barrier. It’s interesting how that works.

Rodrigo:00:45:42I want to get back to the adviser practice specifically on the communication side, you use a lot of platforms to communicate your thoughts and your views.  Twitter, LinkedIn, your own website, YouTube. Have you found one platform to be more useful from an advisor practice perspective than others? And then the follow up question to that will be compliance. How do you deal with that?

Alex:00:46:07Yeah. It depends on what you’re looking for. So, if you’re going to Twitter and thinking that it’s going to turn into generating a lot of business, you might be wasting your time. Twitter is a great place for me to be able to meet individuals like yourselves, talk to people in my community, learn from them, help out others. So I like that FinTwit community, it’s been helpful for that. Another great thing is I look at Twitter as the white pages. You remember that thing that used to be hanging from their phone booths? Barely, right. But think about it that way, I have access to people I would have never had access to. And because of that I’ve been able to connect with reporters, CEOs and so forth. A lot of them have followed me, we can PM each other, I don’t need to even have their phone numbers, I don’t need to text them, I don’t need to email them, There is direct communication. Twitter’s been able to provide that and it’s been very very powerful. We also utilize Facebook to an extent for Lake Avenue Financial. Now, that that’s a great way to be able to connect to more of the general public, put videos out there, put content out there and so forth. Instagram is something we started to utilize a little bit now, still trying to put my head around how does that work best? LinkedIn is fantastic, I have a big following on LinkedIn. And I’m not saying that to brag, but it took me many years to get there. And that’s also a great way of connecting to professionals in our industry, as well as professionals outside of our industry.

Rodrigo:00:47:39Did you find that LinkedIn is like, how do you work with LinkedIn,? You can post but there’s also the Publisher that seems to be quite useful. What aspect of, is unique enough that it has been your biggest growth? And what does it allow you to do that other platforms don’t?

Alex:00:47:57It’s interesting, you have to post things differently on the different platforms. I don’t know if you guys do that or not, but I traditionally do. I’m not going to post a picture of a cat video on LinkedIn, maybe I’ll put that on Instagram or Facebook. Everyone does these things. But going back to your question, LinkedIn Publisher is something that I’ve considered utilizing. I’ve done a couple of posts on there which I’ve gotten real good feedback. But you go back to, do I want to be controlled by this platform? Is it better for me to blog on our platform, and then send people to our blog so I can control that as opposed to be at the mercy of the algorithms. And I’ll give you a perfect example. We used to have a lot more traction on Facebook, being able to do things and then all of a sudden, they changed algorithms, and it was over. All of a sudden 90% drop off of the type of engagement we used to get from the same amount of posts. So, do you keep doing that or do you say, okay, I got to change this and do it somewhere else. But now you’re starting to see, especially when it comes to videos, like I post a lot of videos on Twitter,, whether it be the bear in my backyard or whatever else, people respond to that. And if I posted that video on YouTube, and then put the YouTube link on Twitter, very little traction. But if I take the actual video and I put it on Facebook, Instagram, Twitter, LinkedIn directly, it gets a lot of traction.

Rodrigo:00:49:31Right. So that’s the way the algorithms are trying to get. They want video for engagement but they also have a particular way of uploading that video.


Rodrigo:00:49:40That’s an interesting tip.

Alex:00:49:42You’ve got to figure out where you want to build your community. Whether you want to build your community here on YouTube, then you might focus and put your efforts on YouTube. If you want to build your community on Twitter or Facebook or whatever platform, then that’s where I would put my focus on, but I think you also need to control that content. So you can do both, which is what we’ve done. We can put the blog on our website, but then we can also put it directly on LinkedIn or whatever the case is to try to get eyeballs there. And you experiment with it, and that’s what I’ve done and over the course of the years I’ve done multiple experiments. To this day, I still do experiments on Twitter, I’ll put a post just to see what response it’ll get, what kind of results it will get. And I track the engagement and all of that afterwards to say, okay, I know that that really didn’t work. Or this did work, why did it work? And sometimes you and I might sit there and say, let me write this clever thing on Twitter and it gets nowhere. And then you write something stupid and all of a sudden, it’s getting retweeted and shared and people… And you’re like, I spent no time on that and all of a sudden, people loved it and shared it.

Rodrigo:00:50:46It’s totally random.

Alex:00:50:48Very random.


Communication and Compliance

Rodrigo:00:50:48Most advisors that I deal with are either unable because of who they work under, to do any social media. Or are terrified of the compliance repercussions required in order to be able to do what we do. What advice would you give to an advisor practice that’s trying to think about social media and compliance?

Richard:00:51:12Keeping in mind that this is for the US. I mean, it’s going to change from jurisdiction, but I think probably the US regulatory landscape is probably on the more draconian side of things. So if it applies there, maybe.

Alex:00:51:25Yeah, I don’t know how it is in Canada, as far as compliance is concerned. But one of the things to keep in mind is you want to know what those rules are. You don’t want to go out there and get in trouble and all of a sudden the compliance department is slapping you with a fine or we’re telling you, you got to shut your Twitter account down, and so forth. So if most of the independent broker dealers typically will allow you to use the three major ones, Twitter, LinkedIn, Facebook, you need to utilize some tool that allows them to capture the information and archive it, whether it be like an Urato, or ZIX, or whatever. So, as long as you put those things in there, it’ll be able to do it. But find out what those rules are at your firm. One of the major reasons why we went independent besides acquiring practices was because I saw that we needed to be able to have more freedom. One of the big nightmares and again, this is not to put down Ameriprise, but I recall many times I had an idea, I had a marketing thing that I wanted to do. Let’s say it was September and I’m saying it’ll give me enough time, people are going to start worrying about their taxes and so forth so let me start, do a letter about tax planning and I would submit it to compliance and then September would pass, October, November, December. And all of a sudden they would respond to me in June saying we’ve rejected it. It’s like, well, thanks. Thanks a lot. And it was all because they wanted to protect that blue box, the American Express box. So it was very hard for them, it was like you had to use their pre-prepared stuff or it was really tough for them to make an exception.

Now things have probably gotten lax since then. But that was one of the reasons why we went independent, and I pushed the envelope, I do other things that most even independent broker dealers might not be comfortable with, which is one of the reasons why in April, I dropped my securities license is like, okay, I don’t have to worry about that now, I just have to make sure my RIA is comfortable as long as my CCO is comfortable with the stuff I’m doing and sometimes they’re not, I got to make sure that we’re on the same page. As long as you’re comfortable, we can we can push that through.

Rodrigo:00:53:34I’m about to post a bear running through my back yard, is that an A-OK, or should I not?

Alex:00:53:40This is considered an outside business activity.

Rodrigo:00:53:43I remember when we were in Maquarie under the Maquarie umbrella, this is Maquarie Global based out of Australia, we have a pretty popular blog. In fact, when you looked at Maquarie Canada, our blog, our personal teams’ blog would pop up before the Maquarie logo, we had more hits than anybody else in the organisation and we published our yearly bold, confident and wrong review. Analysts saying we believe this to happen, by the end of 2021 we see these targets being hit and every single time generally speaking, the vast majority were wrong. And for some reason that particular year they weren’t approving it. Get on the conference call and try to get uncomfortable with Sydney, trying to figure out what the hell’s going on and then it leaks that they had at the same time that we were planning on publishing our piece, Maquarie was going to publish their Global Outlook. And if anybody was going to do an organic search they were going to find us before their Outlook. And that was it, we couldn’t publish it. That was one of the major reasons why we got ahead.

Alex:00:54:48Yeah. I mean I’m not about saying ridiculous things and there’s a ton of people that do this, like on Twitter that we probably see. I just end up rolling my eyes or saying man, that’s not good, I don’t know who’s going to get, whether it be their compliance or the Twitter police or whatever it may be. Some people get away with it and unfortunately other advisors look and say, well, they were able to do it, why can’t I do it? So that becomes an issue and every firm is a little bit different. So definitely talk to your compliance officer, your CCO, whatever it may be and figure out what those rules are, and stay within those boundaries. Also, it’s tough for people to work on different platforms, maybe find out what you’re trying to accomplish. If your thought is the only reason I’m interested in let’s say, social media is to get clients to use it as a prospecting tool, then maybe you got to go to one platform as opposed to the other. If you’re saying I like coming here because I like community and I want to learn things and share and so forth. Maybe you go to a different platform. So, figuring that out I think is really important because people will just say, I want to start something and then they have no idea what to do. And then they’re wondering why don’t I have followers? It’s like, well-


Rodrigo:00:56:05It’s just interesting you can tell right away who the social media accounts are with when it’s been overly reviewed, and you’re just toeing the line. Nobody cares about what your company by a committee feels about at all. What they care about is authenticity, being genuine. Your personality. This is I think the people that I like in the advisor space on Twitter and LinkedIn, they’re putting themselves out there and it really is like 80% about who you are as a person and what your values are and 20% have to do with the actual business that we’re in. It doesn’t need to be 100% financial. I think how you build a brand, how you build a following, how you how you get your clients to continue to feel that they’re in touch with you even when you’ve built your business successfully, you’re not necessarily in touch with them as it used to be when you only had two clients. That’s how you do it. I think that’s a part that’s missing, you don’t need to. Absolutely, you don’t need to do that.

Alex:00:57:07It’s interesting because a lot of times one of the top things I will hear whether it be at a conference that I’m at, or even prospective clients as they say, I feel like I already know you and I’ve never met you in person before. Whether it be through social media, whether it be because they watched a video of me or whether they feel like they got invited into my house when they saw Rosa posting something or whatever it may be. So that part is very important and you have to mix it up. So look at even Mike’s Twitter posts, he might be putting some stuff for ReSolve, but then he has a picture of himself and his wife for New Year’s, or whatever the case is. But again, you might not put that on LinkedIn, I wouldn’t maybe put that on LinkedIn and try to keep it more professional in regards to that. And sometimes there might be personal things that I will want to share, maybe it’s something that’s important to me, like I shared this stuff with the community that we were doing and trying to give back. And that gets a lot of people that are appreciate-

Rodrigo:00:58:18Share your value.


Richard:00:58:20This authenticity sells for sure. In a pasteurized and cookie cutter world where there’s so much of the same, being authentic and just being yourself, it connects with people as you were saying earlier Alex.

Rodrigo:00:58:33That leads to the client base you want and leads to the people you want to be surrounded by. Selection bias. You’re self-selecting at the end of the day.

Alex:00:58:43Very true. I mean, if they’ve seen my posts, political posts, there’s a certain political group that is not going to want to be my client. You got to be careful.

Rodrigo:00:58:53It’s the Green Party, isn’t it?

Alex:00:58:54Yeah. It is. How did you know? But at the end of the day it’s up to you. I chose to be verbal about those types of things. Other people will just stay away from it and avoid it like the plague and say, I don’t want to do that. I don’t want to have a certain group feel like they’re not welcome. I’m not saying they’re not welcome but I want to be authentic and say, if it’s something that I think is important, I’m going to talk about it. Like that was funny enough, my 2021 New Year’s resolution was, I am not going to do any political posts. And it took six days, I was already done.

Rodrigo:00:59:28Everyone of you guys on Twitter that are political and say that, like you literally last two weeks.  I don’t think I’ve seen any one of you be like, I’m not going to talk about politics anymore.

Alex:00:59:37It’s hard, man. It’s hard.

Rodrigo:00:59:38That’s in the US. Like there’s a lot of stuff to talk about.

Richard:00:59:42So, before we go up that’s very slippery slope. And we might choose to go, I just want to ask Alex in terms of whether it’s trends in the industry, or just projects that you’re currently working on, what’s gotten you excited? What are the things that you’re looking forward to after a crazy year that’s gotten everybody reaching for their drinks when we mentioned 2020? What’s 2021 and going forward have in the crosshairs for you in terms of projects, things that are getting you excited?

What the Future Holds

Alex:01:00:09Yeah. The two projects that I was talking about is what I’m super excited about. These were things that I wanted to launch last year, but we had to hold off as we let the dust settle and trying to figure out our bearings of what we’re going to do. Right now, I’ve been working pretty much from home for almost a year now. Very smooth, our clients have had no issues with it. But the project that I’m working on will be more of the community, for the clients that are more of the do-it-yourselfer crowd, they want to learn, they want the resources and tools, that’s something that we’ll be launching soon. I’ll let you guys know more about that and then also being able to have more of a presence online, something like this where we’ll have a live stream show, something where I could be able to touch the community and talk to them and share ideas and so forth. So there’s a lot of different stuff up in the air right now. I got to make sure that I’m efficient with my time going back to what we talked about. As the leader for the firm, being able to make sure I can focus on different things, and nothing falls through the cracks. It’s tough, but if you find the right people to help out along the way, it makes a huge difference.

Richard:01:01:27How about on the disruption side of things? What are the things that you’re looking out for potential risks or things that you need to keep up with? I mean, the buzzword today is blockchain distributed ledger, stuff that can’t be disrupted by this upcoming technology. So do you have any thoughts on there and what are the things on your radar?

Alex:01:01:47 You know, this is another good conversation because maybe 5, 10 years ago when we’re talking about… Maybe not 10, but five years ago, we’re talking about the Robo advisors and is that going to put an end to advisors in general, but no, it was a very glorified temp where we can utilize those tools and you can still offer the solutions, but it makes things efficient for you and so forth. But now looking at, there’s the discussion of crypto, and I would love to actually get some of your thoughts if you guys are allowed to talk about it, of where you see where the crypto is going. But I think that needs to be a discussion as well with clients. Now, because of compliance, I haven’t necessarily been able to talk to them about it, but I’ve wanted to.

Now, we got to figure out what’s the best way of doing that, and discussing that this is just another separate asset class, or maybe they shouldn’t consider it an asset class and just forget about it altogether. That could be something that we need to discuss. And then lastly, is, the conversation we see and we have amongst advisors, if you’re on Twitter, people are always discussing how should you be compensated. Is it asset based management, AUM versus financial planning fees versus monthly retainer fees. Part of that community that I want to build, I want it to be more monthly retainer model but the monthly retainer model I think has some broken parts to it, where if you’re charging the client 300 bucks a month, 400 bucks a month, whatever it is, that puts you in a position where every month like an attorney, I got to show what work I did for them. Keep track of my hours and most advisors don’t want to do that. That’s not what we got into the profession for. So, you find a different way of doing it maybe at a much lower cost, where it’s more of a community basis, not necessarily selling a newsletter for a monthly fee or whatever. But something where there’s value added and you give them the tools and resources so they can do a lot of that stuff on their own.

Rodrigo:01:03:44This is for the technical crowd that you were discussing. Those that are willing to learn on their own and read and the like.

Alex:01:03:50Listen, If we think about the gym, I don’t know if they’re open in Canada or not. But they’re not really open here in LA. So, think about the gym. If you work out, you go in there, there’s two types of crowds for the most part. There’s the crowd that’s going to say, I want to go in here, I see the machines and the tools, I know what to do. I’m going to do it on my own. Maybe I do it right, maybe I do it wrong. Maybe I watched a YouTube video, maybe I’m using an app to tell me what’s the next exercise I should be doing. Then there’s the other crowd that is either going to say, I want to step my game up and I need a trainer to hold me accountable and to make sure I’m doing things right or I’m never going to show up to the gym if I don’t have an appointment with a trainer. So, there’s those two crowds and I think that will come into fruition in the financial industry where you can offer those types of services. You don’t have to choose one or the other. Some advisors might and they say I’m just going to focus on being the trainer and charging for this for the serious people and that’s fine. Some are going to say, I want to be working with the do it yourselfers or more volume in that regards. And then I want to be able to do both and give the clients a choice like do you want to be here? Do you want to be here? We offer both options.

Rodrigo:01:05:02Very cool.


Alex:01:05:05Yeah. So if we talk about the crypto, I’m curious to what you guys think about this, because I think it’s going to be very disruptive for our industry. And it’s going to be very tough on the greed side of things whether you believe it’s an actual asset class where you actually think there’s a store of value or whatever it may be. How do you have that conversation with a client? Do you basically tell them ignore it? It’s the tulip mania and you got nothing to worry about. It’s FOMO. I’d love to hear your thoughts on this.

Rodrigo:01:05:32It’s been a very heated series of debates in the organization, we were certainly interested. We see that there’s a ton of value when Canada… Canada was the first public fund to launch just, was it for Bitcoin? For bitcoins mostly for crypto currencies and the main one being Bitcoin. Most of the people in the firm bought part of that because they believe in it and so it is something that you can allocate to clients. Now, I’m not speaking for everybody else in here, but the way I’ve always seen that type of something in Canada it’s always been something. It was either the oil and gas stocks in the mid “00’s”, it was marijuana stocks recently, now it’s Bitcoin and Bitcoin became Canadians being the first to be able to invest in this type of stuff. To me, it’s playing by the-

Richard:01:06:22Through ETF or through a public vehicle.

Rodrigo:01:06:24They all have merit. Whether they were going to succeed and they can go up and be parabolic or not, but at the end of the day, I’ve always thought about it as we need this, this is a behavioral game as we spoke. You need to manage the behavior of your clients. And if you think you’re doing what’s best for your clients by denying them a little bit of humanity, you’re wrong. You need to set aside some money, give them their play money, and then give them the option to talk about it. They need to be informed about the topic so that when they talk to you as a fiduciary, you should be able to give them some good advice as to what it’s all about. And the advice for me is that we really don’t know where it’s going. It is an emerging technology, it is an emerging asset class and it’s fun to play. But let’s make sure we’re not putting 50% of our net worth in it. That’s the way I see it from an investment perspective, from a technical-

Richard:01:07:23Understanding the narrative that’s driving it. Whether it’s because people perceive it, whether misplaced or not as a hedge to inflation, I think it’s because of the fear of currency debasement most particularly after all the stimuli coming in 2020. But against the US dollar, I think that’s what- and I think part of that narrative now has become, okay, institutional money is coming in, they’re figuring out the custodial side of things, they’re figuring out the regulatory framework. So people are perceiving this as, okay, there’s so much money that could come into this space, and that becomes a little bit of that behavioral thing that we’re talking about and that greater fool theory, okay, I can find this now and sell it for later. Whether or not there’s any intrinsic value, I can’t think of any framework to decide whether there’s any intrinsic value there. But it seems like there’s a lot of trend behind it.

Alex:01:08:18Yeah, listen, it’s fascinating. I personally had bought some back in 2019. I was interested in it before, but it was, is this real? Is this not? Is the SEC going to step in some regulatory body and to step in and put a squash to this and there’s a concerns about as powerful as the government is, can they just say, you can’t own this end of story, it’s illegal, whatever the case is and it squashes. So there’s always this risk, there’s always this risk. And whether it is as you mentioned, all the other things of people looking at this as a legitimate currency or an alternative or a digital version of gold, or I don’t trust what’s going on. So there’s a lot of that that needs to be spoken about. But I agree with Rodrigo is, I think you can have an allocation to this, not a huge allocation but just something where you can say, okay, as a hedge or as a diversifier, we can have some exposure to it, whether you tell them to go and buy this with your play money, quote-unquote. That can be tough because then you start to get to the behavioral aspect where people come back and say, look, what have you done for me lately? I know your portfolio went up X, but I did that in a month or in a week at this point, whatever in my crypto. So why should I give you all of my portfolio? They’re telling me why I shouldn’t do that.

Rodrigo:01:09:42That is where I would just say goodbye. We’re done. Yes, you’re right. Go ahead and put it all in. Give it one more shot.

Richard:01:09:49I think these are two separate issues. I think one of them is whether or not crypto has any legitimacy to it or Bitcoin particularly. The other one is maybe understanding what the particular client’s biases are, and maybe setting aside quote-unquote what you described as play money and saying, okay, maybe for 1%, 5%, whatever percentage we’re going to set aside a smaller percentage of the portfolio for them to scratch that itch.

Rodrigo:01:10:20It’s the watercooler, how can you not be able to talk about Bitcoin? It’s a watercooler discussion, you have to have a little bit of that.

Richard:01:10:27For sure. But it doesn’t have to be Bitcoin. It was before, as you said, marijuana, and maybe they want to invest a little bit of their marijuana stock, because they want to have that part of their portfolio and be able to talk about it at dinner parties, whatever the bias is, understanding the clients.

Rodrigo:01:10:42What I want to start doing is you posted a chart on Slack the other day that I thought was hilarious. Was it soybeans? That soy beans had a more parabolic chart than Bitcoin? And next time a client comes in it’s like, should I buy bitcoin? I’m like, yeah, Bitcoin is good, but how about this one?

Richard:01:10:56Exactly, and corn had one the same. So it’s a tongue in cheek side of things of …Rodrigo:01:11:03And they (1) appreciate what they need is to be able to talk about it and brag that they have it.

Jason:01:11:08Put a 100 bucks in and if you’re going to take a high risk bet on something, maybe there’s a more suitable thing to look at that might benefit your portfolio in a time of distress, like how’d Bitcoin do in March. And it’s not going to. But, who knows? There’s a lot of debate about it right now.

Alex:01:11:30Yeah, I was watching someone major that is always on Twitter talking about Bitcoin and that they brought that up to like, if it’s supposed to be an asset that has no correlation to the markets. Look what happened in March. And his response was, yes, it correlated and so did gold and so did the bonds and blah blah.

Richard:01:11:46The relation is not negative correlation. That’s one of the things people don’t understand.

Alex:01:11:52But listen, tweeting out that I own a bunch of soybean futures is not sexy on Twitter. It’s just not. It’s not. We’re talking about-

Richard01:12:00That was the point. But that was the point when I sent it, I was like, you want to talk about Bitcoin. I just sent this chart on and so I was like, look at this parabolic rise.

Alex:01:12:08We might be missing, again, I’m going to play devil’s advocate here. I think we might be missing the point of a lot of the people and I do believe in this and it’s becoming more and more of a reality is that this can be the currency of the future, or it can be the currency that other countries utilize. I know one of the other live streams, you guys were talking about Argentina, recently. So if you’re from a country where there’s all this huge devaluation of the currency, you’re going to say, thank God, thank God I owned something else, or a crypto or I had all my money in euro, or whatever it may be. If you look at it from that aspect, you’re going to say those were winners and now you’re… I’m starting to hear Russia is very interested in Ethereum and Ether as far as the crypto is concerned, and that technology behind it, so who knows where we’re gonna be? I mean, we might have this conversation 10 years from now and say, oh, my God we talked about this 10 years ago and look what’s happened? Or we might be laughing about it. I don’t know. I look at it as it’s just roulette. You might hit it, it might be big, or just no…Again, I’ve told some of my friends who’ve asked me about it. I’m like, whatever you put in here, it might do well, but just also know that whatever you’re putting in here, be willing to risk it all.

Rodrigo:01:13:25Yeah, exactly.

Richard:01:13:25That’s exactly right.

Rodrigo:01:13:27Whatever coin wins, if any of them do, is it going to be an emergent phenomenon, we never saw coming. We’ve seen it with Ripple and what’s the other one that’s being…


Rodrigo:01:13:41Yeah. So they have these like all of a sudden the SEC comes in and says, okay, you did something wrong, nobody understands what happened. That one’s gone. You know, we’re never going to know in advance, I think if you’re going to get exposure to Bitcoin, I don’t know-

Alex:01:13:54I said, if they could figure out who Satoshi is, maybe they’ll go after him or her. But I think that was one of the things with XRP and some of the other ones are like this is a security because you create it afterwards as opposed to the way Bitcoin works where it’s distributed and everyone’s running their nose and their servers and blah, blah, blah. It’s not one person who just came to the market, like an IPO or an ICO as they would call it, and put it out there. So who knows?

Richard:01:14:25Satoshi or not, it’s funny, you mentioned that one of the real concerns that I find in this space is the fact that I may get the percentages wrong, but it’s rough numbers. I think 3% of the accounts own 90% of the bitcoins, something along those lines. So there’s such a high concentration that it’s hard to put a lot of faith-

Alex:01:14:47As far as the market cap you’re talking about.

Richard:01:14:49Yeah, as far as the outstanding Bitcoin. I think 3% of the accounts or small percent of the float controls about 90% of the outstanding coins.

Alex:01:15:01Okay, so you guys understand supply and demand. I mean, that’s where we end up going and a lot of these people that are just holding on to their coins forever. And a lot of them by the way when we look at that data, we don’t even know how accurate that is. And I’m not an expert, I’ve been teaching myself over the last year, a lot of this stuff you are reading up on it. But a lot of these people have actually lost a private key. So that stuff is gone for ever. Which is the scariest part for me. It’s one thing we could talk about fiat currency and its like if I can hold $1 bill or a Canadian bill and say, okay, I know who owns this. It’s here, whether it’s losing value or not. But if you lose your passwords or token keys or whatever and stuff and you can’t get in or someone was talking about their hard drive exploded, and they just lost it all it’s like-

Richard:01:15:46Which goes back to investor education, which is why the fact that Canada has democratized access by ETFs or investment trusts, and the US is still considering that even though they’ve already offered futures contracts. But again, it’s not for everyone and for those clients that might have a place in their portfolios, it might not be the case that they want to buy Bitcoin outright, they might want to get access indirectly. I’m sure for a lot of purists, they hear me say this and they just want to shoot me and say for sure not, you want to hold on to your own coin. The fact that they trade 24/7 as opposed to the exchanges is another variable to be considered.

Alex:01:16:26It’s crazy. I’m looking at it sometimes at two in the morning, like seeing what’s going on.

Richard:01:16:33Yeah. Your position is probably bigger than it should be Alex, just from-

Alex:01:16:38It’s more, I’m trying to see if I can find some sort of pattern. Something happens like at 3am my time and I’m trying to figure it out, like is it people from New York coming online or is it-

Richard:01:16:49No it’s the Asian traders, is what I’ve heard.

Alex:01:16:52I’m like that’s more what I’m doing. I’m trying to just figure it out. But there’s no rhyme or reason behind it right now. It’s not something that you could put in a chart and say, here’s the candlestick, it doesn’t work that way. So it’s a lot different.

Rodrigo:01:17:04It’s a fantastic hobby. Every year one must have something to obsess about. Why not let it be Bitcoin right now? 

 Richard:01:17:15They are all right together, doesn’t need to be either/or.

Rodrigo:01:17:19I think the idea, this idea of an alternative currency, certainly from a South American perspective. I‘ve seen it in Peru when inflation was out of control. Completely forgot about this, it just came to me now, but everybody used to have these point cards, like 25 years ago, where depending on how many points you use, you were able to buy goods from different providers. Now the points didn’t change, there was no inflation to the point system. So whatever they had in the catalogue, you could buy with a certain amount of points. But the currency was doubling and tripling every day. But you were able, so people that would have more value, these point cards would have more value than the currency itself. The idea of finding a way to move away from a centralized government that’s screwing it up is always going to be there and I think Bitcoin, a lot of the other coins have been a godsend to those countries. Africa, South America, they’re all using it.

Richard:01:18:17Yeah, particularly for the countries where they might be experiencing something akin to a failed state or hyperinflation, Venezuela comes to mind as another South American on the call here. But you have other places that have lived through similar things, that ability not to have to bring all of your cash and put it into gold or precious metals, but actually put it into something that’s digital and then flee and get it on the other side of the border. Yeah, there’s real value to that, no doubt.

Alex:01:18:46So, let’s jump ahead real quick. I don’t know how much time we have here.

Rodrigo:01:18:49We have about five more minutes and then I’m going to hop on.

Alex:01:18:52Okay. So, if you think about this and you brought up a very important thing, forget about the crypto aspect, but if you think about financial technology which is one of the things that we’ve been investing for our clients in, a lot of these countries whether you want to consider them a third world country, second world country, whatever it is, they basically leapfrogged right. It’s the same thing that they did with the phones. They said we don’t need landlines, we’ll just go straight to cell phones, we just put the towers up. So that’s the same thing. There’s a lot of under banked and unbanked countries and a lot of these companies are coming out there with the FinTech tools and saying, whether it be Venmo and the Squares and blah blah and say, “You don’t need a bank, you can send money to each other directly through this vehicle. If you got a cell phone, you’re good to go. You have a bank in your hand.” And I think that’s going to be the next disruptor in the space. We’ve been investing in things like that, we’ve been investing in the AI space, we’ve been investing in robotics. So we add that as a part of our clients’ portfolios where you need to look at, okay, this is something that you’re not going to touch for the next 10, 20 years. And I think it’s interesting to see that playing out and we’ve seen it here in the States. We’ve seen it all over. And as far as the robotics, I don’t know if you guys talk about investing in Japan or something, who knows? Maybe Japan will come back to its golden years and be able to be a dominant force with a lot of the robotics and stuff that they’re building out there.

Richard:01:20:19How about biotech? Do you guys play around in biotech at all?

Alex:01:20:22Little bit. I’m more fascinated with those other three areas that are like I said, the FinTech, AI and robotics are something I know a lot more about.

Rodrigo:01:20:34You guys have the Fair Fund, right? The five or?

Alex:01:20:35Yeah, so the Fair Tech Fund. Yeah. So Fair. F-A-I-R FinTech AI robotics. Kind of being able to do it there, it has been fun for me, it’s something that I’ve invested in a while and now-

Rodrigo:01:20:53I think that that is a much more fruitful conversation, than the Bitcoin conversation. Now we’ll hear from it internally as we hang up.

Giving Back

Alex:01:21:00But I also want to talk, before we go, if we get a chance of talking about giving back, I think a lot of your audience advisors we’re in a blessed position today, most of us were not hurt as much as other business owners were. And if we’re in a position to be able to give back, I think it’s something that we need to do, I think we all need to step up and play our part and do whatever it may be, whether you help a business owner that’s in need, or whether you help a friend or family member that’s a need, or giving back to the homeless community. Whatever it is. I think we all need to step up as an industry and do our part.

Rodrigo:01:21:40Well, you know what man? I’ve always seen you be willing to stand up publicly about the things that you believe in, what could be a great cost to have an opinion about your values and putting them out there and I think that bravery and going out and representing the people that you think should be represented has been really commendable. So I think if anybody can follow your lead, they should. It takes some guts to be able to do that and go out there and make the right moves for your community. And I think I think it’s great for an asset manager for building a community for your clients and private wealth, you got to give back to that community as much as you can.

Alex:01:22:19You have to. I think there’s no way around it. Unfortunately, a lot of people don’t think about it or to the benefit of most advisors situation, they don’t know how to go about it. It could be as simple as, I don’t know in your area what’s a major market, but like here, whether it be Kroger, or Ralph’s or Bonds, or whatever. Me and my wife will buy $10 gift cards whenever we go there and then we’ll pass them out. It could be to anyone. If I get off the freeway, there’s unfortunately always like a homeless gentleman or someone that’s standing there and I will give it to them and say, listen, go get yourself some food, take care of yourself. And then now we’ve done the things with the blankets, we’ve bought a bunch of blankets, and I’ll keep a whole box of them in my car on the front seat. So if I if I see someone, I will literally give it to them and say listen, I know it’s a lot colder where you’re at. I think it’s 74 today here, but still.

Richard:01:23:15Don’t tell me that.

Rodrigo:01:23:17Sorry man.

Rodrigo:01:23:18Hand over a blanket to Richard.

Alex:01:23:23But it’s a little things like that. It can be done. It doesn’t have to be, I don’t want to take on a major skill. Like you could do it yourself and I know, sometimes I do get flack for people like why are you promoting this? Or why are you putting it on Twitter or thing or you’re patting yourself on the back? I’m like, this is not what I’m doing. I want people to understand that they can do this as well. They can learn from this. And most of the time people don’t know what to do. You could put a little goodie bag. When we used to travel a lot if I got some extra shampoos or things or whatever, something as simple as body wash, I can put them in a Ziploc bag, I don’t need that stuff. I will give it to them and say here you go. I mean, it’s just simple things like that that can be done.

Rodrigo:01:24:02You’re totally right. I was reminded of my mother. We had a car full of toys and bread. We were in Peru and I admit that poverty there is at the time was over 60%, so wherever you went you were surrounded by children at every stop sign. So she was constantly giving out charity in many aspects. Coupons for lunches at their local or whatever stops we frequented. We would have an agreement to feed them. So, there’s something in certain communities like that. You can certainly do that and if you have a passion about anything like my wife has a passion about animals and she helps, that’s what we focus on as a family. That’s what our values are about.

Alex:01:24:45And that’s good- I don’t know if you have children but if you do, getting them involved is huge. And having them learn about empathy is fantastic. One of the organizations that actually reached out to me is called Blankets For All, and they basically do something where they will allow the schools to create this little fundraiser and the kids will write a note to the homeless people talking about empathy, and they go through a whole exercise about an hour, they’ll close your eyes and imagine if they were homeless what they would do, what they feel, and so forth, and kind of write their feelings down there. And they will take that note along with a blanket, and either directly give it to homeless people or take it to the nearest homeless shelter. And that’s a one way for them to understand and be a little bit more humble and to learn about empathy and caring, and that’s fantastic. So there’s organizations like that that I’m going to start working with this year as well, going back to what am I excited with? And just help them and partner up with schools here in Los Angeles and schools throughout the nation.

Rodrigo:01:25:54Alex, thanks so much for joining us today man. That was a wealth of information. Hopefully the advisor group is able to take something away from here. Gentlemen… Jason:01:26:05Ill finish my drink so cheers.
Rodrigo:01:26:07Have a fantastic weekend and we’ll hopefully see you again in the next FinTwit event.

Richard:01:26:13Yeah, this was a lot of fun. Thanks, Alex.

Alex:01:26:15Thank you for having me guys. Bye.



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