Introduction and Background
- Ritholtz Wealth Management
- Josh Brown bio
- The Reformed Broker
- Josh Brown @reformedbroker
- Backstage Wall Street: An Insider’s Guide to Knowing Who to Trust, Who to Run From, and How to Maximize Your Investments by Josh Brown
- Brown's appearance on Showtime's Billions
"A personal crisis." Josh describes the epiphany he had in leaving the brokerage industry for the advice business after 10 years (1:20-3:41).
"It worked immediately." How the Reformed Broker blog was born and led to a chance meeting with Barry Ritholtz, which gave rise to an RIA (3:42-5:21).
- Barry Ritholtz bio
- Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy by Barry Ritholtz
- "How I Met Barry" by Josh Brown, The Reformed Broker blog
The Advice Business
"If they haven’t figured it out by now, they probably don’t want to." Observations on how the advice business has changed (5:22-7:29).
- "Understanding Mutual Fund Classes" by Finra
- SEC Regulation Best Interest
- Definition of a nontraded REIT
"Brokerages in name only." Why wirehouse clients aren't necessarily being ill-served by the system (7:30-8:09).
- Morgan Stanley First Quarter 2019 Earnings Results
- James P. Gorman, chairman and CEO of Morgan Stanley
Lending: The key difference between a fee-based account at a Wall Street wirehouse and a fee-based account at a traditional RIA (8:10-10:34).
- "The Rise of Rich Man's Subprime" by Josh Brown, Fortune magazine
- Securities-based lending, explained
How to Provide Financial Advice
Telling the client "no." The difference between pushing product and offering advice (10:35-12:16).
- "When Fund Companies Pay to Play, So Do You" by Leslie Norton, Barron's
"It's recreation; it's not a necessity." Helping clients to scratch an itch without putting their financial plans at risk (12:17-14:53).
"Financial planning is the highest calling within our profession." Ensuring clients get past the firm's public persona and truly buy into its plan and approach (14:54-16:46).
An ensemble approach to delivering advice to clients: The anti "eat what you kill." (16:47-18:58).
- Michael Batnick bio
- Michael Batnick's "The Irrelevant Investor" blog
- Ben Carlson bio
- Ben Carlson's "A Wealth of Common Sense" blog
- Blair duQuesnay bio
- Blair duQuesnay's "The Belle Curve" blog
- "Consider Firing Your Male Broker" by Blair duQuesnay, The New York Times op-ed
How to Build an Advice Firm
"Barry and I don't spread out a map like Napoleon and start sticking thumb-tacks in it." How Brown thinks about strategically expanding the firm (19:04-20:45).
"If somebody comes to us in a rush, it's probably a bad situation, and we don't want anything to do with it." The advisor recruitment and weeding-out process (20:46-24:23).
Portfolio Construction and Asset Allocation
"You're going to lose money. It's gonna happen. There's no way around it." The firm's approach to allocating assets and setting client expectations (24:24-27:33).
Tactical asset allocation's role in their process: "We don't believe in investment alpha using tactical." (27:34-29:33)
"What if you had a tactical model that almost never did anything?" How they built their tactical-asset-allocation overlay to help manage client behavior (29:34-33:13).
"I hope it underperforms, because most of our clients' money is not invested in tactical." (33:14-35:03)
"Every client is different, but their needs are not." Implementing a scalable asset allocation (35:04-37:08).
"You want to be wrong in such a way that it's not going to be catastrophic for the end client." How Ritholtz sets capital-markets expectations (37:09-38:41).
Managing Client Assets
How Ritholtz approaches assets that clients bring in with them: "You've got a human being with their own issues." (38:42-40:58)
"The longer I'm doing this, the more stuff I want to take out, not add." Brown explains why they err on the side of excluding various types of investments from client portfolios (40:59-42:33).
"Our clients are here because they want us." Brown says fee pressure hasn't been an issue for the firm (42:34-44:22).
The Future of Advice
"You're being judged on the portfolio, you should get paid on the portfolio you recommend." Brown is dubious of clients who aren't willing to pay for advice as a percentage of assets under advisement (44:23-46:50).
- "What People Will Pay For" by Josh Brown, Reformed Broker blog
How a chocolatier's success reinforced the importance of consistency in client interactions: "Standardize the process, personalize the advice." (46:51-50:25)