A (3:48)

Let me ask you a question, because I just absolutely love that story. There's so many pieces that we're going to get back into wealth management in a moment, but I want to talk to you about something from a sales, a founder's perspective, a business perspective. You talk about that situation that so many of us have. You get the order, somebody wants to buy this, they want to do that with you. And you're sort of like almost a little bit like, well, I should leave now before I mess something else out up before it goes poorly, before whatever. And just, you know, we'll get back and regroup and we'll start with the serious work later. Your partner, and this is laudable if your partner had the wherewithal to hang in there after the order was received or after they said, hey, we want to buy, and, and, and, and. And immediately sort of almost got to work doing what the client sort of needed. And looking at them from a comprehensive standpoint that of what do they need? Who are the beneficiaries? What are their goals? What do they want to do? Give us a moment on a lesson that a founder or business owner can take out of that experience. I think that's a brilliant. I love that story. I love the epiphany you had that we're trying to go much deeper into overall planning, but there's so much more there from a sales and business perspective too. Can you give us a moment on sort of that. That. That moment in maybe a different light as well?

B (5:10)

Sure, sure. So I think in my industry and in many industries, we all drive to what they train us to the point of sale. And once you get that point of sale, you just want to be gone. But really, if you really want to better serve clients in many industries, you really have to Know what's going on behind the curtain because it isn't one size fits all. And I could use a lot of analogies. Think of your doctor, your internist. Some doctors just poke you and prod you, take your temperature, whatever they do. But the best doctors are the doctors that ask you questions about other things, like what else is going on in your life. And that's how he becomes a better doctor for you. So I could probably take that to almost any industry, the legal industry, doctors, selling, almost anything. So we're so well trained to sell and not quote, unquote, sell through the clothes. That's what I was afraid of. But really, you have to help clients understand sometimes what their real need is. Not convince them what their need is, but help them find what their real need is. And that's really what I think the difference was. For me, I was product oriented. I sell a stock, I make a buck, I sell a bond, I make a commission and I move on to the next one. But that's really, that's not what really services the clients. I, I believe.

A (6:49)

No, I absolutely love that. I think it's fantastic. And that ability for the client to explain to you what they really need, what the real issues are, so you could really help them. I love that. Now the name Wall Lakes Planning, I get the concept on planning that we're really trying to help a person with their, or their family, with their long term wealth plan, their business plan, their life plan, really economically, wall leaked. Where does that hold? Where does that come from? Where does that.

B (7:16)

Sure. So we are planners and wealth managers, which means we are asset managers and planners. We lead with planning. But when we were launching ourselves In December of 2018, we were trying to come up with a name and we were thinking of mythological creatures and stars and all sorts of sexy names and this and that, and we couldn't really come up with one. And after about a week of this, my partner starts to talk about when he was younger, he used to visit his grandfather at a place outside of Detroit called Walled Lake. It's a recreational lake. And he said those days when he would go there, he wouldn't have to worry about anything. He could go swimming and fishing and be with his family and it was the best times of his life. So we called ourselves worldwide because we want clients to understand, Go live your life. Don't worry about your finances or your money. We will help you shape a plan and it will hopefully pay for your life. And we'll monitor it and we'll review it with you Regularly, but we don't want clients to worry about it. And because worrying is the devil in all these things and it causes people to do the wrong thing. If you think about it, if I could give you 1 or 2% better return for the rest of your life, but you stayed awake at night, would it really be worth it? So we want people to have a sense of comfort. And we called it Walled Lake because it spawns this conversation. And over time, our clients really do develop a sense of comfort.

A (9:03)

I love that. And now I know that the genesis of the name Walled Lake, I absolutely love that. Tell us a little bit about how do you think about building long term portfolios for clients? I mean, obviously we seem to be, yes, the market's been up the last few years, but it feels quite fragile. Feels like lots of market volatility. How do you help clients through market volatility? The uncertainties in the world. What principles sort of guide your investment decision making? Give us the overview of portfolio planning for clients.

B (9:33)

Sure. So the first thing we accept is that we don't know what's next. We can make believe we do. And you meet a lot of people as you travel through life that seem to be geniuses and they could tell you up is down and down is up and gravity doesn't exist. But we accept the reality that we have to build plans to pay for people's lives through up markets, through down markets. People still have to eat, people still have to pay their mortgages. So we design plans that after we spend a long time talking to clients about the things that they want, that they need, what are their goals in life, we'll pay for that. And if somebody needs, hypothesize, let's say somebody needs a 3% return on their money based upon their assets that they've accumulated in life and their needs. Why would we chase a 10% rate of return? It's just inherently more risky. So I think it's a long way around to say the best way to do it is to build a portfolio that survives the up markets and the down markets. And a really good example of that is, let's say when the market's down, you could sit in my office and all day our phone doesn't ring. The market could be down 5, 6, 700 points, a thousand points. Nobody calls because they believe, but sometimes new clients do and they, they're worried their assets are going down. So we pull up their plan that we built for them maybe six months earlier, a year earlier, and, and we put today's numbers into it. And yes, today's numbers are lower, but we show them. Look, all the goals that you've told us are still going to be met. Maybe you won't leave 2x dollars to your kids. Maybe you'll only leave 1x dollars to your kids. Okay, that's not perfect. But your life is still paid for. And markets are cyclical. So let's readjust the portfolio for what's going on in the world. But let's stay invested. And they do. And after they witness this 3 4/4 or whatever, they never call because they know that we are taking care of it and we are going to make sure that their wives are paid for. And if they get in trouble, if things happen that are getting close, we call them and try to help them adjust. We've never had to tell somebody to change their lifestyle. Some do because they get nervous. But, but we have never, we feel, we feel our plans have protected them. Nothing's perfect. That's how we believe even in today's market. And there are, I could talk about that forever. There are things that make people nervous, make me nervous in the market. But we, but Mrs. McGillicuddy still has to eat next month, next year. So there you go. I mean that's how we do. We build it for that, we build it for who they are.

A (12:32)

But, but I, but I love that. And Howard, tell me about this for a second because there's this concept that some people think, well, I could do this better, I could replace this, I could do your, you know, your health care, your doctor, your lawyer, your wealth planning. Talk about why it's so important to have that sense that somebody's really taking care of your planning and really could take care of it and see it and watch it versus simply artificial intelligence, simply other things, and particularly through ups and downs, how important it is to have somebody to actually talk to and of things.

B (13:04)

So you've touched a few wires there. So one expression I like to use is expertise in one field does not make you an expert in other fields. Although the narrower your expertise, the more you think so. So with brain surgeons, so to speak, being the most difficult clients to let go because if you think about in their operating theater, they are in control of everything around them and they're not used to, they think they're smarter than everyone. But I have retired in proxy hundreds of times in my 45 year career. When I mean in proxy, I've helped people build retirement plans. If someone thinks as smart as they might be, that they could for the first time build their own retirement plan and have a greater chance of success than I am, than I could. Well, I wish them luck. It's very, it's possible. But I think I have a much better chance of success than someone who's just doing it for the first time, 100%.

A (14:13)

And, and, and I love that. And we talk about that all the time in every business. The first time you do something, you're sort of an amateur. And if you try and sell your business without an investment bank or at least a serious business, you're usually making a mistake because an investment banker really knows what they're doing and has been through this dozens and dozens of times. And typically the buyer on the other side is also very experienced buyer. And you're often a one time seller, one time founder, one time entrepreneur. Talk a bit about that. You're a founder yourself. And do you end up working a lot with entrepreneurs and business owners? Tell us a little bit about, about your work there.

B (14:48)

Well, we do work with a lot of entrepreneurs and business owners because we need people to make decisions sometimes. Often when we meet somebody and they dump their life on the table, their insurance policies, their portfolios, their annuities, whatever, we show them how to reshape their portfolio to meet the goals that they have. And they could understand it intellectually, but they need to change sometimes. They need to get off the square. And entrepreneurs know how to make decisions. You know, businessmen, independent businessmen know how to make a decision. Corporate executives, we have plenty of those also. But you know, they tend to committee things and they think and they want to analyze and then they come back. It's, we like decision makers because we're presenting choices to people that require a decision. And, and when you hire somebody like myself, I readily admit, and I tell clients at some point it's a leap of faith. You don't really know. You could get recommended by somebody to me. But am I really going to do well for you? It's a leap of faith and which means there could be change in there. And I just, it's just hard sometimes to deal with people who just never want to make a change. Never. Or just afraid of change. And I understand that that's the human experience, the brain. You know, I'm a behaviorist and I believe, I think investing is more behavioral than it is economic. I know that sounds strange, but.

A (16:27)

Well, I think that's right on and talk about that for a moment because everybody's wired a little bit differently. You could optimize returns based on certain ways, but you also have to be able to sleep at night, which is very much the behavior, the psychology of money, the ability to sort of understand how will these different things impact oneself. Talk a bit about that. The difference between maybe optimal finance versus behavioral finance. Because I think you're right on in what you do. You're as much working with you on the behavior of money and the psychology of it as you are on the optimal nature of it and hitting that right balance. Can you talk about that for a moment?

B (17:05)

Yeah. So repeating. I believe in a concept called behavioral finance and it's a real science and you could research it and read it. I believe successful investors, it's all about behavior. How do they act and invest during a lifetime of decisions and are their choices in line with their short term needs, their medium term needs, their long term needs? They tend to make. It's the brain, it just causes people to make buys and sells at the wrong times. I mean, if you think about it, what industry, when the prices go down, people want to buy less, they want to sell, and when the prices go up, people just want to buy more. It's just, that's just the nature of the human brain. A simple example I could use for that is there's a concept called recency bias. It's your brain telling you that whatever has happened most recently will continue to happen. It may, it may not. And it's not just an investing. It's sharks at the beach, it's a shark at the beach, everybody goes to the pool. Airplane crashes, everybody gets on the trains, but statistically they should go back into the ocean. Statistically they should get on planes and they kind of know it. So we encourage and show clients how to behave better, how not to necessarily when not to sell and when they should be buying. And it doesn't mean sitting on your hands. Sometimes clients think that's what we do, but that's not true. A simple example would be in Covid. When we were in Covid, some people, what should I do? Some people sold everything. Some people sat on their hands. We were thinking about what's going to benefit when we come out of COVID So we stayed invested, we shifted, we changed certain things. And that's better behavior than just exiting and saying, oh, I'll wait till the market goes back up and then I'll get back in. So that's behavior. I can make a. I could show you lots of different behaviors that investors do that make mistakes, but 100%, I.

A (19:17)

Mean, it's a typical thing of people selling into the Dip. And then ended up missing the upside. And there's all these studies about over the course of 50 years, there's X amount of specific dates. If you were out of the market because you got nervous, you missed a huge amount of the returns. There's so much of that and so much of it is behavioral.

B (19:39)

I don't have that study. I've seen that study. I don't have it in my hands right now. But it's really remarkable. If you miss the, it's something like the five or six best days of the year, your return, you lose two thirds of your return. And so There you go, 100.

A (19:56)

No, that's exactly right. And when you, when you have clients think about long term wealth beyond returns, how do you talk to them about issues like legacy family communication, aligning money with personal goals or values? I mean, many people of our generation are trying to figure out how to talk to their children about money. You've got adult children, I have adult children. How do you sort of think about these issues, family communication aligning with personal values and goals. How do you sort of overall look at those issues and talk clients about them?

B (20:27)

Well, my children you can't look at because I've been talking about my business at the kitchen table my entire life. So my kids, when they got out of college, they knew more about personal investing than any of their friends, parents, you know. But that being said, we try to teach clients how to define their lives. What is it that they really want to accomplish? Not just, I mean, more is better. You know, you have more money. Yeah, okay, that's better. I want to get the best return I can. But to what end, you know, is it, does more really make you happy? I mean, it's, it's more, it's better to have more. But what are you trying to accomplish? Are you trying to pay for your retirement? Do you know how to do that? You might know how to make a billion screws a year and sell them to Costco, but do you know how to really save efficiently? Do you know how to pay for education officially? Do you know how to retire? Do you know how to give money to philanthropic desires you might have in the most efficient way? And so we try to help them understand that. And then on the issue of communication, that's a good question, Scott. A lot of families are at fault for lack of communication. Their kids have no idea what they're stepping into one day. Sometimes the parents are setting up beneficiary, I call them beneficiary traps that the family never Knows about where we had this will. Just a quick digression, but we had a client, four children, father dies, ran a business, big business at the airport. Two of the sons worked at the business, very successful business. Two, a daughter and a son had never really accomplished much in life, and the mother was supporting them. When the mother finally died, her trust gave more money to the two children that needed the help. I call it the mother hen theory. She just wanted to make sure all the little Chiclets, you know, were. Were covered. And it set off a family explosion that I promise you, the mother never intended to happen. So on that issue of communication, when you finally build your plan, your estate plan, get your kids in a room and let them know what it is, or else you could be launching a time bomb. So I'm not sure if I answered your question. I could run forever.

A (23:01)

No, But I think that's right on. We've seen so much this in families where one's a really high achiever, one is not. The parents figure that they ought to do more for the one who's not a high achiever. Whether you agree with it or not, that's not really the issue in so many of these families, somebody dies without having explained it to the two children. And now the child that was the high achiever, who feels like they earned what they earned is very hurt because they didn't understand the thinking that the parent had giving more money to the other child. And whether it's right or wrong, whether right or wrong, that lack of communication has caused so much trouble in so many families. I think you're just right on, on that.

B (23:45)

I can't tell you how many times I've seen it. And we purposefully ask a family, like, first of all, we love to have them come into our offices and, and have a family meeting if they'd like. But at the very least, can we prepare something to help you communicate to your families? And by the way, we do our best, and we can. We don't always win that battle.

A (24:09)

I'm sure that's right. And talk for a moment as you look at the next year, the next couple of years. Obviously, as always, we're in a time where things are volatile or can be volatile. What areas of the market or types of opportunities, what are you most excited about? And what risks or blind spots should investors be thinking about or paying attention to?

B (24:33)

So I think, first of all, Wall street, there's an expression. Wall street always climbs a wall of worry. When everybody's worried about something, that's often when there's opportunity. I think even this one maybe Warren Buffett said, you know, when there's blood in the streets that's when you should buy real estate. But I'm not suggesting that, but there is a lots of worries out there and I think there are things that people should be concerned with. But I don't want to sound like a broken record. I think people have to build their portfolios, accept the fact that they don't know and what the future exactly brings. They might know long term trends and, but three to five years is not long term at all. And make sure that their bucket of money they need for the next couple years is in very, very low volatile securities. Intermediate needs maybe 5 years, 7 year money can have a little more fluctuation to it and their long term money, it can, can accept some more fluctuation. So I think not just now, but at any time someone must should be looking at their portfolio to make sure that it meets what their needs are. It's easy for someone very wealthy to just leave it all in treasury bills and not worry about it. And that I'm not. It's a big world, everybody's entitled to that. Not a very efficient way to do it because you end up losing to inflation. But people can choose to do that. I just think it's always a good time to make sure your portfolio aligns with your needs and take the time to sit down and figure out really what you want to accomplish in life. Now you also touched another thing. What should people be concerned with? Well, there's a lot of the market's expensive. I can't deny that. Can it get more expensive? Yes. Can gold get more expensive? Some people sold gold thinking they were a genius last year at 2000 and today it's 4000. So I don't pretend to know. I would tell you on a personal level. I'm concerned with the growing U.S. debt problem. I, I used to believe there was an intelligent way out of our debt situation. An orderly pattern that maybe, but I'm not sure that's going to happen anymore. I, I've as studying economics in my college days. I, I just cannot see an intelligent path out of the debt that not just the United States government, but corporations, foreign governments have built short of inflation. I want to be careful using the word hyperinflation because it's, you know, it may be more like in the 80s, early 80s where maybe we have 18% money markets that could be, that's pretty inflationary at times but, but I don't Think it's going to be wheelbarrows of money going to buy bread. But I think we're in for some highly inflationary times. And I just, but that may be in a decade, but that's. That to me is what I fear the most, the all the hype about crypto. I don't want to start a debate about that with anybody. But you know, I, I just don't buy all that. That increasingly adds a little more risk to the overall marketplace. I'm not sure how much, but this infatuation with AI and AI is real valuations are extraordinarily high. But if you think about it, AI is productivity. It's going to make, it's going to put a lot of people out of work and that's going to be a demand on the governments to create support programs for them. And I don't know also, by the way, I don't know if you've thought about this Scott, or you've read about this. The demand for electricity for AI is crazy.

A (28:38)

So, so many things you said there resonate so much with me. I mean this concept of things being expensive. Yes. The concept of the debt being a real, real long term problem. Yes. We're all reading today and recently about there might be blackouts in certain places because so much of electricity is being taken by this kind of stuff. Absolutely. And I loved what you said also about recency bias. I mean it does seem like there are a whole generation of people, you know, there were, there were a whole generation of people in the private equity world that for a few years never saw a down market or market that where everything wasn't perfect. And now a lot of those people are seeing that it's a lot harder to exit things than it was. There's a whole bunch of people that have seen just the last three to five years the market's going up, you know, with some caveats over Covid and stuff like that. But, but aren't used to the fact that markets go down as well and there could be real pressures. I think what you said about is if the debt becomes a real problem or unemployment was a real problem, we'd have to find a way for the government to help. And we've got this really challenging situation where the government feels quite incapable of getting on the same side with each other as they used to be and trying to figure things out. I mean, you think about the Great Recession, I mean, whether you like them or not, thank God there were some adults in the room like Henry Paulson and Who will be there the next time there's a huge crisis? And can the Democrats and Republicans get along or one party be so happy to see the other party totally screw up that they can't find consensus and build bridges and solve big problems? It is a. It is a scary thought. Let me come back to you, Howard, on this. It's been such a pleasure visiting with you and hearing your perspective. An incredible pleasure. Any final thoughts you'd like to share with the audience? You know, again, we're with Howard Klieger, founder leader, Walt Lake Planning. Just a brilliant person. Any final thoughts you'd like to share with the audience?

B (30:32)

Yeah, I mean, I'll just, you know what? I. I thought you might ask that. So I just sort of have two little quotes that I like. The first one, my partner brings to table all the time. I'm not sure who said it, but the battle is usually not won on the battlefield, but really one in the planning tent. And that's what we think. We prepare clients in the planning tent. And finally, I would just tell prospective clients, I tell my current clients, a goal without a plan is really only a wish.

A (31:14)

So the concept being you should have goals for what you're trying to do, whatever it is, whether it's in percentage terms of what you're trying to do, whether it's in giving money to charity, what you're trying to live for, your children, whatever it is, if you don't have some plans to go with those goals, they're not really, really worthwhile. You can't get there.

B (31:36)

And I think there's a book or, sorry, Alice through the Looking Glass, and this I'll get. I'll take some poetic license here, but I believe there's someone in there says if. If you don't know where you're going, it doesn't matter where you end up. So I just encourage clients, figure out where you're going and don't. And be humble. Don't think you're invincible, and. And at least let somebody make a plan for you. Frankly, I don't know how somebody could retire. It's such a major waypoint in someone's life without making a plan. It's just, what a risk I would never take. Your plan might work, it may work, it may not work. Some people are so well overfunded that it doesn't matter, I guess. But I don't want to sound like a broken record, Scott, but I just. Planning is better than not planning. Even if you think about some of the sports that you and I have shared. You know, you walk onto the court and you have a plan. If you don't have a plan, the other guy does. And Wall street wants to part you from your money. So it's best to make sure that you know what you're doing.

A (32:55)

So 100% again, Howard Klieger, founder leader, Wald Lake Planning. What a great pleasure to visit with you, Howard. This is an uncommon pleasure for me. I hope our listeners enjoy it as much as I enjoyed it. Thank you so much for joining us today on the Becker Private Equity and the Becker Business podcast. Thank you very much.

B (33:15)

Thank you, Scott.