If the name Joe Lonsdale doesn't ring a bell, maybe the name Addepar does. Lonsdale is the billionaire co-founder of the cloud-based investment management platform, which is used by 1,200 wealth management and financial firms, and the man behind many other successful tech companies. The Austin, Texas-based entrepreneur and venture capitalist is probably best known outside of wealth management as a co-founder of Palantir Technologies, a global data analytics company with huge defense and intelligence-agency contracts. But he still sees plenty of opportunity in the financial advisor marketplace.
Speaking with Barron's Advisor, Lonsdale discusses his automated-estate-planning start-up Luminary, and argues that Opto Investments, his five-year-old alts platform, deserves advisors' attention despite coming to market years after rivals like CAIS and iCapital. He shares his formula for identifying company concepts that are most likely to succeed. And he explains why he has no interest in investing directly in wealth management firms. More>
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What does it take to be wealthy? The signposts of wealth are easy enough to spot—mansions, yachts, private jets come to mind—but what is the hard dollar amount that qualifies one as wealthy? Charles Schwab asks that question in an annual survey, and this year the number turned out to be $2.3 million, down slightly from last year's mark of $2.5 million but up from the two previous years. To simply be financially comfortable, Americans say you need $839,000, up from $778,000 last year and $624,000 in 2021.
Senate tweaks Trump accounts. When the Senate worked up its own version of the massive tax and spending bill that is now law, it kept in place the bedrock of the so-called Trump accounts—tax-advantaged savings accounts for children—but it also tweaked some important provisions of the program. The accounts are less complex and the tax benefits are less attractive than the original concept—they are now taxed like traditional individual retirement accounts. They still start with the government-provided seed money of $1,000, but the final version jettisoned some of the complicated rules around when the money can be used.
What else is in the tax bill? The sprawling tax and spending bill contains numerous provisions aside from the Trump accounts that advisors will want to be aware of. We asked a handful of advisors what sticks out to them in the bill in this week's Barron's Advisor Big Q feature, and heard that permanent tax cuts will be welcome news for business owners, how the estate-tax provision can affect financial planning, and concerns about the bill's impact on the federal deficit.
When investing turns into gambling. Financial advisors might not like to think of the stock market as a betting parlor, but with frictionless investing platforms seemingly built for day traders who are now embracing prediction markets, high-risk, high-reward options strategies, and the lure of crypto speculation, the similarities are real. So is the potential for a hobby to turn into a compulsion. What should advisors do when they fear a client is teetering on the edge of a gambling-like addiction? Experts suggest that advisors can try to be the voice of reason and keep in frequent communication with their clients, but they also acknowledge their own limitations in managing clients' behavior.
Defining independence. The term "independence" is pervasive across the wealth management industry. It's used when talking to clients about a firm's lack of conflicts as well as to describe breakaway brokers launching their own practices. But it is also used to describe what has become a top goal for many individual investors: financial independence. We asked a handful of top advisors to explain what that term means to them in a recent Barron's Advisor Big Q feature. They said it means having the capital to support social, intellectual, and other pursuits. As Misty Garza of Bogart Wealth put it, "You have the flexibility to make decisions that give you joy and excitement, rather than focusing on whether you can pay the bills for the month."
Former Merrill advisor faces charges. Isaiah T. Williams Jr., a former Merrill Lynch advisor, is facing charges that he and a co-defendant fleeced a former NFL football player out of nearly $2.6 million. The client, former Miami Dolphins safety Reshad Jones, is also seeking damages from Merrill Lynch. Prosecutors allege that Williams orchestrated more than a dozen transactions that siphoned money out of the client's account, using the money for a variety of personal expenses, including travel, strip clubs, and child support.
