Chairman’s Message: Retirement? Sorry, No.

APA Kossoff 3x4HI RGBIn my letter that I wrote last December, I apparently did a poor job of communicating my transition from President to Chairman.  So, now, after many kind inquiries from all of you about how my “retirement” was going, let me say thank you, I love all the care and concern, but (fortunately) I am not retired.  The work we are doing to build and maintain a world-class business by helping clients attain their financial success is still so incredibly exciting and compelling to me that while this is my 23rd year with Allegiant, my 33rd year in the industry, and I’m not close to being done. 

When I decided to make a change in our corporate leadership, my reasoning was two-fold.  I first wanted to create some structure and space within our executive team so that the next generation of leaders had their chance to take the reins and make decisions that would help move Allegiant forward.  In addition, they are tasked with further improving our most important mission: advising clients while providing top-shelf client experience and service.  I also wanted to create some space for myself so that I had the opportunity to do more holistic, bigger picture thinking that, while being President, I just didn’t have the time or capacity for.  Mission accomplished.  And while I’m busy patting myself on the back for thinking of such a brilliant plan, I thought that it would be a good idea to communicate a few things with all of our clients.

I first want to reaffirm our raison d’être, our core mission: to be your most trusted advisor, acting always as your fiduciary, without the usual Wall Street conflicts of interest, immune from any pressure to sell product, while providing best-in-class wealth management advice and investment services.  That’s a mouthful to type and I’m sure a bit of a wordy read.  So how have we done?  Only your opinion really matters here but the feedback we receive from all of you is so far very good.  We have invested substantially in recruiting and retaining a top-notch team (14 staff members and growing) to continue to provide you with concierge level service, and we have upped our professional game as well.  I believe that now we have more professionals with CFP (9), CFA (3 plus 1 more almost completed), and AIF (5) designations than any other independent wealth management firm in our area.  In addition, you can include CPA, CDFA (Certified Divorce Financial Analyst), and CRPC (Chartered Retirement Planning Counselor) to the list of industry credentials earned by the Allegiant team.  One of our CFP professionals has almost finished her Masters of Financial Planning.  I feel that our level of experience, intelligence, and expertise has never been higher, and is unrivaled locally. 

Importantly, all employees are paid by salary and bonus, not commissions, and the bonuses are based upon how they perform individually, as well as how the company performs as a whole.  Sales incentive compensation does not exist at Allegiant - there are simply no sales goals or numbers tracking for our advisors, or any staff member.  Successful financial planning outcomes for each of our clients is the most important yardstick for measuring our own success, and each advisor’s efficacy.  We remain solidly committed to this single vision as we believe it is the only way to earn and retain client trust.  We have grown, but we have never lost – and will not lose - sight of what matters most - you, and your personal goals. 

Yellow Bar Divider


Your portfolio is ready - are you?

Taking a more outward looking and serious tack, tougher economic times are probably in store for our economy at some point.  Benjamin Jones, President and Chief Investment Officer, and the rest of the Investment and Research team do a marvelous job of making sure your portfolios are ready for rough weather, while also updating you constantly by means of our Allegiant Economic Dashboard, Monthly Economic books, and regular Features on our website.  In addition, the Wealth Advisor team of financial planners is focused on making sure each client is prepared for a change in the economy as well.  Having a perfect financial plan, and having a portfolio built to weather a recession, actually means very little if you, the client, aren’t prepared as well.  Now is the time to speak with us and make sure you’re going to be able to stick to the long-term plans we’ve developed for each of you.  We don’t want you being scared into making regrettable decisions during the next bear market.  So in other words, your accounts are ready, but are you?

The study of behavioral finance is relatively new but extremely valuable to us as we attempt to guide you with an understanding about human nature.  All of us have biases, and cannot help but perceive the world through those biases.  What is surprising is that behavioral finance studies consistently show that even when made aware of those biases, people still let their views and actions be colored by them.  In his marvelous book Misbehaving, Richard Thaler, one of the research fathers of this field, goes through countless examples of how investment professionals make bad decisions by seeing the world through the prism of their own perceptual flaws.  It is absolutely a book worth reading, even for non-professional investors.  Our job as advisors is to make sure each financial plan is realistic, and optimally built to survive and thrive through various economic cycles and over long time frames.  But that won’t matter if a client panics - or to use Thaler’s term “misbehaves” - and pulls the rip cord on what otherwise might be a perfectly good financial plan.  We have no way of knowing when the next recession will start, how long it will last, or how deep it will go.  Nobody does.  I know that it is our responsibility to make sure your plans and portfolios are ready.  But what about you: are you personally ready? 

I’ll say it again.  We have the most qualified team of professionals to help you construct, monitor, and adhere to your financial plan so that you can reach your financial goals.  If you are uncertain about your ability to stick with this plan, while the markets are acting well, please reach out to us!  Let’s understand and acknowledge those biases and address any fears so that we can help you make rational, not emotional, decisions, giving your financial plans a real chance to work. I’ll leave you with one striking, somewhat extreme, example of the benefit of letting long-term plans work.

Do Something!

Vanguard Funds recently tried to determine who their best performing clients were.  Not their best performing funds, their best performing clients whom are investing in their funds.  On their website Morningstar publishes mutual fund returns and compares those to investor returns (how investors in those funds actually performed versus how the fund itself performed), and the numbers aren’t good.  Investors typically earn returns that are lower than the actual funds they are invested in.  Why would there be any difference?  Because investors can and do make less than optimal investing decisions, adding money at the wrong time (market tops), withdrawing money at the wrong times (market bottoms), following trends that have already peaked, etc.  So when Vanguard looked at their own investors, they discovered, probably to their chagrin but without real surprise, that their best investors were either deceased, or had forgotten they had accounts at Vanguard.  Let me state that another way: clients (not sure the deceased count as clients but...) who did NOT trade were their most successful investors!  This speaks directly to the bias we all have to “take action” when we think something important is happening.  “The market is really moving, what should we do?  Do something!”  Yes, let’s do something.  I suggest we simply review and stick to your financial plan. 

Yellow Bar Divider


Fees and Conflicts of Interest
 

Every fee you pay has a direct negative impact on the ultimate outcome of your financial plan, including our fee.  True, paying Allegiant for a great plan is how our planning process begins.  But it’s no secret that our industry is extremely adept at hiding, burying, and otherwise obfuscating fees in an attempt to extract every dollar they can for themselves.  Wall Street firms, too many to mention, continually have their hands slapped for both improper disclosure and excessive levels of such fees.  Wall Street is not only a dangerous place for the general public, it can be tricky for us as well.  But we were built to be your advocate. As fiduciary advisors we are charged with the legal responsibility of doing what’s in the best interest of our clients.

To that end, we focus solely on using securities with fee levels that are as low as possible, avoiding any hidden fees. In fact the mutual funds and ETFs we use have some of the lowest possible management fees in the industry, sometimes as low as .02% per year. 

Furthermore, as I stated above, we won’t accept any compensation from fund companies, or anyone else for that matter.  Receiving compensation from anyone other than our clients would present a conflict of interest for us.   Others in our industry don’t seem to have the same concerns with this as we do, but we have no problem traveling this road by ourselves.  The fees you pay directly to Allegiant provide service, planning, and investment management, and there are no under-the-table revenue sources that are paid to Allegiant from any other source.  

In summary, we access professionally-managed portfolios at extremely low costs to you, and we apply that security selection process to each and every customized portfolio.  As a result, those savings increase your portfolio returns dollar for dollar.  Investing in this manner is one of the strongest positive attributes of the portfolios we put together and manage for you, leveraging the chances of achieving your goals. 

Yellow Bar Divider


Your success is our success, and helping you achieve your goals is our core mission.  We have grown by serving this vision since day one, and our growth is 100% fueled by the introductions you and other satisfied clients have made to us.  Friends, co-workers, family - you’ve brought them all to us and we can never thank you enough.  You honor us with each new client you bring our way.   

If this letter or anything else brings up any issue or questions you may have, please feel free to reach out to me directly.  My email is This email address is being protected from spambots. You need JavaScript enabled to view it., and the office phone number is (941) 365-3745.  I look forward to speaking to each of you.

Best wishes,

Martin J. Kossoff, CFP®, AIF®
Chairman, Principal
Allegiant Private Advisors
240 S. Pineapple Ave, Suite 200
Sarasota, FL 34236
(941) 365-3745
(800) 926-5237
(941) 953-7430 (fax)
Allegiantpa.com

Advisory Services offered through Commonwealth Financial Network, a Registered Investment Adviser

Trade orders, wires, and check requests cannot be accepted via the email system. Please call our office at (941) 365-3745 for assistance.