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11/10 Austin Private Wealth Company Night

We had our final company night of the semester this past Thursday with Austin Private Wealth, and we were happy to host the company and two of our organization's former presidents as they talked about where they were in their careers and expanded on our monthly topic of bonds. Read on for a full recap!



Speakers’ and Company Backgrounds

  • APW was started in 2010 by Dan

    • 7 advisors

    • $800 million of assets under management

    • 19 total employees

  • Dan moved to Austin in 2004

    • He used to work for American Express

    • Previously was a trader

  • APW focuses on comprehensive financial planning - not just micro decisions regarding one aspect of personal finance

  • APW used to have 1 support person for 1 advisor but they have now transitioned to having a team support 1 advisor

    • Hayley is working on one of those teams while currently studying for her CFP - takes the exam in March 2023

  • Reagan works on the Implementation side of the firm

    • Implementation team is involved with firm administration - ex. client billing, account setup & management

    • Recently passed his Series 65 exam - will allow him to get more involved with actual financial planning

  • APW is a fee only fiduciary

    • In contrast to fiduciary, the Best Interest standard is primarily used by banks like Merrill Lynch & UBS

    • Fee Based Planner - tries to present themselves as a fiduciary but is not quite a fiduciary

Licenses and Certifications

  • Series 7 - required to be able to sell securities

  • Series 65 - required to be able to do fee only financial planning

    • Typically takes 60-120 hours to study for

  • Blue sky law - how federal financial principles and regulations vary by state

    • Main part of the studying involved for the Series 65

Types of Bonds

  • Bond - like a loan that is not from a bank

  • The type of bond is dependent on who is selling the bond

    • Ex. Municipal bond, government bond, corporate bond

  • Any bond rating BBB and above is investment grade

    • Any bond below this is junk/high yield

  • Only about 5% of all bonds are floating rate bonds - interest rate changes

Bond Investing

  • Many times when foreign countries will trade amongst themselves, they will demand payment/trade in dollars - ends up creating demand for US government bonds

  • 2022 has been the worst year ever for US bonds because of the rapid pace of interest rate hikes

    • APW had clients convert their bonds to cash in April because they anticipated interest rates increasing and bond prices decreasing

    • Have now started buying more into bonds in September & October

  • Unlike stocks, there is only 1 real input/prediction to make when it comes to bonds - inflation

    • Stocks have many inputs, like profitability, growth rates, interest rates, etc.

  • Bonds are also different from stocks in that there is no requirement that a bond sell for the same price to different people/at 1 point in time

    • Dealers tend to offer better deals for people buying in bulk

  • APW does not believe in buying individual bonds because of this variable pricing and lack of comprehensive knowledge about individual bonds

    • APW will contract other bond funds or active fund managers to buy/sell bonds - these people do their own due diligence and do not have to rely on the research put out by bond rating agencies

  • Benefit of bond funds over individual bonds is diversification

    • Only reason to prefer individual bonds over bond funds is if you happen to have done a lot of research about the bond issuer to know your risk


 
 
 

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