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How do you break into the world of high-net-worth financial advising? What’s the secret to crafting portfolios that rival institutional-level sophistication without a $100M price tag? And how do alternative investments like private equity, litigation finance, and even professional sports ownership reshape modern wealth strategies?
In this episode of The Focused Advisor Podcast, Ryan Ross sits down with Patrick Kennedy, founding partner of AllSource Investment Management, to discuss his journey from Morgan Stanley’s alternative investment desk to running a boutique firm that helps families with $5M+ in assets navigate complex wealth landscapes.
They tackle the challenges and strategies of going independent, the intricacies of private market investing, and why tools like Wealthbox and Zephyr are game-changers for modern advisors. Plus, hear Patrick’s insights on leveraging AI in financial planning, managing client relationships across the U.S., and building partnerships with CPAs and estate attorneys to deliver an elite client experience.
For advisors aiming to carve a niche in the competitive world of wealth management, or those simply curious about how high-net-worth individuals truly invest, this episode offers invaluable takeaways. Tune in and get inspired to level up your practice!
Episode Links:
Chapters
Chapters
00:00 Introduction to Patrick Kennedy and His Journey
02:54 Transitioning to Independence in Financial Advisory
05:57 Understanding Alternative Investments
09:04 Accessing Institutional Investment Opportunities
12:14 Exploring Different Types of Alternative Investments
14:55 The Rise of Litigation Finance
18:13 Investing in Infrastructure and Its Benefits
21:04 The Business of Pro Sports Investments
23:55 Private Equity’s Role in NFL Expansion
26:55 The Accessibility of Pro Sports Investments
28:01 The Value of Sports Investments
29:30 Real Estate Market Insights
32:17 Breaking into Wealth Management
35:41 Building Strategic Partnerships
39:17 Client Management and Communication
41:48 Operational Tools for Advisors
44:06 Conferences and Networking
45:30 Recommended Reading for Investors
49:27 Embracing AI in Business
Transcript from ChatGPT (h2)
Welcome to the Focus Advisor Podcast, your go to source for insights and inspiration on how to build your independent financial advisory business. In this show, you’ll learn about success strategies, tools, and tactics to help you build your independent financial advisory practice into an enduring business.
Join me, Ryan Ross, as I interview advisors and thought leaders across the industry.
[00:00:26] Ryan Ross: Pat Kennedy, welcome to the show.
Tell me about Yourself, your business, how you got into the business and being a financial advisor.
[00:00:34] Patrick Kennedy: Yeah. Thanks so much for having me on Ryan. So I am founding partner of all source investment management, myself and my partner, Justin Bernier. We built our practice back at Morgan Stanley before going independent about four years ago.
We are both alternative investment directors at Morgan Stanley, which means we specialize in basically private market investments, things like private equity, private credit, hedge funds, that sort of deal. Back then our typical client was either a high net worth family or an institution. So think a charity or an endowment, that type of thing.
We went independent four years ago. We came over to a group called Integrated Advisors Network. It’s been a great move for us thus far. Our typical client now is just high net worth families. We’re dabbling back into the institutional realm, but because of non competes and things like that we kept all of the high net worth families when we came over and we left the institutional business.
So that’s a little history about us. As far as my personal life, happy father of two boys. I have a one year old and a five year old at home. So I got my hands full there. My beautiful wife, Leah. Devout Patriots fan. It’s been tough these past few years, but still,
[00:01:46] Ryan Ross: you had a good run.
[00:01:49] Patrick Kennedy: I was at the game this weekend though.
And it was it was a nice finish. So
[00:01:53] Ryan Ross: that’s cool. I, Tom Brady’s doing a lot more stuff, even off the field. I’m curious about, so you said you went independent in 2020. I’m curious, like what was that or what period of 2020 did you start? You’re like transitioned going independent.
[00:02:09] Patrick Kennedy: Yeah, that’s a great question.
So it was official start date of January 8th, 2021. But we did a lot of prep before that. So thinking of. Founding a product or founding a firm, I should say outside of Morgan. And there was a lot that went into that particular around the alternatives piece, right? So the alternatives business in general, it’s sticky business when you’re working with banks, meaning it’s very tough to move those assets from Institution to institution, when you have a long only stock portfolio or bond portfolio, it’s very easy to transition those assets wherever you want, really, right?
Any place that will accept stocks and bonds and regulators are okay with, you can shift those assets with a click of a button nowadays. With the alternative investments, because most of them are illiquid and not cued at the actual custodian, but linked to that custodian, meaning the reporting is handed down to the Morgan Stanleys of the world, the fidelity of the world, and then they report on it rather than them actually custodying it at their firm.
It’s a little harder to move those assets. So one, we needed to find a firm that was comfortable basically housing the assets that we had, which is roughly 50 percent of our book. And two compliance is a big thing, right? We wanted to make sure that whatever firm we went to had a very strong compliance infrastructure in place that could not only help us vet out these offerings that we’re bringing on the platform, but to the day to day for us.
[00:03:33] Ryan Ross: So a lot of the times you have advisors that might do only financial planning But then sometimes they also work in capital markets, right? Yeah Often when you come from a wire house because wire houses are attached to banks who are working in capital markets, they have much more proficiency doing that.
It sounds like something that’s what you guys really focus on the alternative space. Is that right?
[00:03:58] Patrick Kennedy: Correct. Yeah. We’re very heavy into investments. We do financial planning as well. But our typical client is a qualified purchaser. So 5 million in assets and above the financial planning is very different than running some software and doing some income modeling and say, Hey, you can retire, right?
It’s more so about doing the blocking and tackling around taxes, blocking and tackling around risk management, blocking and tackling around trust in the state planning, right? And then working with all the professionals in their life to make sure that what’s what needs to get done gets done. And then on the investment side is even more critical than like a, a retail portfolio simply because when you have a retail portfolio, someone sub a million dollars, it’s pretty easy to say, look, based on your age, here’s how much market exposure you need at any given time.
Here’s how much we need to grow the money for you to retire accordingly. When it comes to a greater pools of money the buckets are more complex than that, right? Hey, this bucket is for estate planning and the kids. This bucket may be for the purchase of a business, right? So there’s a lot more things that go on even at the investment level.
Nevermind the financial planning level. What have I was doing research into. for preparing for this. And one of the things it said you help individuals invest like institutions. Can you unpack that a little back? What does that mean and how did you come to that as a service offering?
Yeah, no, that’s a great question. When we’re at Morgan a lot of the funds we work with were top decile funds that have been closed for decades, right? Funds like Elliott, Millennium again, top decile managers out there that are very hard to get into that typically have high minimums, right? So when they were open, Elliott, for example, if you were to knock on the front door, the minimums range from any 5, 000 Anywhere from five to 10 million.
Okay. Just for that one fund. So if you’re getting that through a Morgan Stanley, where they’re going direct to the fund, that’s a 5 million minimum. You have to put up for one position. Which means if you want that to be a 5 percent allocation or less, which we think is a good risk management tool, five to maybe max 7%, it puts you around a hundred million dollar portfolio size to get access to that fund and do so in a risk efficient way, meet their minimum, so on and so forth.
And that’s assuming that they’re open and they have capacity. Over on the independent channel, we have access to Elliot at a hundred thousand dollars minimum. So
[00:06:22] Ryan Ross: you can. So
[00:06:26] Patrick Kennedy: what we can build a portfolio for someone with 5 million. It looks like a portfolio that you can’t get until you hit a hundred million at a Morgan Stanley, a Goldman Sachs or a Merrill Lynch.
[00:06:40] Ryan Ross: I see. So you’re just, you’re providing, I think nowadays having that access to these sort of investments, right? When you want to go beyond just the pure stocks and bonds, right? When you want to get more creative with the investments that you’re making, being able to do that is is a pretty big differentiator.
[00:06:58] Patrick Kennedy: A hundred percent. And it’s all about the managers, right? So in alternative investments, okay, when you look at the top quartile versus the bottom quartile, there’s a huge gap there. Like bottom quartile, private equity managers compared to top quartile, private equity managers, it’s more than 10 percentage points on average per annum, Annual return difference, 10%. When you look at public equities or global equities, It’s 3 to 5%. And that’s being generous. so there’s a lot more inefficiencies with manager selection within the alternative investment universe. And if you’re doing all it’s critical that you get access to the top quartile managers if you want to provide a good experience, I’ll say for investors.
[00:07:41] Ryan Ross: Do you want to talk about the types of alternative investment out there? And I know that a Tony Robbins book was very, it was fun to read just because there’s so many things I hadn’t thought about pro sports teams or different energy investments like we said, aside from the equities and bonds, but I’m curious just about your business, right?
Like. How did you guys, I know you guys went from Morgan Stanley, but how are you developing your business? How have you done that over the last four years to make sure that you’re stable?
[00:08:08] Patrick Kennedy: Yeah. So the, I think the first question was the alternatives we look at. So a phenomenal book, it’s called the Holy Grail of investing.
For those of you that are listening to the podcast that are wondering what the book is actually got the chance to meet Tony Robbins a couple of weeks ago at a CAS summit. CAS is a partner of ours, which he is also a partner in that firm. So great hearing him speak, great being able to meet with him. And yes, he is as big as he looks in the video.
It’s a huge, Big guy, big torso should have been a football player. But anyway the book is really good because it unpacks a lot of those institutional asset classes in the first 12 chapters or so. And then the back half of the book, they’re interviewing top decile managers from Those chapters, which a lot of those we invest with.
So things like private credit we’re very big into private credit. It’s just privately held debt. So when you think of a publicly held bond if you buy an Amazon bond, You’re basically putting up debt for Amazon for a certain interest rate over a certain amount of time, right? The same as within the private credit market, but it’s a privately held company that doesn’t have access to capital markets.
And because of that, the rates you can charge a little bit higher, the terms you can give her a little bit better. And typically the loans that we’re looking at least are backed by some sort of asset or equity. So that’s private credit. The counterpart in the public markets would be bonds.
Private equity is just a privately held company. So you’re purchasing a privately held company. That’s not publicly listed. The story around, private equity investing is pretty easy, right? So if you go back to the era of the. com bubble to go public. You needed a market cap around a hundred million dollars.
I won’t say a low barrier to entry, but lower compared to today, at least where the average market cap is over a billion, right? So from zero to a billion, there’s a tremendous amount of growth that happens. And usually at the quickest rate, Of the company’s life cycle is that first zero to a billion as far as a growth rate goes That’s what you’re tapping into within private equity your typical private equity fund They’ll vet out call it two to three thousand companies.
They’ll pick 10 to 15. They want to invest in so there’s a tremendous amount of diligence that goes into private equity. Now, when you look at private equities, public counterpart, it would be stocks. Okay, so it’d be publicly traded companies. When I’ll back up and look at both private credit and private equity compared to their public counterparts.
So The index for private equity is the Cambridge private equity index. That is a 35 year history. When you look at the average return of that index, it’s been close to 14 and a half percent per annum. During that same timeframe, the S and P has done about 9%. So it’s outperformed the S and P on an annual basis by roughly 50%.
With roughly two thirds, the volatility of the S and P. So higher return, lower risk. Again, to use Tony’s term, that’s the holy grail of investing. That’s what we look for. And just stayed on one more point when it comes to things you can check out as far as benchmarks, Cliffwater direct lending index is the private credit index that we typically look at and we’ll benchmark our managers to that goes back to Oh five.
That’s also outperformed the S and P not by as much as the private equity index has, but it’s done. So with a 3 percent standard deviation versus a 16 percent standard deviation. And all I’m saying is it’s given you equity like returns with roughly 20 percent of the risk or volatility. So it’s a really hard thing to do.
We invest in hedge funds, we invest in infrastructure. There’s a lot of tax plays that we invest in. There’s some niche here. Strategies like litigation finance. We have four X that we invest in. So we have a huge breadth of investments that we look at within our toolkit, right? But typically they fall somewhere within the private credit realm.
Private equity or hedge funds. Those are the three big ones.
[00:12:06] Ryan Ross: Yeah. I want to dive into one of those, which was litigation finance. What is that and how does it work?
[00:12:13] Patrick Kennedy: Yeah. Usually people hang on that. So litigation finance is a newer asset class. So essentially it’s a private credit investment.
And you’re providing a loan to a law firm. And that law firm is using that money to go out and fight a case. So essentially that law firm is backing that loan with sometimes equity from their law firm itself, sometimes a personal guarantee from the partners. And then the caseload itself.
So it’s a way for you to participate in litigation. Through a debt instrument. The good thing about that is it’s highly uncorrelated to markets. Even in recessions, people get sued, companies get sued, and that type of thing. Now. There is a, I won’t say an ESG aspect to it, but there’s a feel good or an impactful aspect to it.
And that’s when you’re going after some of these mass tort cases where people have really been impacted. Camp Lejeune comes to mind, Roundup comes to mind hernia mesh comes to mind, right? You’re really helping those people at the end of the day by financing their attorney. So they don’t have to cut a check out of pocket up front for the attorney.
Yeah, you are feeling, yeah, exactly. And you’re getting an uncorrelated return, which we’re all about. Interesting. Infrastructure, you guys are investing in infrastructure as well.
We are. We are. Yup. So we invest directly in the infrastructure rather than the companies that own them. So think airports think green, right?
So solar windmills, things of that nature, railroads. And that tends to be a pretty steady investment. So there’s typically a yield that’s generated from that or revenue that’s generated from that booth. Maybe. Correct. Yeah. That’s a great, that’s a great example.
[00:13:55] Ryan Ross: More found in like
[00:13:56] Patrick Kennedy: UND’s, but that’s a great example.
There are also,
[00:13:58] Ryan Ross: I remember, there were at least, I haven’t heard of them in a long time, but when I was at Barron’s, I remember there was a big chat about MLPs, Master Limited Partnerships. It was like, they used to be buying a pipeline and buying the dividend from the pipeline. Is that still around? It’s
[00:14:16] Patrick Kennedy: still around.
It’s still around. It’s more so a public market investment. Now that’s the way we view it at least because of the volatility associated with it, there’s high dividends in that space and whatnot. We’d prefer going to the private credit markets to achieve yields like that though, because within the MLP we’ll say universe within the public markets, you’re typically looking at yields like seven to 10%, But for that seven to 10%, you’re taking on a ton of volatility. The whole purpose of those MLPs was, Hey, we’re going to not be correlated to the oil markets in any way. We’re just going to clip a coupon for letting the oil markets use our pipelines or natural gas or whatever it may be. It turns out that they are very correlated to the oil markets, natural gas markets, so on and so forth, simply because that’s the trader’s perspective.
And if that’s the perspective of the traders, that’s how the asset class is going to move. So we prefer to get those yields and private credit where we don’t have to take on public market volatility.
[00:15:15] Ryan Ross: Got it. I want to read me direct back to what your what does your team look like now? What’s your I think you said you have you and a partner and also how do you guys develop your business in general?
[00:15:26] Patrick Kennedy: Yeah. So it’s myself and Justin Bernier and then Katie’s aim is our office manager. We run like a tight book, right? We like to think of ourselves as having a quality book over quantity, right? So we have roughly, 40 to 50 families that we’re managing money for all of them, high net worth families with different needs.
And then as far as how we’re going out and getting business, because we’re targeting that, call it five to 25 million space. It’s not like you can cold call those clients or market to them. So it’s all word of mouth. It’s centers of influence. So accountants we work with attorneys we work with that know we do a good job and then our clients rewarding us with a referral.
[00:16:07] Ryan Ross: That makes a lot of sense. You do good work for one person. They say, they’re going to be knowing those people anyways, right? And they’re probably more likely to have those conversation organically than you could engineer yourself,
[00:16:18] Patrick Kennedy: you nailed it. You nailed it.
[00:16:20] Ryan Ross: So let’s talk about the, so you did it.
Okay. I want to go back to the alternative investment because I think this is really cool. Yeah. Pro sports is so interesting to me because traditionally, at least in football, right? I’ve become a big football fan. Unfortunately I don’t follow the Patriots. I’m much more of a lion’s guy.
Turnaround story. I love it. They have a great story right now, right? But on the investing side, there’s been, up until recently, I guess you could say there’s been like a really finite amount of ways to be a, to get involved in pro sport or football, for example, right? Basketball there too.
You can own a team outright. Yeah. That’s about it. You nailed it. Yeah. But now it’s Oh, private equity is coming into the play. When did that start? And how does that work?
[00:17:11] Patrick Kennedy: So in the NFL, this is brand new, right? And we are so excited about it because it’s something that’s been in the works for a long time.
We’ve had access to sports investments in general since we went independent. And the reason why we like sports, it’s not because it’s just some vanity investment, right? When you hear about, Oh, hey, I can buy a piece of the NBA Charlotte Hornets, for example, or something like that a lot of people think, Oh, it’s just a vanity investment.
It’s so you can say, Hey, I own a piece of a basketball team or whatever it may be. But when you look at the NFL, Those each team, to us is an extremely efficiently run business. the commission think of that as like the NFL’s regulator, if you will. They put limits on how much leverage every team can use.
It’s only like 15%. They put they put mandatory profit margins on each team. So each team has a mandatory profit margin on how much money they’re going to make. And then every single year. The league kicks out a huge payment to each of the teams based on media rights and things of that nature.
Last year it was over 400 million per team. So the numbers make a ton of sense when you look at it as a business case. If you take away the sports aspect of it to it, just look at, Hey, this is a business balance sheet, cashflow, that sort of thing. They are very strong businesses.
And ones that you want to participate in just based on the numbers. But then when you add in. And they own a day of the week. The NFL is practically a religion in this country. And you can talk
[00:18:45] Ryan Ross: about it.
[00:18:47] Patrick Kennedy: Exactly. Exactly. We’re listening to the CEO of Arctos speak at the same event that I met Tony Robbins at.
And he goes, the word fan comes from fanatic. And it’s because these people have such a belief in their teams that’s one thing they’re always going to hold on to. Now, when you look at like media rights in general a lot of people talk about, Oh cables going away.
And I agree with that cables going away. Streaming services are coming on. That’s actually a very good thing for the NFL reason why is those streaming services have huge balance sheets, and they’re now billing up or shooting up those media rights as far as the valuation. Simply because they’re all bidding on it.
So when you look at Amazon, for example, they have Thursday night, Netflix is looking to get into this space. Disney already in the space with ESPN. Actually there was a study done where it showed the top 100 top most viewed 100 TV series of last year I’ll say show times of last year, 97 of the hundred slots that were most viewed on cable for the NFL.
Oh, NFL, not even sports. FL not even sports. The NFL. Yeah. So that shows you how powerful it is from meteorites standpoint, and it shows that. The people that kept cable kept it for sports, right? That’s one thing that people are always going to watch. Even if cable goes away and that sort of thing, there’s always going to be a spot for sports because of how people feel about it.
[00:20:10] Ryan Ross: And it’s interesting because Football. Not that many games. 18 games 18 games per team, but still 18 games, right? Yeah. Basketball’s got 80 games. I don’t know how many baseball does. Hockey’s got a crazy amount of games. Especially for the physicality of the sport. Yeah. The the amount of.
Games per season is so small. Maybe that’s a great thing because it’s like you only got 18 tries, right? It’s a supply and demand thing.
[00:20:39] Patrick Kennedy: There’s pent up demand for it. No, I think you nailed it right. Yeah, there’s pent up demand for it, right? It only comes on once out of the year and people are all over it when it does.
[00:20:48] Ryan Ross: So how did private equity get involved or how did there become an opportunity to do that?
[00:20:53] Patrick Kennedy: So the reason why the league is interested in private equity, one, they have very tight leverage limits on their teams and they don’t want to raise them. what that means is there could be a ton of growth opportunities out there.
for the NFL, it’s expanding internationally, right? There’s more games happening in London now and that sort of thing. Brazil, right? There’s a huge international market that they’re starting to tap into. And that requires funds, right? And if each team has a limit on leverage, they can’t go out and borrow to go after those opportunities.
They have to use cashflow. So they’re limited by that private equity comes in and solves that problem in a big way. think growth and expansion, things like that. Another big reason why the league wants private equity to come in is expansion or not expansion capital. Excuse me. It’s trust in the state plan.
So trust and estate planning when an owner passes away. Okay. And all of a sudden five of that person’s kids inherits the team. Some of them are going to want liquidity. Okay. And there may be business continuity plans in place to say, look, we just want to pay off all the kids and a new owner. To come in private equity money solves that.
So trust in a state planning and last but not least keep up with stadiums and things like that.
[00:22:04] Ryan Ross: That makes a lot of sense because they’re making advancements all the time that and at the end of the day, these insurance companies need somewhere to advertise. Yeah, exactly.
[00:22:14] Patrick Kennedy: Exactly. So if you are to your point, if you’re advertising you want to do it in the most viewed a thing possible, and to us The NFL is it right? The that stat speaks to it. 100 of the most viewed TV programs last year, 97 of them were NFL games. So if I’m an advertiser and I want to target, 18 to 50 as far as ages go, that’s where I’m going.
I’m going to the NFL.
[00:22:38] Ryan Ross: That’s interesting. Let’s talk. Okay. So this private equity is available. Does it mean you can only purchase one team? Because if you’re an owner, you can only purchase one team at a time, right? Mark Cuban, he’s not going to be the owner of three basketball teams, right?
[00:22:56] Patrick Kennedy: No there’s limits on how much you can purchase of each team, right?
I believe it’s only a 30 percent stake for each of the four partners they’ve chosen and then 10 percent per team, something like that. Don’t quote me on that, but there are limits on how much they can own, right? So how much they can own of each team and then how much each team can sell in total. So I believe each team can only sell up to 30%.
And then each private equity player can only buy up to 10%. So those are the rules in play right now, to my understanding, those could change, right? This is all very early and they’re still getting into this, but that’s what’s been put out there right now, as far as the proposal goes.
[00:23:33] Ryan Ross: Okay. Let’s talk about some other alternative investments from this book, right?
It’s a great book. Yeah. Tony Robbins book. Yeah. Yeah. He talks about.
[00:23:41] Patrick Kennedy: It’s a lot about what we do, which is why I love it. I give that book to all our newer clients. Not because I’m a, I am a big Tony Robbins fan, but it’s not that reason, right? It’s because that book hits on everything that we do.
And I haven’t found a book that’s done that as well as that book has yet.
[00:23:55] Ryan Ross: Yeah, he talks about a lot of different alternative assets. That’s GP stakes pro sports ownership Which we just talked about private credit energy venture capital real estate and secondaries And I’m curious from your perspective, which one of these is the like the least well known
[00:24:14] Patrick Kennedy: I would say pro sports I would say for sports because a lot of folks believe that To your point that, Hey, the only people that can buy into pro sports are billionaires, right?
Billionaires are multi billionaires that can go out and buy a team. The NFL brand new, right? So a lot of people don’t realize that, Hey, it’s actually accessible to high net worth people, right? You have to be a qualified purchaser for the vehicles that I’ve seen at least that it means you have to have 5 million assets or more.
But it’s available now. Okay. So I think a lot of people have a misconception that, Hey, it’s just for the ultra high net worth. And then the folks that do know about it typically think, Oh, it’s just a vanity investment. Why would I want to own it? They haven’t really taken a look at the numbers.
And if you just look at the returns so that the top four sports leagues, the NFL baseball, hockey and basketball. They’ve done an 18 percent Kager going back to, I think, 2000. So it’s been tremendous, right? It’s blown the SMP out of the water.
[00:25:14] Ryan Ross: Also, I guess it’s because it’s maybe you just said this too new, right?
It’s so new that people don’t even realize this is something you can actually take a part in, right? And there’s new sports coming along like pickleball just seemed to happen upon everybody and now you know franchise you mentioned earlier in an interview that for a real estate as an asset class When combined with a, the stated potential for the fed to lower interest rates in the next few months.
And they’ve started that a little bit that combined with the, this culture of returning to office, which obviously affected commercial real estate, but Amazon’s making everybody go back. People are wanting to be back in the office. Like Jen the, what’s it? Gen Z, the ones that’s lower than me younger than me.
They’re like, we want to be back in the office. Yeah. That will probably have a an effect on real estate prices. What do you have any anticipation of what will happen in real estate?
[00:26:13] Patrick Kennedy: Yeah. So just to be clear, we’re still very cautious when it comes to office in general, but mostly older office buildings, right?
We think newer office is going to be fine because it’s built for today’s workplace. course. But when you look at some of the buildings that you know, some of the insurance companies around here used to use some of the we’ll call legacy office buildings. They’re gonna have a tough road ahead, we think, because they’re not built for this new age workforce that we have right with flex workspace and things that you need, that sort of deal.
Now, remote work is here to stay. So we’re just not co when you look at o look very attractive as f depreciated. Some of them on the dollar compared to with us, we need to see a in order for us to take A clear path, a crystal clear path, at least for office as a whole. There are certain pieces that we like within office but office as a whole, we’re backing away from now logistics.
We like a lot. logistics because of last
[00:27:16] Ryan Ross: mile delivery, things like
[00:27:18] Patrick Kennedy: that, you nailed it. Yeah. So let last mile delivery logistic centers, we don’t think they’re going anywhere. Amazon is, runs the world today when it comes to two day delivery and that sort of thing. Those are mission critical centers for any business.
And typically they can’t get rid of them. So if they’re looking at the balance sheet in a downturn and saying, Hey, we have to cut fast somewhere that is not where they would cut for a second or third. So it’s pretty resilient when it comes to the income that those buildings generate. And because of that, the appreciation of the asset itself goes up over time as that income goes up.
So that’s what we like the most within real estate is typically logistics centers followed by multifamily. We still like multifamily a lot. Multifamily did have a bit of a downturn when it came to interest rates going up and some funds being over levered, right? But we really think it’s a manager specific problem and a leverage problem, as opposed to an asset class problem, the way you’re seeing with an office.
[00:28:16] Ryan Ross: I want to go back to how you guys operate your business, but think about this from the perspective of an advisor that they need to figure out what their niches, right? You guys, niches, ultra high net worth individuals. And if they’re trying to figure out, how do I break into that? Because it might seem pretty daunting.
Maybe it’s not, but how would you recommend they start to go through the path of servicing that target market?
[00:28:41] Patrick Kennedy: Yeah. I can tell you this daunting, right? It’s a very tough field to break into wealth management as a whole has a 90 percent failure rate the first year, as I’m sure Ryan.
And then when you look at ultra high net worth, it’s even higher than that. And the reason why is Everyone out there is going to not trust just anyone to manage their money. And then folks that have worked extremely hard to sell a business or a long executive career, that trust level goes down even further.
So it’s very tough to break into. What I would say is really develop yourself first, right? So focus on developing yourself and honing your skills and finding a niche. that you could provide in knowing what that service model looks like for the ultra high net worth, right? Because the problems that someone has with 15 or 20 million are very different than the problems of someone with a sub a million dollar portfolio that’s just saving for retirement.
Taxes become extremely critical. Trust and estate planning, extremely critical, right? Risk management, extremely critical. And I’m not just saying, oh, we should, put X amount in bonds because of your age and that sort of thing. There is there’s a different service model, and there’s a different look and feel to that service model that high net worth people are accustomed to, okay?
So one, learn the service model. Two, develop yourself, hone your skills, and three, find a niche. That’s the advice that I would give anyone looking to break into the high net worth realm of advising.
[00:30:04] Ryan Ross: Yeah, would you say that being able to I think talk the talk is the wrong word But like being able to explore what these non traditional assets are and under you know say like I’m thinking like maybe you worked at a Maybe you worked at a sports team and you understand the the economics of that, right?
Being able to advise on this would work really well. Or maybe you’re an agent and you want to be an advisor that way, right? Maybe you could break in that way.
[00:30:33] Patrick Kennedy: I think studying up, right? Reading a lot, interviewing a lot of people, right? When I say interviewing, I mean talking to the managers.
So if you do work at a Morgan Stanley or Goldman or Merrill and you’re working with I won’t say, you’re a typical person, but you’re not a high net worth of advisor. You’re running more of a general wealth management practice and you want to break into the high net worth realm. Start meeting with some of the managers.
that the high net worth folks are meeting with, right? So meet with the hedge fund managers out there, meet with private equity managers out there, find out what they’re doing different and why the high net worth person is using them within the portfolio, right? One, I would interview high net worth people, right?
I’d go out, or high net worth advisors. I’d go out and say, look maybe not like a mentor mentee relationship, but just a quick touch point to say, hey, how are you running your practice? What are you doing differently? And then something you have to be willing to do when you do make the move over into the high net worth realm is raise your minimums, right?
You’ve got to raise up your minimums. We have a firm million dollar minimum now that we won’t go below, right? And that’s really helped us build the practice. We, the way we need to build the practice. It’s a tough thing to do because you do have to turn away business. right? You’re turning away business because you’re structuring the practice in such a way that’s conducive to growth down the road and the way you want that growth.
But that’s something that’s a must do now. A sacrifice you need to make now for future growth. If you want to get into the realm of high net worth. It’s a really important thing, I think, right? Making sure that you don’t break your own rules in terms of who you service. Because once you focus in on that niche, you can’t be wishy washy on the Gotta put up one of those barriers at the bowling alley.
[00:32:18] Ryan Ross: You got to make sure that you’re not, your ball will always go in the in the gutter or it might, if you don’t have the barriers up and it makes it so much easier to just focus on who exactly you service, what their needs are, because like you said, they’re going to have different needs, they’re going to have more complex issues and also if you’ve only been servicing Individuals that are 500 K 750 and then you land a 10 million account.
Those other, that might take up so much time.
[00:32:49] Patrick Kennedy: Yeah,
[00:32:49] Ryan Ross: just because you’re learning new things. Yeah oh, you’re spending so much time with that client that your other clients who still definitely need you, they’re gonna, they might fall by the wayside. And you don’t want that to happen. Because you’re servicing one client, right?
And then your concentration is way off kilter. So you got to really focus in on who exactly you serve.
[00:33:11] Patrick Kennedy: That’s a great point. And I think You bring up one piece of advice that I left off, right? So most younger advisors, when they hear the word partnering, it puts a bad taste in their mouth, right?
They’re like, I don’t want to partner. I don’t want to go away revenue. This person’s trying to take my business, that sort of thing. And some of the times that’s true. You don’t want to give away revenue for something you could do yourself or something that’s offered by the firm for free, right? But when it comes to breaking into the high net worth realm, right?
To my earlier point, there is a certain look and feel with that service model. And if those clients have sat down with other high net worth advisors and have been high net worth people for some time and are used to that service model. They’re going to know what to look for. Okay. They’re absolutely going to know what to look for and they’re going to know whether or not they see it.
And if you’re brand new to that realm, I would consider partnering with another advisor that has a lot of those relationships and knows how to handle them and use it as a learning experience for the first few. And then when you’re confident enough, then go out on your own, right? Because I’ll tell you what, if you sit down with, if you’re, managing accounts that are, I’m just making up a number, a hundred thousand or 500, 000, and you sit down with a 10 million client, and you’ve never done that before. Chances are they’re going to throw a few curve balls at you that you’ve never seen or heard of, right? That the guy that runs 10 million accounts. All day. The way we do, you’ve heard it time and time again. So that’s just one thing to consider if you are trying to break into this field.
[00:34:36] Ryan Ross: Yeah. It’s like Brewster’s millions. Remember this movie? This guy’s I got to spend 30 million in a month. How do I do this? Whereas like Bill Gates, you’d be like, all right, what’s, what else we got to do today?
[00:34:53] Patrick Kennedy: So
[00:34:54] Ryan Ross: I’m curious, you said that you you have a lot of, you get referrals through clients and you also have partnerships with CPAs. And probably other estate planning attorneys. What have you, what are your best referral partners and how do you guys work with them to make sure that you service clients well and you’re playing on the same team?
[00:35:11] Patrick Kennedy: Yeah. Great question. So we make sure that the referral partners that we’re using, our strategic partners are playing in the same realm as we are. So the accountants we use, They’re dealing with the same sorts of clients we work with, right? So they’re working in that 5 to 25 space, no problem.
Same with the attorneys, right? The attorneys that we use are very comfortable with those types of clients, right? So we have a very similar type of client that we’re looking at. And their service models support. that sort of relationship. So that’s one right? Find people that are playing in the same field as you, the same arena.
Two is to make sure you trust them, right? So when I’m sending over a referral or reference to the accountants we work with or the attorneys I work with, I am extremely confident that they’re going to do a good job, right? Why? Because they’ve done a great job for not only me, I use a lot of them myself, but other clients that we’ve referred over to them, right?
So I’m confident that they’re going to do okay. And, When we make a referral with us, it’s very important that our clients are taken care of. The last thing we want is to send our clients somewhere and then turn around and say, you know what, that wasn’t a great experience, right? It reflects poorly on us.
And we want them asking us, Hey, who should I talk to for this? We want to be in that conversation when the time comes. So hopefully that gives you some flavor on how we pick our strategic partners and how we work with them.
[00:36:34] Ryan Ross: Yeah. And. I know you said you probably work with about 50 families.
Are those concentrated in the Northeast or are they dispersed out across the country or where are your clients based usually?
[00:36:47] Patrick Kennedy: I’d say 50 percent in the Northeast and then 50 percent scattered throughout the country.
[00:36:52] Ryan Ross: Yeah. Is that just because they’ve, they’ve moved wherever or?
[00:36:57] Patrick Kennedy: Yeah so a bit of both, I should say.
So some have moved down to Florida for retirement, that sort of deal. But then some have been, across the country and refer it to us through a colleague or something like that.
[00:37:09] Ryan Ross: Yeah. That makes a lot of sense. Do they prefer, or do you find yourself. doing more in person meetings or are they fine with virtual or is it a mix as well?
They’re fine with virtual.
[00:37:21] Patrick Kennedy: Most of the clients we work with are fine with virtual. It’s today’s world, right? We have some clients, select few that prefer in person and we’re fine with that too.
[00:37:30] Ryan Ross: Got it. Final few questions, cause I know we’re running up to the hour. I’ve, I have a question just like operationally.
What are some tools that you use that you really like using on a day to day basis? And that can be from just portfolio management tools or day to day office tools, anything that jumps out. So
[00:37:50] Patrick Kennedy: something that my office manager talked me into using recently was wealth box, which is like a CRM tool.
And at first I was iffy on it because I thought it was creating more work than it was solving, right? But it has really expedited things as far as the processes go in our office. So that’s what I love, right? I can assign a task. She can assign a task to me. We can keep track of client meetings, communications, all of that in one spot.
So that’s been very helpful and something that I would recommend out. We use a lot of tools that advisors don’t typically use alts, right? So one of those would be Zephyr. So Zephyr is a. Portfolio management tool. Which essentially can dissect a portfolio a bunch of different ways. And it’s specific to I shouldn’t say specific to, but it can handle institutional level investments, alternative investments quite well.
And it will basically tell you, if you give it a bunch of inputs, as far as here’s 10 funds that I like, private equity funds, hedge funds, private credit. I’m looking for this amount of income. I’m looking for this amount of growth. Here’s the tax buckets and whatnot. It will put together the efficient frontier.
And that’s really how we build out portfolios, right? It says, okay, for the amount of return that you want here’s the risk level that you need to take out. And it will give you your marching order, so to speak. So that is a way that we find the best risk adjusted return. What we feel is the best risk adjusted return.
And would recommend it to people that are allocating that way. Zephyr is a phenomenal tool and one that we need to do our job. Cool. So wealth box and Zephyr, those are two tools. I haven’t heard of those. You usually I’m pretty up to date on this stuff, but that’s great. Yeah.
[00:39:36] Ryan Ross: Do you go to conferences a lot?
And if so, which ones do you prefer to go?
[00:39:40] Patrick Kennedy: So selective, right? Time is one thing you can’t get any more of. So we are always very busy. But there are certain managers that we make time for, because. There’s certain conferences where they’re just going to talk about their product and that sort of thing, and that’s fine, right?
They’re talking about their own funds, their own vision and whatnot, and then there’s other conferences where they’re talking about that Yeah, but then they’re talking a lot of about a lot of important things in the industry itself Okay I love those conferences because you can go and catch up not only on what they’re doing at that fund or that firm But what’s going on in the industry as far as trends and things of that nature.
I’d say we go to maybe, 10 to 15 a year. Okay, so about once a
[00:40:22] Ryan Ross: month, something like that.
[00:40:23] Patrick Kennedy: Yeah. Once a month, maybe twice a month sometimes, but that’s the case.
[00:40:26] Ryan Ross: What’s the conference that you’ve gone
[00:40:28] Patrick Kennedy: to recently? So we went to the CAS conference. CAS, yeah. Tony Robbins was the speaker there and whatnot.
We heard from a lot of really smart people. CEO of Arctos was there. We had CEO of quantum, quantum energy there which is huge energy funds. So that was really intriguing and interesting.
[00:40:49] Ryan Ross: Okay. I, this is going to be good. What books have you read that you would recommend people read if they’re interested in investments other than the Tony Robbins book?
Cause we give them that. Yeah,
[00:40:59] Patrick Kennedy: I have a lot. So what one book that one book I like a lot is it We hit on Tony Robbins book, right? But let me get my list out. Hold on one second. I have an audible list that I can kill for audio
[00:41:12] Ryan Ross: audible versus I
[00:41:14] Patrick Kennedy: do. I do. Yeah. Cause I spend a lot of time in the car parented to, I’m always like driving back and forth on the way to work and that sort of thing.
But there’s a few good books as far as, Business goes right. So how to invest by David Rubenstein is a great book. Options trading is just more a good book to, to catch up on options and that sort of thing. What else the art of selling to the affluent, if you’re trying to break into this space, another very good book artists is a Matt O’Shell.
Yeah. Yep. There’s a couple others that I like here. Random walk down wall street. I don’t know if if you heard of that or not, that’s a good one. The intelligent investor by Ben Grant, obviously. You
[00:41:58] Ryan Ross: have a lot of classics
[00:41:59] Patrick Kennedy: in there.
[00:42:00] Ryan Ross: I do.
[00:42:00] Patrick Kennedy: I do. But then, more recently like zero to one
[00:42:04] Ryan Ross: Peter Thiel
[00:42:05] Patrick Kennedy: awesome book.
Awesome book. Grit is a good book. If you’re just getting into business, the next five steps. And then my all time favorite is winning. And that is by got it. Michael Jordan’s coach. Yeah. Yeah. Yeah. One of my all time favorite books just in life in general. I love that. Yeah. Yeah.
[00:42:26] Ryan Ross: Wings always good. Have you read his other one?
Relentless?
[00:42:29] Patrick Kennedy: I have. Yeah. He gives such a different perspective on things. Like most of the self help books you read are like this feel good, pick me up type of book. He just doesn’t care. He doesn’t care. Now he goes all out. He says, look, you’re gonna have to sacrifice. You’re gonna have to this that one of the things I love about that book is he talks about winning.
He goes, if you, ask someone, what winning is. Most people say Oh, it’s happy. It’s joyful. It’s achievement, right? He goes, but if you ask like a Colby Bryant or Michael Jordan, it’s hard.
[00:43:03] Ryan Ross: Yeah.
[00:43:03] Patrick Kennedy: Dirty winning is everything, right? Yeah, exactly. So it’s just, it’s a different way to look at things,
[00:43:08] Ryan Ross: have you Heard of Ed, my let.
[00:43:11] Patrick Kennedy: Oh my God. Love Ed, my let. Yeah. He
[00:43:15] Ryan Ross: turned me on to Tim Grover. Yeah. I read his book. What the power? Wait, what was it? Oh, it just maxed out your life.
[00:43:21] Patrick Kennedy: Yeah. Max out. Yeah. Max out. It’s such a simple
[00:43:24] Ryan Ross: book, but like really powerful stuff. The thing that stuck with me the most from that was warm morning. No.
Cool. Cold morning. Warm evening.
[00:43:33] Patrick Kennedy: Yeah. Yeah. Yeah. Yeah. Love that. I’ve tried to do
[00:43:36] Ryan Ross: that.
[00:43:37] Patrick Kennedy: Yeah, he has some great YouTube videos and my let I’ll tell you, I’m really big into the self help guys
[00:43:44] Ryan Ross: coming up in December. You know what season December is right? Separation season, separation.
This is when everybody needs. This is where you separate the winners from the losers. Separation season. I love it. Is that an ad? My left? Is that? Yeah. I’ll send you the link. It’s so yeah. Yeah. I think about that all the time. Separation season, like weekend separation season. You got to be with your family as well, but separation season.
[00:44:08] Patrick Kennedy: Yeah. I love that. I love that. They’ve they’ve given me a lot of great tools when it comes to business and
[00:44:13] Ryan Ross: such. He’s so good. Oh here’s a preference question. AI in business. Actually not a preference question, but AI in business. How are you guys? Are you guys incorporating that into what you’re doing or how?
[00:44:24] Patrick Kennedy: A hundred percent. I really feel like if you’re not using it, you’re in trouble. You’re in trouble if you’re not using AI. I don’t think AI is going to replace all of us, right? I just think that there will be a clear delineation of the people that are embracing AI and using the tools effectively from the people that are not.
I really think it’s going to give you an edge. It’s going to make you more productive. I use it in my day to day life when I’m typing emails, presentations, that sort of thing, either through copilot or chat GPT, right? But it’s super, super effective. Now, like we don’t use it for everything, right?
But when it comes to typing out a simple thought process or something like that, very quick, right? So we’re absolutely using it. And then we’ve used some form of AI in investments for a long time, right? So Zephyr being one, right? So it’s giving you great analytics on, hey, this is what the best possible portfolio is based on these metrics.
Okay. AI models are no different, right? So we’ve used that for a long time. We’ve embraced process based investing for a long time. And we feel like it’s at the core of everything we do and it’s really our edge. So yeah we’re big into
[00:45:31] Ryan Ross: been scared away. I love it. Not at all.
[00:45:34] Patrick Kennedy: Not at all.
[00:45:35] Ryan Ross: Love it. One final question for you. How can people get in touch if they want to learn more about your company? How do they get in touch with you?
[00:45:41] Patrick Kennedy: Yeah. All source invest. com is our website. There’s a contact button there. Or you can reach out directly to me. I’m on LinkedIn. You can give me a call.
My number’s out there. My email’s out there. Okay. Wonderful. Pat Kennedy. This has been a pleasure, man. I’m glad we had a chance to talk.
Ryan, thank you so much for having me on. I really appreciate it. This has been great.
[00:46:01] Ryan Ross: Cool.
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