Alex Reffett With East Paces Group

Intro: [00:00:04] Broadcasting live from the Business RadioX Studios in Atlanta, Georgia. It’s time for Atlanta Business Radio brought to you by on pay Atlanta’s new standard in payroll. Now here’s your host

Lee Kantor: [00:00:24] Lee Kantor here another episode of Atlanta Business Radio and this is going to be a good one today on the show, we have Alex Reffett with East Paces group. Welcome, Alex. Thank you for having me. Well, I’m excited to learn what you’re up to. Tell us a little bit about East Paces group. How are you serving folk?

Alex Reffett: [00:00:43] Yeah, yeah. So we are we’re an independent wealth management firm, so we’re we’re primarily focused on helping people figure out where to put their money, which is a constant challenge in the world we’re living in.

Lee Kantor: [00:00:55] So what’s your back story? How’d you get involved in being a financial advisor?

Alex Reffett: [00:01:01] So I was one of the, I guess you can say, the lucky ones or unlucky ones that always knew it’s what I wanted to do. I figured it out pretty early on when I was in college and, you know, taking pretty technical derivatives classes and, you know, options trading and things like that. And, you know, kind of, as a kid, wanted to always had the dream of going up to Wall Street. And then I heard back from a few people that lived that life. And it wasn’t wasn’t all the glamor it seemed to be. So I just wanted something that was really I felt like my skill set was actually going to help people and have some sort of intrinsic value to it. So I kind of discover the world of wealth management, and it’s been on a one track road ever since, you know, I got my licenses while I was still in college and got some of my first clients, actually while I was still in college. And it always was with an independent Firmino, never with a big wire houses, which was, I guess, I’m finding out, pretty unique and added it’s challenges for sure. But it gave me a different look into what the industry could look like going forward.

Lee Kantor: [00:02:05] Now, can you explain to the listener the difference between maybe some of these larger firms that you see on, you know, stadiums or on commercials and then an independent firm? Because not every financial advisor or wealth management is like, you know, picking stocks or picking investment, they’re kind of salespeople that are that other people are kind of doing that kind of work, the the choosing of what where the investments go.

Alex Reffett: [00:02:34] No doubt. You know, if anyone is thinking that they’re their advisors operating on an island or a if they are, that’s probably something to be concerned about. But for the most part, you’re exactly right. You know, the the advisers, especially in the large kind of household name, you know, stadium branded type banks are are really focused on sales. I mean, they’re they’ve got their client relationships and their people. But what they’re doing is they’re they’re selling their their firm’s products to their client and that can, you know, obviously there’s a wide variety of people out there, a wide variety of ethical disparities between individuals. So, you know, the experience may be greatly different. You can have a great financial advisor at at a large bank, but there’s just a lot of layers and mess with that. That is not really something that I felt like was necessary. And I guess that’s kind of the core of why I believe in the independence basis because, you know, whether or not you know, some of those things can be good or bad if used correctly is is up for possible argument. But what’s I don’t think up for argument is what’s necessary to help a client manage their money is much, much simpler and more straightforward than all the complexity of the products the big banks try to try to add to the mix.

Lee Kantor: [00:04:08] Now, can you talk a little bit about your vision by becoming independent and owning your own firm, rather than kind of be part of these larger institutional entities? What were you kind of trying to accomplish and what did you see that was possible?

Alex Reffett: [00:04:28] Sure. Well, there’s you know, when you look at what clients need, you know what kind of the basics of a wealth management firm, what they need to provide their clients, one is portfolio management. You know, they’ve got to figure out where to actually invest the money. What makes sense, you know, have a have a team that is everything from research to implementation of of just seeing what’s out there in the world and what we need to be participating in and what we need to be staying away from. So you got the investment component and then you have the planning component, you know, you want to figure out, you know, yeah, you can invest in a great portfolio that runs out the years. But if you don’t have a plan for how you’re going to spend your money, you know, whether it’s, say, business liquidity event, where you’re selling the company, that was your cash flow for years. And I’ve got a lump sum and you’ve got to figure out how much to take every year or Social Security planning or, you know, just a general saved in a 401k for, you know, three or four decades. And now I’m going to spend that money that I’ve saved. There’s a lot of complexity that comes with that planning. So, you know, having those two things really buttoned up and dialed in was is the core of what we needed to create, you know, an investment process, an investment management process and a financial planning process. So, you know, fortunately, it kind of worked out well with my two partners. Each are kind of experts in those individual realms.

Alex Reffett: [00:06:00] So it created a great team to kick off the company and be able to offer that. But but kind of looking forward, you know, my the reason I believe the independent space is so important for that is, you know, when you talk, take the investment management process, for instance. I mean, you know, what are you trying to accomplish? You know, if it’s a the best asset allocation with the lowest possible cost, which is what I believe is best? Or, you know, do you want to take the strategy that many others have taken in the past of, you know, layering funds, you know, funds or funds sometimes to try to get the most possible performance out, but just, you know, adding a lot of fees to the bottom line for that client and in ways that they may not even see or understand. And that’s that’s what I was definitely trying to avoid expensive kind of mutual fund type strategies that were kind of so commonplace. And I was also trying to avoid, you know, proprietary strategies, you know, we don’t have any of our own funds here. So that really allows us to organically look out at the world and say what’s best for our clients and just go find it as opposed to trying to sell anything of our own. I mean, we we don’t have any funds of our own. It’s just we’re kind of looking at what what’s out there and the tens of thousands of options that are out there and what’s the most bang for the buck?

Lee Kantor: [00:07:24] Now, because there are so many options out there, how do you kind of create a portfolio that makes sense for like an individual because everybody has their own risk tolerance, their own goals? And some people are in an accumulating stage. Some people are in the D accumulating stage. How do you kind of cater to the individuality that every client probably desires, at least. Maybe that’s not some kind of reasonable, but maybe that, but that is what they desire, something that is customized to their unique situation.

Alex Reffett: [00:08:02] Sure. No, that’s a great question. I’d say it’s probably one of the most common ones, too. And and what I’ve always kind of pushed back on a little bit is, you know, everybody is different, but in a lot of ways people are the same. You know, that’s where I think people have a maybe a bit of a misunderstanding of their own anecdotal experience and thinking that it’s very unique. I mean, in reality, most people do want a lot of the same things. They want to they want to retire with enough money to be able to live the life they’ve been living without having to stress about running out of money. I mean, that’s the basic objective. You know, that people have, you know, a lot of similarity in business owners, you know, that are looking to have some liquidity event sell their business. Will that lump sum they got to replace the income they’ve been getting? So there are similarities, but you’re totally right that there’s different phases of life and different temperaments as well. I mean, that’s that’s really the places where people differ is you’ve got different age groups and phases in life and then you’ve got different emotional temperaments for how much you can weather risk. So those we definitely take to play. And when we’re figuring out how to invest a client’s money, we’re the main thing that I consider, I think, is probably 90 percent of the objective. Is there a time horizon, you know, the period that they’re investing in the purpose that they’re investing for? You know, if they’re 30 years old and they’re, you know, their life doesn’t always go to plan.

Alex Reffett: [00:09:29] But, you know, if it does, you’re kind of thinking save them for 30 or so years to accumulate and then distribute that money the next 30 years of your life. Then you certainly want to invest in a portfolio that will grow to meet those needs, which would be very different from the the 70 year old who has, you know, money beyond their needs and just wants to preserve it, not not wake up in the middle of the night, worried about what the market’s doing and just has a different both financial need and emotional need. So but but in general, I think people are more similar than they they think, you know, we’ve got a, you know, most of our clients that are in, say, the 30 to 35 range or are pretty similar in what they’re trying to accomplish. So although there may be some nuances to the way we invest their money. You know, one may have a legacy holding in a stock there, their parent bottom 20 years ago, they want to hang on to or something like that. But but philosophically, you know, most 30 to 35 year olds, we would have a similar portfolio for and most 70 to 75 year olds. We’d have a somewhat similar strategy. But you know, the the disparities at that point are usually just based off their temperament. Some people are very, very risk averse and others are not so.

Lee Kantor: [00:10:48] Now, when it comes to the risk in any investment, how do you manage that? Because a lot of people might say they’re, you know, I’m risk averse, but you know, when the market punches you in the face, then you know, that becomes a true, true marker. You know, they can say, I’m risk averse, but you know, when the market tanks, are you getting a call from them saying, what’s going on? You know that they may not be as risk averse as they as they think they are.

Alex Reffett: [00:11:23] You nailed it. I mean, yeah, I don’t I don’t even know what I can add to that because you said that perfectly. I mean, there’s a, you know, a lot of what we do as well as behavioral counseling. I mean, I know that’s kind of been an industry of an industry term that’s popped up over the past, you know, five to 10 years. But but truly, I mean, you’re trying to educate clients because what they’re understanding of risk and what the realities of risk are a lot of times is different because there are many types of risk. You know, that’s what people think is just risk. They just call it one thing, but it’s really, really subdivided. I mean, there’s all types of risk. And just kind of a simple example is, you know, when you talk about market risk, which is what they’re usually kind of referring to is what’s the risk of the market going down? And they’ll say, we’re losing all your money. You know, it’s like an 08 09, which is what the Great Recession of our of our generation. You know, if. What did it take to lose money in that environment because the markets, you know, twofold that’s peaked before that even happened. So it’s not as if, you know, if you if you didn’t have to take money out and you were properly positioned, you know, so many people tell me they lost a bunch of money in 08 09. And I always try to ask them why, you know, why don’t you lose money? And sometimes it’s awful situation. You know, they they got sick.

Alex Reffett: [00:12:48] Or, you know, I’ve heard some horror stories of, you know, had to sell the house and, you know, I had a family issue and it was just horrible timing. I mean, of course, that, you know, I lost my job. I didn’t expect it to have a job for two or three or four years. I mean, there’s obviously terrible stories, but for the most part, if you if you plan for the worst of times, you get through those things and you don’t, your portfolio goes down. But when you’re talking about risk, it’s just important to figure out what risk is because is your risk losing money or is the risk needing to spend money when the market’s in a correction because they’re not the same thing? You know, if you talk about, you know, what are the odds that during a market recession that a company like, you know, Apple or Delta or, you know, just a big house, Procter & Gamble, you know, something like that? I mean, what? What are the chances that they’re going to have some negative effects in a broad market correction? I mean, they’re pretty high. But what’s your chance of losing all of your money in that investment? I mean, that’s a much different. I’m not saying that’s a the answer zero, but but it’s a much different answer. So it’s just important to when people think of risk. I really try to coach them and understanding what what the risk is and the only risk I think people need to worry about is is running out of money by having a bad financial plan.

Lee Kantor: [00:14:12] Right. And I think that that’s one of the challenges in your work and in this industry as a whole is they don’t ring a bell when the markets are too high, they don’t ring a bell when the markets had too low and they don’t ring a bell when your time is up on this planet. You know, these are a lot of unknowns and there’s a lot of variables. And it’s, you know, for the layperson who isn’t like, you’re you live in this world every day. You can see historical trends and you understand the history of the market and the American economy and things like that. And then those you feel comfortable in that history and knowledge. Whereas a layperson, I think those are overwhelming unknowns and it’s hard to plan when there is a lot that’s out of your control.

Alex Reffett: [00:14:59] That’s that’s true and it’s interesting to, you know, what certain people respond to. You know, there’s a you know, you take, say, COVID last year. I mean, a lot of people don’t realize because it happened so quickly, but that was the sharpest market drop in history. I mean, you throw the Great Depression in the 20s, 2008, 2009. Nothing even came close to that. I think it was 37 percent or so within six weeks. I mean, that was just an insanely quick and market drop. But people, I feel like for the most part, understood why it was happening. And surprisingly, you know, very few clients really negatively responded or got very concerned about that, you know, because for the most part, you got to think of what people are thinking about, you know, they’re thinking about, they’re not able to go into work and their kids aren’t can’t go into school or new mask mandates and quarantines. And you know, that’s where their heads out. They’re not thinking about their four one k, just because what they’re dealing with in front of them is so much kind of more more consuming. So it’s been interesting to see. And then at the same time, you know, when, when nothing’s really going on and everything’s cruising along. But the Fed hikes interest rates a little bit and the market responds negatively to it. You’ll get more calls about that than COVID. So, you know, it’s interesting to see what people respond to, but it’s usually based out of emotion. But but you’re totally right. I mean, if you live in the industry, you see this day to day, you’re staring at it. You kind of have a general grasp of why things are happening and what’s normal and what’s not. It’s a little bit easier to digest than just getting a statement in the mail that for some money, looks like it. It evaporated.

Lee Kantor: [00:16:41] Yeah, I think that it’s interesting. I think from a generational standpoint, like my parents lived through the Great Depression and that left a mark. Obviously, you know, people that you mentioned 2008, that left a mark, Covid’s going to leave a mark. But the people who are investing nowadays, I think, are lulled into this bull market that’s been going on for so long. I don’t know if they have the memory or the knowledge of history of the market that the Great Depression left where you’re talking about, you know, kind of lost decades of pain when it comes to finances and they’re in a kind of mental state of this is, you know. It’s always trending up. You know, it’s everything’s going to be good and, you know, it’s just a matter. Oh, that’s a blip, you know? But when the market dropped, like you said that that dramatically over that period of time, I think inherently people are optimistic and they were like, Oh, this, so this is just going to bounce back. It’s obvious it’s COVID and this is going to go away shortly. And I just don’t know how resilient we’re going to be if something more dramatic happens.

Alex Reffett: [00:17:53] Bill, you’re you’re absolutely right, and that’s you know, you said you said something that I it’s something I agree with and that I think people, they just misinterpret a lot of times you said, you know these these certain times in history where things have been really tough and haven’t, you know, markets have gone sideways or had these recessionary periods that have been really tough on people, you know, left a mark and it does leave a mark. But but my I just urge people to for that mark to be not a not a reminder of fear, but to be a lesson, you know? You know, there’s lessons to be learned from, from things that happened. And the biggest lesson is not to prevent it from happening in the future. Again, because you can’t do that. I mean, there’s no way to bring an individual to prevent a recession from occurring in the future. I mean, we’re going to see those. I don’t know what’s going to cause them, but something’s going to cause the next five recessions over the next, however many years. You know, in our lifetime. But but there are lessons to be learned in the context of how do you build something that’s resilient to where you don’t have to sell the aggressive parts of your portfolio, for instance, in a down market, you know there are ways to create strategies that are that are representative of of what could go wrong. You know, there’s not a, you know, nobody has a crystal ball to perfectly predict exactly the best way to hedge a future volatile period. But but there are sensible approaches.

Alex Reffett: [00:19:27] And that’s really the core of what we do in trying to figure out, OK, where where are the risks? Do you personally? What are what are you worried about? What period? How long of a of a of a length and recession could we survive if markets really, really didn’t cooperate? You know, how many years do you need to feel comfortable with? You know, is it three years? It’s a five years. Is it 10 years? And then we can build a portfolio that that that has that in it? You know, something where if you go through a 10 year recession, you know you’ve got a bucket to draw your needs out for 10 years and then the rest, you know, unless you think the recession is going to last longer than a decade. We can we can have a little bit more of a growth strategy to it. So I mean, everybody is different in that regard. But, you know, I just urge people to for that to be a lesson learned. You know, when in 08, which was the biggest recession of, you know, our modern lifetimes for all of these generations? I mean, I was I was studying finance during that time. You know, there were people that obviously were close to retirement during that time, but that’s the biggest example. How many years did it take to recover from that? The market, I mean, you know, it’s about five years. So, you know, let that be a lesson. You know, if that happens again, have six years to wear and then you should be able to sleep at night.

Lee Kantor: [00:20:44] Right. Well, I think this is why it’s so important to find a financial advisor to partner with because as a layperson, you just can’t. It’s hard enough to live life and your own life with your own worries and your own business, your own challenges. And then to layer this on top of it, this this is a full time job, and I think it requires a trusted advisor, financial advisor to help you through this because you need someone watching your back. And that’s why I think it’s critically important to have a partner like this on your team because the lay person, unless this is all they’re doing. Twenty four seven is going to have a hard time navigating rough waters when they come.

Alex Reffett: [00:21:28] Yeah, no, you’re totally right. And just to add to that as well, I think taking the emotion out of it is one thing that helps. I mean, it’s not just a partner that’s doing it full time, which is obviously has its value and, you know, strategically speaking and hopefully as a huge benefit on that level. But but just someone who isn’t looking at their money like their nest egg and overly protective of it, you know, to a degree that can become a little bit irrational. And that goes for us, too. I mean, I much prefer personally other people too, and I know the industry well. I still like, you know, bouncing ideas off my partners for my own personal money because, you know, you can just you have this weird, you know, there’s just as humans, we have this defensiveness and this protectiveness to the our money naturally, which isn’t a bad thing. But in certain cases, when times get tough and decisions become tough, it’s good to have someone that can kind of take the emotion out of it and be a bit of a counselor and just an emotional resource to you

Lee Kantor: [00:22:28] Now in your practice. Do you have a niche that you serve or is it kind of, you know, wealthy families, you know, executives, former executives, business owners? Is there a niche that you kind of work in or is it kind of all comers?

Alex Reffett: [00:22:44] Yeah, I mean, naturally, just with a with the firm of our size, you’ve got a little bit of everything just because personal relationships are really what drive it. I mean, we we the primary thing we look for are just good people that are are are nice people that kind of value the work we’re doing. And because I mean, it’s a, you know, it’s something people’s money, they can get the wrong kind of temperament. And it’s just it’s not a healthy relationship where we’re not as helpful as we could be and they’re not getting all from us that they could. So, you know, the first thing is just that we like each other and it’s a good, a good, positive relationship that we feel like we can benefit from. And then the the as far as a niche goes, if we’ve got any kind of niche, it would definitely be business owners, mostly because we’ve got an expertize in transition planning. You know, for people that are which is happening a lot right now, you know, partially due to the I think a lot of the success we’ve had over the past few years is, you know, we specialize in helping business owners that are selling their business and then having a, you know, major liquidity event that’s equivalent to a retirement and needing to figure out, you know, now that they’re not taking partnership distributions, they’ve got a lump sum that’s got to last them, potentially their lives unless they start another business. That’s that’s definitely, I would say, the core of of what we’re able to help with on a on a niche market. But but we’ve got doctors, engineers, business owners, pilots. I mean, you can, you name it,

Lee Kantor: [00:24:16] Now in your work, you decided to go independent, but you decided to become part of an independent advisor network. Can you talk about the reason behind that and the rationale, as well as the benefits of being part of this larger network?

Alex Reffett: [00:24:34] Yeah, yeah. Well, to, I guess, be a little bit more specific as I kind of am actually trying to create that independent advisor network. You know where where we are an independent firm, but these independent advisors have have been able to bolt on to us for some of those core needs that they need help with. I mean, as we mentioned, you know, to earlier in the call, it’s kind of hard for an advisor to wear eight different hats and be the best at best plan or best investment advisor, best business owner, everything. But they do want to do right by their clients and have have some help, especially in those two areas of investment, management and financial planning. So we’re we’re able to offer that and these guys, you know, they’ve got their relationships. They’ve we’re not forcing them to, you know, act in a certain manner with their clients as far as selling anything particular to them. I mean, we don’t sell anything, really, we just help them manage money. So you know how how they utilize our resources is up to them. But we just kind of have a we’ve created this network of independent advisors now where, you know, now we’ve got a six that have joined us on top of the three of us who started the company. And yeah, they it’s it’s a great relationship because, you know, they’ve got they’re able to work with their clients in a way that they that suits them, but they can also know they’ve got kind of a team behind them when when times get tough and they’ve got a research team, so they’re not out on an island, you know, being that end all, be all for their clients, but at the same time, they don’t have a big bank telling them, you know, to sell these mutual funds. So it’s kind of hopefully the best of both worlds.

Lee Kantor: [00:26:13] So now what was kind of the genesis of that idea to create this network to to find, I guess, like minded people that are, you know, maybe they are on an island and that they need just the sense of community and the idea that there are people kind of working together to I don’t want to say battle against these large be behemoths, but people are out there that are kind of living through the same thing that sense of community just by itself as valuable.

Alex Reffett: [00:26:42] Absolutely. I mean, you know, and there’s more of a personal note. I mean, that’s one of the I mean, I know a lot of people have experienced and we’re not unique in this. But the heartbreaking thing is we, you know, we kick this thing off in 2019 and had this awesome year of, you know, just from a social presence and, you know, communal presence. And then, you know, dealt with the the reality of COVID like everybody else and had much less of that. So it’s been a been a sad thing. But at the same time, having those, you know, calls where we all are there together and, you know, have a Zoom call instead of all being in the same room together like it used to be. But you know, just that community are just bouncing ideas back and forth, you know, asking about people’s families and how things are going or, you know, how we’re able to, you know, get that deal closed with a client or whatever it may be, you know, just having someone that understands what you’re going through and, you know, maybe a lot of times better than your family would if you’re just going out on an island.

Alex Reffett: [00:27:39] So it’s been great. But as far as the need for it is, I mean. Realization for the need for it is just being one, I mean, I was I was always, you know, I was when I first started out in college, you know, when I got my first clients and kind of found my way into this business on the independent space I was, I got started kind of an operational role with a solo guy. He was an independent financial adviser and it was just him and me. So he stayed out of business. He’d been in the business for, you know, 20, 25 years or so. But it was just me helping him, you know, manage his clients and run the business. And we work on it out on an island. And, you know, I think that was kind of the original genesis of all this is just realizing that man, it would be nice if you know, there were more of us and we could kind of share some economies of scale and, you know, maybe invest in some more resources as a team together and things like that.

Lee Kantor: [00:28:33] And in what ways do you see moving forward that you can kind of invest in? What are some of the things you’d like to invest in if you can, as the community grows?

Alex Reffett: [00:28:43] Yeah, yeah. It’s uh, so it’s kind of a it winds up being a pretty perfect science. Believe it or not, you know, as we as we add the ad to the community, as we add to our our network of independent advisors, we you know what they contribute financially to the to the company basically goes directly into to new resources, which are, you know, the biggest thing that any quality firm needs. I’m a big believer in. This is a solid operations team. You know, someone who can really get clients what they need on a just in an operational administrative level. So investing in that, we’re continuing to invest in our investment platform from a headcount standpoint as well. You know, trying to get people that can, you know, as you start to get from 300 million to 600 million to over a billion dollars in assets under management, you know, really just having the infrastructure to be able to manage that and make sure that clients are or are getting all their needs met, that our strategies are actually getting implemented, as is another place that we’re continuing at. You know, as the headcount grows, you know, we then become servicers to the advisors. So we’re we’re kind of just continuing to invest in what we can offer almost them as clients in a way.

Lee Kantor: [00:30:06] Now is this something that is only Atlanta based or are these advisors coming from anywhere?

Alex Reffett: [00:30:12] Well, we’re pretty new. So currently we’ve got most of our advisors are in the Atlanta area, not necessarily in town, but in the Atlanta area. And then their most recent advisors to join us is actually from North Carolina. So I mean, it’s not something that’s restricted, but I mean, it’s one of those things, you know, southeast presence is definitely where we’re headed, at least in the near term, just because you know that sense of community, it doesn’t have to be every day. A lot of these guys have their home offices, but we at the same time want to be able to all get together and, you know, have our even if it’s just on a social level. You know, as you mentioned earlier, the community is important. So, you know, we don’t want these people to feel like they’re out on an island. We want them to feel like they’re, you know, even if their day to day in a home office that they’ve got a team behind them, they come in every once in a while, maybe to meet with a client or conference room or have lunch and or do our office events and things like that. So.

Lee Kantor: [00:31:10] So if somebody wants to learn more about your practice, if they’re looking for a wealth manager or financial advisor or they want, or they are a financial advisor and they’re independent, they want to join the network, is there a website? What’s the way to kind of learn more about this opportunity?

Alex Reffett: [00:31:26] Sure. Yeah, the best thing to do is our website is just East Pace’s group. They can got all of our contact info on there and just reach out to me. I mean, you know, we’re, you know, we try to cut through all the the, you know, the benefits of being independent, you know, smaller businesses. You can get to me directly and just, you know, let’s get a coffee, whether it’s a client or an advisor looking for maybe a different game plan for their life, then we love to just sit and learn more about them and what they’re looking for and seeing if we’re a good fit.

Lee Kantor: [00:32:02] Well, Alex, thank you so much for sharing your story today. You’re doing important work and we appreciate you.

Alex Reffett: [00:32:07] Yeah, no, I very much appreciate the time and it was great talking with you.

Lee Kantor: [00:32:11] All right, this is Lee Kantor. We’ll see, y’all next time on Atlanta Business Radio.