My Friend Jackson

I received a text from a young man who wanted help with his investments. Jackson is in his early twenties, married, and a business owner. New to investing, he asked several great questions. He is excited to start generating his wealth, despite the current economic environment.

Jackson is a man of action, and he’s taking control of his financial future. He’s self-employed, hard-working and he’s not leaving anything to chance. After a few conversations, we opened a brokerage account at one of the large online investment firms. He made his initial investment, and in a few days, we’ll start a monthly investment program. In a couple of months, we’ll open a Roth IRA. Once these accounts are up and running, we will discuss creating a retirement plan for his business.

The account we setup is aggressive; more than 90% allocated to stocks. Jackson is young, so he might not need his money for 40 or 50 years! He has a long-term view, and he can care less about the Cornavirus or short-term moves in the stock market. His primary goal is to create wealth for his family. Of course, he doesn’t care about the short-term because he is so young, but neither does Warren Buffett, who is 89 years old.

I told Jackson stocks would trade up, down, and sideways for decades, so don’t get excited when they rise or depressed when they fall. In fact, he should be joyful when prices fall because he can buy great companies at lower prices.

Jackson is self-employed, and he knows it’s better to be an owner rather than a borrower. The best way to create wealth is to own things like stocks, real estate, and a business. You can’t borrow your way to wealth or invest in low yielding investments; you need to take risks and not play it safe.

Our firm does not require an asset or fee minimum, so we’ll work with anybody who wants or needs help – like Jackson. As a result, we receive inquiries from every type of investor – young, old, rich, poor, seasoned, rookies, etc. If we can’t meet their needs directly, we make sure they receive financial guidance from another source. We act like financial missionaries

To create wealth, we should all follow Jackson’s lead – think long-term, invest often, take risks, and focus on our goals.

Let no one despise you for your youth, but set the believers an example in speech, in conduct, in love, in faith, in purity. ~ 1 Timothy 4:12

March 5, 2020

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.

 

 

Why I Started My Business

Starting a business is a crazy idea and a daunting task. Each month, about 540,000 individuals launch new businesses and half of them will fail within the first five years.[1] I took a leap of faith a few years ago to start my firm when I turned fifty and so far, so good.

The primary reason I started my business was to remove confusion, complexity, and worry from the financial planning and investment management process. I wanted to offer people an alternative to firms that sold products with exuberant fees. As Jeff Bezos said, “Your margin is my opportunity.” I also noticed that individuals didn’t know what they owned, the risk they were taking, or the fees they were being charged. My goal was to bring these issues into the light.

First, I was tired of hearing stories from people who bought products and services they did not need or want. The products were complicated and expensive, and most of them did not fit in with a client’s financial plan if they had one. The products were sold by brokers earning massive commissions and fees. I wanted to recommend low-cost investments to individuals based on their financial plan.

Second, I wanted to offer a competitive fee.  A lot of advisors charge 1% or more to manage a client’s assets, or require a high-fee retainer, or demand exuberant hourly rates. Also, advisors and brokers charge thousands of dollars for a financial plan. Our fee is .5% of assets ($5 per $1,000) to manage investments and a flat fee of $800 for planning. I like to say we’re twice the service at half the price!

Third, I wanted to help individuals with their financial needs regardless of their level of assets. It’s common for investment firms and advisors to have asset minimums of $1,000,000 or more. We work with clients at all asset levels from several million to several thousand.  We don’t have asset minimums, and we will work with anyone who wants or needs our help.

Industry experts and advisors tell me my fees are too low, and I need to set an asset minimum. They also encourage me to focus on a niche like attorneys. I disagree. If my firm sets an asset minimum of $1,000,000, what happens if I meet an individual with $750,000? Do I tell them I’m sorry I can’t work with you because you “only” have $750,000? If I only work with lawyers, do I say no to the doctor, teacher, or pilot?

Because my fee schedule is low and I don’t have an asset minimum, industry experts question if my clients are profitable. I have no idea. I don’t treat individual clients as profit centers. My firm, however, is profitable, allowing me to continue to serve clients.

When I’m told to raise fees or asset levels or focus on a niche, I think of the Coca-Cola Company. Coke has been selling beverages to individuals since 1892, and, to my knowledge, they don’t have a niche. Coke products are sold to billionaires like Warren Buffett and Bill Gates, as well as young children around the world. If you’re thirsty, you can buy a Coke product to quench your thirst regardless of your economic standing. Also, Coke products aren’t complicated or expensive.

My model works, and I look forward to helping all those who want or need financial guidance.

Work willingly at whatever you do, as though you were working for the Lord rather than for people. ~ Colossians 3:23

December 10, 2019

Bill Parrott, CFP®, CKA®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.

 

 

 

 

[1] https://learn.g2.com/small-business-statistics, By Bianca Pasare, website accessed December 8, 2019.

An Interview with Myself.

Good afternoon and welcome to my interview with Bill Parrott, President and CEO of Parrott Wealth Management in Austin, Texas.

Bill, thank you for taking time out of your day to sit down with me and answer a few questions about your business.

My pleasure Bill.   I appreciate you reaching out to me and I look forward to our interview.

Great.  Let’s get down to it.  Why did you start your own firm?

I started my own firm to offer more services like financial planning and investment management to individuals free of any conflicts.  I also wanted to be a true fiduciary and put the interests of my clients first.

You’ve been in the investment business a long time.  Why start your business now?

Well, that’s a good question.  I’ve been in the investment business for twenty-eight years and I’ve worn many hats from financial advisor to branch manager.   In 2015, I turned fifty and my daughter was applying to college and I thought to myself if I don’t start my own business now I never well.  In addition, my previous employer was flying me all over the country to present investment workshops and meet with clients.  The travel was becoming a bit much and I wanted to spend more time with my family and work with clients in my neighborhood.  After you’ve seen one airport terminal, you’ve seen them all.

Excellent.  Tell me about your process when working with a new client.

When I meet with a new client I try to get a good understanding of their financial situation by offering a financial plan and risk tolerance profile.  In addition, to the questionnaire, I spend a fair amount of time talking to them about their financial goals and dreams.  The time I spend discussing their financial situation gives me a good idea of how to structure their investment accounts.  I may meet with them five or six times before we decide to open a new account.

Once you set up a client account how often do they hear from you?

I offer to meet with clients quarterly so we can discuss their accounts and the market.   The quarterly meetings are a great way to check in to see if anything has changed with my clients.  In addition to the quarterly meetings, I email a monthly newsletter to clients and potential clients.  I’m willing to meet with anybody at any time especially if they need help.  I also make house calls!

I looked at your fee schedule and it seems awfully low.  Can you tell me about your fee structure?

Ha Ha!  I’m often told my fee schedule is too low but it works for me and more importantly it works for my clients.  My fee structure is simple and clear.  The fee is .5% (one half of one percent) on the first $10 million in assets.  My fee is about half of the industry average.  In addition, I charge a flat $525 for a financial plan.   I don’t charge any other fees and I don’t have any fee minimums.

Your fee is low!  What type of investments do you offer?

In addition to my low fee, I offer low cost investments like index funds and exchange traded funds from Dimensional Fund Advisors, Vanguard and Blackrock.  These three fund families are excellent financial partners because they don’t charge a sales commission and their internal fees are extremely low.   I like working with these firms because they also have a client first mentality.  I also offer individual stocks and bonds which don’t have any internal fees.

How do your clients keep up with their accounts?

T.D. Ameritrade is my custodian and clients can view their accounts 24/7 on their phone, iPad or computer.   T.D. Ameritrade will send a monthly statement to the client listing all their positions.  On a quarterly basis, I send a detailed report from Morningstar highlighting their performance, fees, gains, losses, income and much more.

Do you have any employees?

I do.  I have an assistant who works with me and her name is Janet Jackson.

Janet Jackson?

Yes.  Janet has a great name and we’ve been friends for a long time.  We started working together on the same day when we were hired by Dean Witter in Pasadena in 1990!  She is a tremendous resource and helps with onboarding new clients and helping me with the firm paperwork.

I love your logo.  Can you tell me more about it?

I’ve been blessed with a colorful last name and so I wanted to incorporate it in my business.  I’ve been told you shouldn’t name your business after yourself but not everybody has a cool last name like mine!  Ha!  Ha!  I wanted a bright and colorful logo that would make people smile as well.  My daughter added the pie chart to the letter “O” which is a nice touch.

Bill, thank you for your time.  It sounds like you love the business and have a genuine concern for your clients.   How can people get in touch with you?

You know me well!  I can be reached at bill@parrottwealth.com and my website is www.parrottwealth.com.

I notice you end your blogs with a Bible verse or quote.  What do you have for us today?

Here is a good one, or two, from Matthew: Jesus replied: “‘Love the Lord your God with all your heart and with all your soul and with all your mind.’ This is the first and greatest commandment.  And the second is like it: ‘Love your neighbor as yourself.’ ~ Matthew 22:36-39

A good one.  Thank you!

My pleasure.

Bill Parrott is the President and CEO of Parrott Wealth Management, LLC.  For more information on financial planning and investment management, please visit www.parrottwealth.com.

August 22, 2017

Should You Follow Your Dreams?

At the age of 50 I started my own company.   It has been an exciting, nerve racking adventure.   My daughter was about to leave for college and my wife was working part time for a non-profit organization.   I had doubts, anxiety and fear.  I wondered if I made the correct choice.   I had considered other options like staying with my large corporate employer forever or retiring early to join the mission field.   In the end, I decided to launch may own company because it had been a lifelong dream to own my own company.

For the Spirit God gave us does not make us timid, but gives us power, love and self-discipline. ~ 2 Timothy 1:7

I had some case history and a path to follow. My maternal-grandfather started his own company when he was fifty.  Instead of having one daughter in college he had three and his wife didn’t work.   He decided to start his own company after a meeting with his boss, the owner of the company.  His boss was upset because my grandfather was making more money than he was so he quit and followed his dream.  He had a successful business career and a better one as a philanthropist.   If you’ve ever munched a bag of chips or eaten at a fast food restaurant, you’ve benefited from his handiwork.

Be strong and courageous. Do not be afraid or terrified because of them, for the Lord your God goes with you; he will never leave you nor forsake you. ~ Deuteronomy 31:6

In college, I majored in Business Administration a degree best suited for those who want to spend a life wallowing in middle management.   While in college, two of my friends and I bought the rights to a company that produced calendars.  We were business owners!  I learned more about business by owning our little company than all the business courses I took combined.  We had to deal with printers, photographers, models, retail outlets, customers, suppliers, etc.  I loved it!   I knew I wanted my own business but didn’t realize it would be another thirty years before my dream would come true.  Oh well, better late than never!

Yet we urge you, brothers and sisters, to do so more and more, and to make it your ambition to lead a quiet life: You should mind your own business and work with your hands, just as we told you, so that your daily life may win the respect of outsiders and so that you will not be dependent on anybody.  ~ 1 Thessalonians 4:10-13

If you’re ready to burn the boats and start your own company, be prepared for a mountain of negativity and threats.  Most people will not have your courage, wisdom or vision to start a company.   Don’t listen to the naysayers.   You may receive threats from your current employer but trudge on and concentrate on your goal.    Others will think you’re crazy for starting your own company.   They’ll say your too young or too old.   They’ll wonder how you’ll support yourself or how you’ll obtain clients.   The list of negatives will grow proportionally to the number of people you talk to.   Regardless, do it any way!

They will have no fear of bad news; their hearts are steadfast, trusting in the Lord.  Their hearts are secure, they will have no fear; in the end, they will look in triumph on their foes.  They have freely scattered their gifts to the poor, their righteousness endures forever; their horn will be lifted high in honor. ~ Psalm 112:7-9

If you have had visions of starting your own company or on the brink of launching your new adventure, here are a few tips.

  1. There is no perfect plan or perfect time to start your business. A good plan today is better than a perfect plan tomorrow.   If you wait for all the stars to align, you’ll never start your own business.
  2. There has never been a better time in the history of the world to start your own business. The technology today gives you the power to reach billions of people with the click of mouse.  The barriers to entry for most businesses are extremely low and access to capital tremendously high.
  3. If you’re young, take advantage of your youth and enthusiasm. An ideal time to start a business is when you don’t have other commitments like a spouse, children or a mortgage.  You’re free and nimble to pursue your dream.
  4. If you work for a large corporation, honor your employment contract and employment agreement (as I did). If you’re not sure about the big legal words in your contract, hire an attorney who specializes in contract law to help guide you in your decision.  Despite your best efforts, it’s possible your former employer will still sue you anyways so be prepared to spend a few dollars defending your good name.
  5. Hire others to help you launch your vision. Focus on what you do best and hire others to fill in the gaps.
  6. Enjoy your journey. Listen to the words of A.A. Milne, “Rivers know this: there is no hurry.  We shall get there some day.”
  7. Have fun. You’ll experience trials and tribulations but at the end of the day it’s your business with your name on the door and what could be better than that?

Therefore, I tell you, do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life more than food, and the body more than clothes? Look at the birds of the air; they do not sow or reap or store away in barns, and yet your heavenly Father feeds them. Are you not much more valuable than they?  Can any one of you by worrying add a single hour to your life? ~ Matthew 6:25-27.

Bill Parrott is the President and CEO of Parrott Wealth Management and is a believer in reaping what you sow.   For more information on financial planning and investment management, please visit www.parrottwealth.com.

April 1, 2017