The Value of Investing | Elaina Serotte

Alan
Welcome back. I’m here today with Eleina Serotte. She is a principal with the golf boot. Eleina, welcome to today’s show.

Elaina
Thank you.

Alan
So Eleina, give me the background, how did you get to where you are today. And you know what, what led you into this position?

Elaina
I don’t not sure how far back you want to go. But I grew up on Long Island. And to me being successful meant riding the subway wearing a suit and working on Wall Street. So I worked my whole life to get to that very point. And I started with Morgan Stanley in Manhattan, and was doing that I even had a beeper. So I’m dating myself, it was a wonderful time. And what I quickly realized was that I wanted to be more entrepreneurial, not just a cog in a wheel in a big wheel and get a change of pace from New York. So I had a friend who would give me a job here in Northern California. And I started as a bit of an apprenticeship with him as a financial adviser. So a financial adviser and training, I slowly built up my reputation at work as being someone who would work really hard, who was someone who could easily establish rapport with people and was empathetic, and a good listener. So we had a group of people have existing clients that had did not have advisors assigned to them. So what they did was we started a campaign where I would go and visit them, let them know that we were here for them, and try to do some discovery. So it was really like being an investigator, and understanding people’s families and their situations, and usually what the account they had was just a small part of their overall life. So putting all those pieces together and figuring out the needs and then coming up with plans, and trying to implement them, making real clients clients where I establish relationships with them. And with the firm.

Alan
When you’re working with families, what do you see as the greatest concern that they have, and in today’s world.

Elaina
The greatest concern that people have now is if they’re going to have enough for retirement, I think even those people who are very wealthy, are still just not sure what that means to them and to their families. And whether or not they can pass that money down, they usually have people that they need to take care of there’s, you know, lots of times there’s children that need help, sometimes special needs help, and they want to make sure that they’ll have enough to sustain sort of their their individual ecosystem going forward. I think there’s a lot of insecurity around that.

Alan
Where as a as a financial advisor, when when we’re working, or when you’re working with these types of individuals? How do you walk them through a process of how to how to give them more security and more direction?

Elaina
So it’s really very simple. I think it’s hard to do, but simple to understand, we start very, very quickly with who do they want to impact in their lives? How do they want to impact them? Is it? Are they charitably inclined? Are they thinking about their family? Is it both? What kind of vision do they have for the next three 520 years? And how do they want to show up in their lives? And then we start to have sort of a more qualitative discussion about their interests, their vision, and then move to the quantitative where Okay, so what are the resources that we have here? What is it that how is it that you want to support each one of these particular people in your lives are the are the charities, and then we’re putting together a balance sheet, so they can actually see everything they have on in one place, you’d be surprised, even very successful people, you know, they have something here something there they have, you know, an old retirement account they forgot about and to put it all together in one spot helps give them perspective, and then to have that discussion about what it costs to be you and creating a cash flow statement. These things are very simple, something you would do for a business, you would never not do it for a business. But somehow as people we don’t treat our families as businesses.

Alan
2015 was a very volatile year in the stock market. When everything is going the right direction, people are never worried but how do you deal with the volatility of the markets down clients are calling or how do you give the reassurance that’s needed?

Elaina
So it’s, again, it’s something that’s very simple. People want to hear from you. They want to make sure that you’re there that you understand their situation, that you’re talking to them about their personal goal. goals. So I understand that, you know, Mr. Jones, when he calls that, you know, he’s upset that the market is down, but he will still have enough money for his special needs daughter to, you know, have care for the rest of her lives, it’s not going to dramatically impact what’s happening in the long term. So to kind of bring it back to their personal goals, and just make sure you’re there to listen, let them air out all of their concerns, let them be afraid, let them know you’re there. And then, you know, help them understand what they own if they, if that makes them feel good, okay, this is what your portfolio actually consists of. And you can talk technically, if they need it, but mostly, they just want to know that you’re there.

Alan
I’m visiting here today with Elaina Serotte. She’s a principal with the Gullah group, Elaina, I need to take a quick break. And we’ll be right back after these messages.

Alan
Welcome back, I’m here today with Elena Serato. He is a principal with the Gullah group, a wealth management firm located here in the Bay Area. Atlanta, we we see a lot in the news about the stock market and the need for good financial planning and retirement but but differentiating the what a person does on their own to do it yourself or versus using a financial planner wealth advisor. There is a notable difference and what is it the approach to value investing? What is value investing?

Unknown Speaker
That’s great question. That’s a great question. So it’s a it’s a very traditional way of investing. We are devout Warren Buffett, groupies, but you may remember, you know, your grandfather talking to you about he received this stock, and he had this certificate, and he sort of left it, you know, in his in his safety deposit box for a million years. And then he pulled it back out. And it was worth three or four or five or six times what it was before. So it really is based on understanding the company that you own. And you want to understand the way they make their money, what their balance sheets look like. And we have an investment team, which they spend, I would say to spend 24 hours a day doing it because they never stopped thinking about the stocks and opportunities. We call it intrinsic value. So understanding exactly what that company is worth, what it could be worth in the future, and then getting it at a discount. So it’s no different than buying your absolute favorite high quality, you know, shirts or shoes, but getting them on the day they’re on sale. So if you think about the fluctuations every day in the market, and it will go up, prices will go up and down. If you know exactly what a company is worth, and the market has a down day, and that company suffers a lower price in that particular day, which has doesn’t have anything to do with the quality of the work they do or the products that they produce, or their revenue stream, you’re essentially getting it on sale. And then you want to buy it hold it. And you want to buy and hold those companies that have the cash flow in order to pay a dividend and to increase dividends over time. So they have a great long term outlook for their products and their business plan good management, we call it a moat around their products. So it’s difficult to invade or take over their market share. So it’s understanding buy, hold and hold for the long term.

Alan
When we talk about the long term. Every financial manager has different philosophies and strategy. But what is what is the philosophy used by Golf.

Elaina
So technically long term is you know, 10 years or more, but we’re talking about individual stocks. And when it’s a good time to, to buy when it’s a good time to sell. More importantly, it’s when the stock price reaches that intrinsic value. So it’ll increase over time. And if we see that it’s now it’s becoming close it gets closer and closer to what we think it’s worth, we’re gonna go ahead and get out of that stock and bank those gains. So the long term with stocks are interesting, because it can be something where they have a quick run up in the stock. So you their long term then becomes quite shortened. Or there are stocks that we’ve owned in the portfolio, which we’ve owned for 10 years because they continue to give reliable dividends and have a reliable business income stream. So

Alan
when a person comes to you what But what would you like to see their net asset value before you feel that you can bring the value back to them and also, it works for your your company.

Elaina
So generally speaking, since we just we don’t use any products, we only use individual stocks, individual individual bonds and cash in order to create the right mix for the client. If you have investable assets of 2 million and above, I think it really starts to make sense to do it that way because you really need that control over your destiny there. So when you have you know, retirement accounts you have in brokerage accounts, you can start to control tax you can start to really customize the portfolio for that particular person for their goals.

Alan
And vision here today with Elaina Serotte she is a principal with $6 group and we need your quick break and we will be right back after these messages.

Alan
Welcome back and visit here today with the latest serratus she is a principal with the golf group’s a wealth management firm here in the Bay Area. And Elena not everything goes right according to plan and the in the industry and you know, one such event that is still in the minds of many people’s 911. And and the great changes in the market going from the.com era to the dot boom era. And walk me through, what were you doing at that time? And how did you deal with your clientele and, and in the rebuilding process?

Elaina
Yeah, so that’s important to revisit the client’s financial plan and to be in communication, there are some clients who were so nervous, I had, you know, a meeting a month with them to review the financial plan to help them maybe make shifts in what it is that they needed to do, because it did affect some people where they had to work a few years longer. Because they were trying to retire right at that, that particular moment. So helping them come up with realistic goals. Financial Planning is a living, breathing document, it’s not something you can just sort of set and forget. So I think those people who were in the set and forget mode really came back to understanding about the living, breathing document piece of it. So it’s important to revisit goals, it’s important to revisit where there is wiggle room in your plan, can I work a little longer, can I spend a little less? Do I need to take a little less risk or a little more risk in the plan. So all things need to be considered. We try to stress the living, breathing document aspects of the plan prior to a downturn. So this goes back to a point made before I mean, you can do it yourself when everything is going well. But I think you really need a financial planner to keep you from shooting yourself in the foot when things go badly. Because you need someone to help take the emotion out of it and create a space where you can air your concerns. But you can still make rational decisions because it’s really difficult to make rational decisions sitting alone sitting alone in your room in front of your computer figuring out when is now it’s now the right time to sell or to buy. So I think that it’s you need someone to help keep it in perspective.

Alan
In this new era generation, especially the millennials, we often find that they want to do it yourself for tax return preparation to all just put my money in the ETF and, you know, and walk away. When an individual comes to you, what are what are the things that you’re looking forward to? To understand Can I work with this individual and help to guide them through the process of getting them to where they need to be?

Elaina
So I think that’s a great point. So what it is, is, you know, we see those people come in and they say I can just throw my money in ETFs what can you beat the market? So we try to pull the conversation back away from the market? Yes, we have returns we’re proud of yes, we can beat the market Netta fees. We’re not concerned about that. But really the value and the reason why people stay with us is because we’re able to big build a group of professionals around them. That’s one and then to take the information they get from their CPA, take the information they get from their legal teams and distill it down and include it in the plan where they it becomes something that’s actionable. Because if the if the person is is an entrepreneur and they’re very busy and maybe they have small children and they’re running around trying to deal with their lives They don’t have time to understand enough about the legal piece to figure out what to tell the financial planner, they don’t have enough understanding about the details and the nuances to the taxes to be able to tell the legal team and the financial planner. So to kind of offload that to us and help create that type of collaborative experience is something they can’t do on their own. And most of them, they don’t want to, they’re ready to start outsourcing or outsourcing some of those duties.

Alan
The Golic group is what I consider to be a boutique investment firm. How big are you?

Elaina
So we have about 1.2 billion of assets under management with just 23 people. So that high touch high access to all people in the firm. So if you for instance, we had a client come in a couple who’s been with us for the past eight years, they have a net worth of just over 15 million. And they had most of the time there are set it and forget it type of client, you probably have some of these where they say up just call me just let me know if there’s anything I need to do. We finally got them in. And it turns out, they did have some questions about exactly what they owned. Exactly why do we own apple? And why are we adding more? What is what are those questions? So we’re able to just walk right over to the investment team, grab up one of the analysts, two of which are partners of the firm and sit down and have a real candid conversation, a more technical conversation, bringing that person in and then we also have the financial advisor technicians and maybe the the illegal the attorney in the room too. So we can all come together on why and what piece that plays in the portfolio. So it gives everybody a good sense of good context.

Alan
So it putting the financial team together then it you got analysts yet. Wealth Advisors or certified financial planners, it’s really quite a process. What should the client expect coming to you though, is it is it a, you know, dealing with one person primarily and that person will then take the information to the, the team there.

Elaina
So they’ll always have a point person, someone that they know is their main contact, and then they have many other players around them, that they can understand exactly what they can be used for. But the great part about it is we always answer the phone by the fourth ring. And there are people they are dedicated to that and they will with a click of a button can understand, you know the broad aspect of their needs and their plan because the way that we we hold the data and help them execute on small items if need be. If they need a quick distribution of cash or they need to add money, whatever it is that can be taken care of without your main point person there. But when we’re having global discussions, then you’d have your point person and maybe some of the technicians in the room.

Alan
Is there a common theme of questions that come to you throughout the year with concerns of what’s keeping your clients up at night?

Elaina
So I think the uncertainty of retirement or or financial independence which is working because you want to and not because you have to that is always the largest question. They want to have all of these things done. They want to have their kids or grandkids go to college. They want to make sure that their you know philanthropic needs are taken care of they’re wanting to make sure they’re doing the best they can from a legal and tax perspective. But they also want to make sure that they’re maintaining their lifestyle and what do they need to do to to do that? In order to do that not just now in the next five years, but 1020 30 years in the future.

Alan
Believe it has somebody with you.

Elaina
Can go to the golf Group’s website and go ahead and click on my my picture and I’ll be right there.

Alan
Garlic boots.com.com Okay, emails Best Buy them. Excellent. Yes. Belinda, thanks for being with us today. I’ve been visiting with Elena Soroti. She’s a principal with the garlic group, a wealth management firm here in the Bay Area. We’ll be right back after these messages.