How many times have we all found ourselves scrolling through reviews on Amazon, Google, and Yelp, trying to decide which product to buy or where to go out to eat? In our digitally dependent world, we are surrounded by many choices and infinite ways to vet those choices. Unfortunately, the most impactful decisions are often the hardest to vet, and we are left unsure of our final decision.

We often find this analysis paralysis to be the case with prospective clients who haven’t had a financial advisor before. Deciding to go with Fogel Capital Management or another firm can be a process that can take several months. We’ve even seen it take more than a year. And it makes sense. Having someone managing your entire financial picture and setting the course for monumental life moments, like retiring or exiting your business, isn’t something to be entered into lightly. 

We say all this because, as part of the vetting process for financial advisors, we find many people are looking for more information to build a deeper understanding of who they’ll be working with. They read advisors’ bio pages, look at website pages that describe the firm’s process, watch videos to understand advisors’ personalities, and more.

But the information prospective clients seek isn’t always readily available or may be convoluted or confusing. That’s why we believe firmly in being transparent, open communicators with both clients and prospective clients, and why we’ve written this piece. Advisors work with all types of clients; some work better with certain clients than others. And how they work with clients is also of great importance. 

Who We Serve

In the nearly 30 years that Fogel Capital Management has been around, we’ve had the good fortune of being able to work with many different clients. We’ve served as the court-appointed fiduciary for incapacitated children in New York state, we’ve helped Native American tribes with their planning and investment management, and we’ve partnered with clients at all stages of their lives, whether that be young professionals in the heart of their career, business owners planning on selling their companies, or individuals gearing up for retirement.

Because of the disparate backgrounds of our clients, it’s hard to categorize select groups without feeling like we’re alienating some of our current clients. That said, there are a couple of subsets of clients we work best with when we focus on professional or career backgrounds.

Engineers in the Treasure Coast

Because of Florida’s impact on the aviation and space industries, it makes sense that we have many engineer clients in those fields due to our office location in Stuart, FL, in addition to the transparency we provide around our methodical investment process. Working for large companies such as Lockheed Martin or Raytheon Technologies can carry a lot of complexities for your financial picture. You have to worry about how employee equity compensation—things like stock options—can skew your net worth as a publicly traded company employee. Having the general knowledge of how something like equity compensation works for a public company is a good start, but our experience with these specific companies and navigating a client’s unique compensation structure takes that to the next level.

Specialized Service Professionals

Many financial advisors say they work with doctors, lawyers, consultants, and other specialized service professionals. But our reason for why we’re cut out to work with these individuals is different than typical. Our difference is that our firm began to take on more clients in this realm because of how we got our start as court-appointed fiduciaries for incapacitated children. Due to the extremely sensitive nature of that field and the high levels of regulation, we had to build out an expansive internal structure to be best equipped to serve our clients and withstand yearly audits, in addition to overseeing all household expenses, insurance, vehicle registrations, etc. This family-office structure is also well suited to serve specialized service professionals, who often have unique needs that come from owning or being a partner in a practice and the resulting transition when it comes to retiring. Not only do we understand the financial obstacles faced by these clients, but we have the back-end support to help them seamlessly move from their profession to the new life beyond it. 

Medical Professionals

With the increased footprint for medical providers like Cleveland Clinic along the Atlantic Coast of Florida, we’ve seen a resulting shift in our clients and prospective clients with medical backgrounds. That’s not to say we only are equipped to work with employees of Cleveland Clinic. Our experience is applicable across providers and is built around you and your career, whether you’re a nurse, physician, surgeon, or another type of employee in the medical field. The financial journey for medical professionals often starts with debt accumulation from years of school, followed by a sudden and dramatic increase in income. We’re here to help you understand your complete financial picture and synthesize its various components. 

Entrepreneurs

Whether you’re nearing an exit in a business you created or your business is simply nearing maturity, there are a host of financial planning opportunities that present themselves as your business grows. Those obstacles and opportunities are different from the ones you had in front of you when you were starting, and carry much more significance with regard to your financial future. Our clients who fall into this area are similar in many ways to the specialized service professionals we serve. The financial lives of entrepreneurs require a great deal of coordination, and they also desire the back-end support that a family office can provide. No matter your business, we understand how important it is to who you are. And we’re here to help construct a path that provides clarity for the years ahead. 

How We Can Help

Whether you fall into one of the above categories or not, how we serve our clients doesn’t stray from our core process, rooted in our family-office approach and how we build customized portfolios for our clients.

Customized Stock Portfolios

Our firm’s roots trace back to Wall Street, where principals managed the assets of financial institutions with strict portfolio management theory in place. As we will dive into further in future articles, that’s why we feel so strongly about how many advisors typically construct—or, rather, outsource—their clients’ portfolio management. We don’t believe in hiring another advisor on our behalf to build and oversee our clients’ portfolios. That’s why we specialize in creating unique client portfolios, consisting of individual investment securities, instead of relying solely on mutual funds and exchange-traded funds.

Customized individual investment portfolios sound like they may only suit an investor with a large risk appetite. But we have strategies available, such as low beta, dividend growth, preferred stock, and others, which we can utilize to fit your unique risk preference, whether you’re “all in” on risk or just looking to play it safe. 

Family-Office Support

As discussed above, our family-office structure inside Fogel Capital Management was a necessary adaptation to serve our clients when the firm first started. And while it served those clients and our needs then, the family-office foundation has continued to transform as our firm has grown and changed in our nearly 30 years of serving clients. 

When it comes to personalized service, we have a bevy of tools to support our clients. Those clients are accustomed to refined attention to detail in every aspect of their lives. In transitioning to life outside of their career, they may lose the back-office support they had, which we’re able to replicate for them. 

If you’d like to learn more about how we at Fogel Capital Management can help you, call (772) 223-9686 or email mcfogel@fogelcapital.com. Let’s find out if we are a good match to pursue your ideal financial future together.

About Max Fogel

Vice President, Private Wealth Advisor

Max joined Fogel Capital Management in the fall of 2022. As an Investment Advisor, Max works closely with our clients to help them confidently pursue their financial goals. Max began his career in finance in 2019 as a Financial Analyst on the Merchant Capital team at Maxim Group, where he advised pharmaceutical companies on raising capital through private placements. He quickly moved into traditional investment banking and joined Canaccord Genuity – Global Capital Markets, working in the Technology, Media, and Telecommunication (TMT) division. During his time at Canaccord Genuity, Max advised on numerous transactions totaling $250 million. In the summer of 2021, Max took on a role as a Senior Analyst at Madison Alley Global Ventures, where he provided expert advice on numerous transactions in the TMT sector. Max attended Indiana University, earning a Master of Science in Finance from the Kelley School of Business and a Bachelor of Science in Public Financial Management. He is registered as an investment advisor in Florida, New York, and New Jersey and holds Series 7, 63, and 65 licenses. Max’s commitment to providing our clients with the highest level of service and expertise is evident in his work. He brings a wealth of knowledge and insights to the team, and we are proud to have him as an Investment Advisor on the Fogel Capital Team. To learn more about Max, connect with him on LinkedIn.

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It received almost unanimous support from the House of Representatives in May. It has now been sent it to the Senate for consideration with what can only be looked at as a mandate for action. The bill proposes 29 new provisions. It advertises making it easier for workers to become eligible for retirement benefits and for small businesses to offer 401k plans. The maximum age for IRA contributions would also be changed to 72 (right now, its 70 ½), giving people more time to save for retirement. These changes sound great to some, but they pale in comparison to the downsides it would bring.

The Secure Act would throw a wrench into the status quo of financial planning by changing the rules that apply to inherited retirement accounts.  Right now, a non-spouse beneficiary can inherit a retirement account and not be required to make a withdrawal until they themselves reach age 70 ½, therefore stretch the tax shield of the IRA potentially over decades. Yes, the Secure Act would raise the required distribution age to 72, but if the account holder passes away, it requires non-spouse beneficiaries to withdraw the money within ten years of the original account owner’s death. The person who inherited the account would be required to add these withdrawals to their taxable income over the next decade, consequently putting them at risk of a higher tax rate ad barring them from saving this capital for their own retirement.

The Act also seeks to update the safe harbor provision for plan sponsors to have annuities inside of 401k plans without taking on any legal liability. Life and annuity groups are celebrating the promise of this change, as the upfront expense of annuities often provides a high commission to those selling them. Annuities are inherently complex and notorious for having a high upfront cost and fees that our firm believes do not justify the benefits the product features. If not highly regulated, this proposal will have adverse results for participants who are encouraged to purchase annuities.

Fogel Capital Management, Inc. is dedicated to helping our clients navigate these potential changes in our country’s economic landscape and provide solutions. Call us today at (772) 223-9686 for a free portfolio assessment to see how the Secure Act would impact your retirement and what you can do about it!

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At Fogel Capital, our review process begins by taking a step back and looking at the portfolio in broad terms. We look to see if the portfolio is balanced correctly and whether it was set up properly from the beginning to achieve the goals of your investment strategy.

We then dive deeper into our proper review process of each investment. This review includes evaluating the weighting of each asset, analyzing the fee structure associated with any holdings, verifying that the security suits your timeline to retirement, and confirming that the risk profile of the investment matches the risk profile of the investor.

Looking back now to the Dow Jones over the last 50 years, every low created an incredible opportunity to build out an investor’s portfolio, and we see this COVID induced pullback to be no different. Of course, timing the market is tough and challenging, especially during the volatility of this magnitude, but slowly and carefully building a position over some time is something that savvy investors do when these conditions present themselves.

The follow-up to the question “What should I do with my 401(k)?” is usually “What stocks should I buy now.” The answer is highly dependent on the individual investment strategy of the client in question. We take into consideration the difference between using market downturns to buy growth or value.  In the current environment, this strategy highlights the difference between purchase technology, communications, and online services, which continue to perform well versus opportunistically investing in sectors such as hotels, airlines, cruise lines, and oil, which have been hit the hardest from the pandemic.

We understand that times of volatility brings tremendous uncertainty, and we are here to help you navigate the situation. If you are interested in reviewing your current retirement portfolio or looking to taking advantage of the opportunities in this market, we will analyze your portfolio and design an investment strategy to achieve financial success. Call Fogel Capital today at (772) 223-9686 for a free portfolio consultation.

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As the price of crude oil collapsed, many investors who are not oil experts looked to take advantage of the situation by purchasing USO, first result when searching online for the term “Oil ETF.” The fund has recently reached the limit for the number of shares it is authorized to issue. The new influx of demand, combined with the limited number of shares, actually caused the price of USO to trade higher than the net asset value of the fund.

But rather than merely gaining exposure to the spot crude oil market, these new investors unknowingly exposed themselves to the complex risks of the crude oil futures market due to USO holding such a large futures position.

USO is under tremendous strain due to a crisis regarding the physical storage of oil. The available storage space for oil is running out, and the cost of storage is rising. The difference between each month’s oil future contract highlights the cost of storage. Bad news for new eager owners of USO because USO has no intention of taking physical delivery and must pay the price to roll their position from one month to the next.

Those who have storage determine the price at which they are willing to buy as the contract nears expiration. The high cost of storage can explain why we have seen headlines reading “Oil trades at $-41 per barrel.” A few unfortunate traders were stuck still holding crude oil futures contracts the day before expiration with no place to store the oil they owned. They wanted so badly to sell the contracts before expiration that they were willing to sell them at negative prices to someone with storage space.

Even though ETFs may seem like a very low risk, inexpensive method of gaining exposure to the market, they can be quite complicated and carry risks that may not seem obvious. At Fogel Capital Management, we often take the approach of going around ETFs and directly purchasing individual securities for our clients. By doing this, our clients can avoid paying excessive fees and taking on unseen risks like in the case of USO. If you are interested in taking advantage of the opportunities the market is currently presenting to investors, we can implement our analysis of your portfolio and design an investment strategy to achieve your financial goals. Call Fogel Capital today at (772) 223-9686 for a free portfolio consultation.

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In the 1970s and 1980s, KKR universalized the concept of a leveraged buyout. In fact, they were known as the “barbarians” of Wall Street due to their $25 million dollar buyout of RJR Nabisco in 1986. Although this acquisition was surrounded with negative implications of tax avoidance and aggressive use of debt, KKR set the stage for private equity firms buying out massive corporations in hope of even larger profits. From a present-day point of view, the acquisition of companies is not KKR’s most precedent concerns.

Rather than buying companies and stripping costs to look for profit, KKR is invested in improving the management and performance of the companies they attain. One example of this incentive can be seen through their 2005 push for a “green portfolio”, which focused on managing their subsidiaries’ waste, greenhouse gas emissions, and water consumption. These conservation efforts are one of many progressions in which KKR is putting money back into the companies they acquire, and the success they are finding is unmatched.

Despite the attractive quality of investing in firms that do right for the world and the workforce, the utmost importance when investing is linked to the company’s ability to make a profit. The massive cultural changes in KKR occurred alongside structural changes that make it an extremely profitable investment for the retail investor. The first structural change was adopted as a response to the financial crisis, in which KKR converted from a partnership to a corporation. From an investor’s point of view, this eliminates the troublesome K-1 tax form. Additionally, KKR has restructured its dividend payout model to a smaller percentage of after-tax earnings, confirming they will retain higher profits than competitors. The “power of compounding” is the real secret to finding profit here. Similar to the Warren Buffet approach, accumulating capital by reinvesting dividends is the main focus for KKR, which now owns over $10 billion worth of investments on its balance sheet. These restructures have proved so successful, that another private equity giant – and one of KKR’s main competitors – the Blackstone Group, has followed in the same footsteps.

While preparing for the long term, investing in stocks like KKR can be the key to enjoying a happy retirement. Not only are they accessible and reasonable for any investor, but there are also countless advantages to investing in dividends. Over a long period of time, reinvesting your dividends back into the company will allow for an even higher percentage of growth. At Fogel Capital Management, Inc., we can implement this analysis to your portfolio and design an investment strategy to achieve your financial goals. Call Fogel Capital today at (772) 223-9686 for a free portfolio consultation.

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In 2016, the Department of Labor’s (DOL) Fiduciary Rule mandated that all professionals managing or advising retirement accounts, such as IRA’s and 401(k)s, must comply with a fiduciary standard. This conduct involved being honest about compensation and recommendations, charging reasonable rates, and always putting the clients’ best interests first. The intention for this rule was to ensure advisors were never running contrary to their client’s risk tolerance or objectives and would be held criminally liable if they violated this rule. Fee-based Registered Investment Advisors were already required to be fiduciaries. Commission-based advisors such as brokers were not. To complicate things further, some commission-based advisors can also be fiduciaries as long as they follow the suitability rule for their clients. This means they can sell any products they believe suit their clients’ situation and objective, but the measure of suitability is quite subjective.

The DOL’s Fiduciary Rule was never fully implemented and then rescinded in 2018. However, this still begs the question about an advisor’s conflict of interest if they collect commissions on certain financial products. At Fogel Capital Management, Inc., we are Fiduciaries. We do not collect commissions and are not incentivized to buy or sell any certain security over the other. Our goal as Fiduciaries is to create a portfolio that meets the individual client’s objectives and needs. As an investor, it is important to do your research and find an advisor that is transparent about their fee structure and that is geared toward your goals and risk tolerance. To discover lost returns because of hidden fees, call us at 772-223-9686 to schedule a free portfolio consultation.

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An MLP is a tax advantaged form of a publicly traded limited partnership, meaning they don’t pay corporate tax, but in return, they must pay out most of their earnings to shareholders in the form of dividends. For this reason, MLP’s are known for their large distributions to shareholders, with some actually continuing to increase their dividend throughout the oil market downturn over the last few years. Currently, the major MLP’s in the sector offer yields ranging from 6%-10%. In the low yield environment we currently face today, 10% yields certainly deserves some attention.

The MLP’s that we are focusing on are unlike other energy stocks because their business is fixated around the processing, transportation, and storing, of oil and other energy commodities. Therefore, their revenue relies heavily on production volume, rather than solely on the price of oil and gas. MLP’s as a group took a hit along with the rest of the energy sector when oil prices collapsed, however there are a handful of quality companies that positioned themselves well to benefit as the sector looks to rebound. Some of the characteristics that the high quality MLP’s possess are an emphasis on strengthening their balance sheets by reducing debt, shifting to self-funding capital expenditure, stabilizing their cash flow stream, and improving the ratio of cash flow in excess of the dividends they pay out. As production continues to grow and the stance on future oil prices begins to turn bullish, which incentives more production, master limited partnerships is an area that we view as a potential investment opportunity going forward.

Although master limited partnerships have been traditionally viewed as income investments, the downturn of the energy sector since 2015 has positioned the quality MLP’s for some significant growth as well. We see that some companies have made strides in strengthening their balance sheets, reducing leverage, increasing and stabilizing their cash flow, all while increasing their dividends throughout a sector collapse. We do see an opportunity for investors to capture above average yield with MLP’s, however like any other investment; it’s dependent on the individual’s portfolio and financial goals.  If would like to hear more about the opportunities we see in master limited partnerships or the market in general, contact me at Michael@fogelcapital.com or call 772-223-9686.

Disclaimer: The information in this article constitutes the opinion of Fogel Capital Management, Inc. and is intended to be educational in nature. This material should not be regarded as investment advice or a recommendation to purchase any specific security

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Some interesting statistics from a recent Wall Street Journal Poll: 30% of Netflix subscribers are likely to cancel to make way for new streaming services, 20% of cable subscribers are considering cutting the cord within the next year, and Americans are willing to spend $44 per month to stream their entertainment, while they currently only spend $30 per month on average. These statistics show that there is going to be a significant shake up in the streaming industry over the next few years, but the question is which platforms are going to prosper?

Although there are many factors that are going to drive the success of each company going forward, the experts at Fogel Capital Management believe the most vital are content, price, and how both affect earnings. This is where Disney and Netflix not only differentiate themselves from the rest of the market, but where one stands out over the other.

Netflix, being the industry leader and innovator for years, certainly has an advantage with its established subscriber and content base. However, that will be tested going forward as existing subscribers weigh the benefits of other streaming platforms, and the trend for exclusive original content continues. Netflix spends the most out of anyone on content creation, but this has led to a growing loss of free cash flow. As a result, they are now estimated to have an outflow of $3 billion in cash for 2019. Additionally, its stock trades at an extremely high multiple of 90x price to earnings, compared to an industry average of about 13x.

Conversely, Disney will have the upper hand when it comes to the quality and cost of its content. They already have such a massive content backlog that they won’t have to spend nearly as much as other competitors. Furthermore, others such as Apple and Amazon have to build up their content base and hope for successful shows or movies to help their subscriber growth. Disney+ is also priced at $6.99 per month¹, half the cost of Netflix² and among the lowest of the competitor group. The combination of these two factors is going to benefit Disney+ in both the short term and the long term.

If you’re going to invest in the streaming industry, it will require a long-term outlook. In the short term, the streaming industry as a whole will be shaken up as the increase in competition forces companies to keep prices low as well as spend heavily on content. Over time, some of the new market entrants won’t be able to keep up with content creation, price, and subscriber growth of the others. Fogel Capital Management has owned Disney for years, and we believe their superior content base, ultracompetitive price point, and diverse revenue stream puts them in the best position entering the streaming war.

As always, reach out to us if you would like to hear more about our outlook on the different trends and events taking place in the market or to schedule a free portfolio consultation.

Sources:

1. https://www.disneyplus.com/
2. https://www.netflix.com/

Disclaimer: “The information in this article constitutes the opinion of Fogel Capital Management, Inc. and is intended to be educational in nature. This material should not be regarded as investment advice or a recommendation to purchase any specific security.”

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When business owners take their first step in opening a corporate retirement plan, many go with the “convenient” option of using their payroll provider as their Third Party Administrator (TPA). Many payroll companies offer the choice of simply “flipping the switch” and turning on a retirement plan. This element of convenience is what attracts busy owners, but there are several reasons why you should stay away from using your payroll provider for your corporate retirement plan.

Qualified retirement plans are complex, with many important rules and testing you need to adhere by. Payroll providers often do not offer all of the necessary components of properly managing a qualified retirement plan. Instead, payroll providers offer plan templates with fund lineups for business owners to choose from. They are not fiduciaries, meaning they do not provide you with investment advice. They instead fill their fund lineups with hidden fees and get kickbacks from the fund companies.

Payroll providers also do not offer all of the compliance testing measures to ensure that your plan is properly managed, and often charge higher fees for these services as well. An experienced advisor and plan administrator that specializes in corporate retirement plans can provide immense value that your payroll provider cannot. An Advisor and Qualified TPA will help your plan remain in compliance with Department of Labor rules and the Employee Retirement Income Security Act (ERISA). 401k Advisors and Administrators bring their expertise in plan design, comprehensive compliance testing, and investment due diligence to set your company’s customized plan on a path for success.

When it comes to managing your company’s corporate retirement plan, it’s best to avoid picking your payroll provider because they seem to be the easiest and most convenient option. A good Investment Advisory Firm can make the administrative component of plan enrollment just as seamless as the perceived convenience of using your payroll provider.

At Fogel Capital Management, we are not only experienced 401k plan fiduciaries, but we also offer detailed plan proposals that are customized to your business. We provide a detailed review of the tax structure and contribution levels for the employer and employees while also taking the time to educate your employees not only on how the plan works but also how much it increases the odds of a successful retirement. Fogel Capital would like the opportunity to show you as a business owner that you do not have to compromise competence for convenience. Call our office for a FREE Corporate Retirement Plan proposal today!

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Bonds, stocks, real estate, cash, commodities…these are all financial instruments that make up a diversified portfolio. The prices of these assets do not exactly move in lockstep. While some may experience price increases, others decrease, which provides protection from price swings. This protection thus smoothes out price movements over time. Now that we have a diversified portfolio, how much weight should we put into each asset? Amongst the various needs an individual might have, we have market-related reasons for owning each type of asset class. Many don’t realize that the payout you get on equities (stocks) over time come from many different places. Once you can understand why we hold an asset like equities, you can then understand what will make your money grow.

When it comes to equities, your return can come from: dividends, future earnings growth, market sentiment, and inflation. If a company issues dividends, they will regularly pay its shareholders a sum of money out of their profits. Your return can also come from future earnings growth, which means that the value of a stock rises when a company increases its earnings. Market sentiment, on the other hand, is one that dramatically drives the price of the stock in the short to medium term. The hot stocks at the moment have people paying upwards of $80 per $1 that the company makes. These people expect the company’s earnings to grow into that price, meaning earnings will increase rapidly. This, however, is largely based on expectations. As you may know, expectations don’t always translate to reality, so in the long run, the power of the company’s actual results drives the price. The last component of a stock’s return is inflation. Inflation is the concept that we expect to pay more for something in the future than we do now. This inflation of prices is baked into the earnings of a company. For example, McDonald’s sells a cheeseburger for $1.00 now, but in five years it might become a $1.50 menu item. This increase in revenue flows through to profit, so the company is worth more in dollar terms later.

At Fogel Capital Management, we pride ourselves on constructing our clients’ portfolios with diversification and long-term planning in mind. We have over 20 years of investing experience and know exactly how to utilize data to make investments that fit your risk tolerance and help you enjoy life with the money you worked hard for. Call (772) 223-9686 for a free portfolio consultation or to get started on constructing your portfolio today.

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