Private Market Strategies

An individual is an "Accredited Investor" if they have:

• $1m of investable net worth (excluding primary residence), OR 
• $250k/yr income as an individual ($300k/yr income as a couple / household).

An even higher status, Qualified Purchaser, is reserved for those with $5m+ of investable net worth or greater.

This is dictated by the SEC. 

More information available here:

• https://www.thinkadvisor.com/2023/01/10/accredited-investor-vs-qualified-purchaser-whats-the-difference/
• https://www.sec.gov/education/capitalraising/building-blocks/accredited-investor

In the future, they may be able to. 

Congress has deliberated this periodically. On June 5, 2023, the House of Representatives passed the Fair Investment Opportunities for Professional Experts Act, which aims to broaden the criteria for Accredited Investors. Under the bill, people determined by the SEC to have "professional knowledge through educational or professional experience" could also qualify to be accredited investors.

For now, we seek Accredited Investors and those we can creatively find a way to show this status has been attained.

More information available here:

• https://www.nerdwallet.com/article/investing/what-is-an-accredited-investor

• Here's the presentation I run you through in the video.
• Here's a podcast on the topic.
• A databank of articles, industry whitepapers, and examples with performance metrics are available here.

Yes, and you need not remove money from qualified or other accounts to access these strategies. Meaning, you can invest in many private market strategies within the tax-deferred shelter of an IRA or 401k. This is unlike "private placements" that require nonqualified money only, or seek to remove money from a tax-deferred qualified account. Nonqualified (brokerage, cash) dollars can also be used, of course.

No. While private market strategies would be made available to you, you are never required to use any particular private market strategy available, and certainly can continue to embrace the public markets for all, most, or just a portion of your portfolio. 

By onboarding to a firm with a track record in this space, private market strategies simply become an additional investment class available to you, when or if you want to embrace them in your portfolio.

Many clients embrace a "new 60/40" approach whereby privates encompass 30-40 percent of their portfolio. Others embrace a 50/50 public-private split, while still other investors have private strategies comprise the majority of their portfolio. This will depend on your objectives, net worth, income sources, time horizon to retirement, risk tolerance, and illiquidity tolerance.

Lack of knowledge, background, acumen, skillset, and expertise. The key to obtaining outsized returns for less volatility through the implementation of Private Market Strategies is partnering and ultimately onboarding with a Registered Investment Advisory (RIA) firm well beyond my capacity as a small, solo RIA. You would ultimately utilize an RIA I would refer you to that specializes in this area and can source, curate, and vet these opportunities correctly. 

Taub Investment Planning Services, through a strategic partnership, is able to source and provide these solutions for our Accredited Investor clients by way of a referral to a more tenured and exclusive RIA firm that has a compelling track record in this space spanning several decades. 

Though I would love to work with you directly, as a fiduciary (legally required to act in your best interest), I willingly give up my best clients via referral so that they may avail themselves of these opportunities for their investable assets.

Registered Investment Advisory (RIA) firms that work primarily with Qualified Purchasers ($5m+) and Accredited Investors (by referral only) are where you will gain access to a curation of opportunities, capabilities, and track record in this space will surpass what I or most routine RIAs can possibly offer you directly. Many of the most impressive funds and opportunities actually approach these RIAs to partner on creating and funding new initiatives and opportunities, before they reach a wider market. The larger clients of these RIAs primarily fund these opportunities, and tranches (smaller slices) are created for their smaller clients to gain a foothold in this arena.

You are not worth their time. In fact, they feel it is beneath them to do any marketing at all.

These firms already work primarily with Qualified Purchasers ($5m+) and only take Accredited Investors by referral only. They do not advertise, run seminars, or send out mailers. You won't find these firms directly no matter how many ads you click on.

I spent a lot of time asking these firms to take my clients. Most wanted $10m+ net worth or more only. Few would show me their past returns or let me conduct my own due diligence. A lot of vetting went into this on my end before I could confidently present the opportunity to my own clients and prospective clients.

It is true that a key feature of private market strategies is that, rather than embrace risk for greater returns, you can actually reduce risk and achieve greater returns, by sacrificing partial illiquidity instead.

That being said, the investment offerings available are constantly changing, but include offerings that trade daily (like any public market investment), while others have quarterly redemptions (ability to enter and exit 4x / year), and then there are those with the greatest potential returns, which indeed  may have illiquidity for one year, or even several years.

While these offerings would be made available to you, an investor is not required to use any particular private market strategy available. They simply become an additional investment class available to you, when or if you want to embrace them in your portfolio.

For sourcing, vetting, curating, running due diligence, and ultimately providing outsized returns with less overall volatility, inclusive of all advisory services (complementary wealth management, tax planning, and financial planning), the firm charges 1% on assets under management (AUM) for Accredited Investors, but this drops lower for those with higher net worth.

Taub Investment Planning Services has a revenue sharing agreement in place--from the 1% (or lower) charge, I earn a percentage and act as a co-advisor.

The costs you incur are the same whether I refer you, or if you somehow found this firm on your own. My revenue share was not "added on" to cost you pay.

For those onboarding less than $1m of assets, you may have to pay for tax planning and financial planning, or waive the need for these services (until $1m is reached, when it would be provided free of additional charge).

Finally, some perspective is often helpful here. Hedge funds, for example, typically run a "2 and 20" model, charging 2% AUM and 20% of profits earned. Upper High Net Worth Investors happily invest with them anyway. Why? Because they know that haggling over fees is an inferior approach to demanding superior net results.

For nonqualified money, there are a number of strategies that vastly outperform typical tax-loss harvesting and direct indexing. A FlexIndexing strategy, for example, can generate $200k, $500k, or $700k of yearly "losses" for every $1m invested, offsetting overall gains to the portfolio. This strategy can be used to increase cost basis in the portfolio (minimizing tax exposure), or used in one portfolio to allow rebalancing or exiting positions in another portfolio, or thirdly, to receive a windfall from elsewhere that would otherwise trigger tax liability. 

Taub Investment Planning Services is a fiduciary (legally obligated to act in your best interest), independent, full-scale Registered Investment Advisor. Based in Cleveland, OH, we work virtually with clients across the country.

The firm to which I would refer you has been in business since 1978, and also works with clients nationwide (and internationally for that matter).

First, book a consultation with me so that we may determine if we are a good fit to work together. From there, I can provide information and bonafides for the firm I partner with in this space, and, if it's a mutual fit, refer you to them.

They want to vet you as much as you want to vet them, and they don't take all my referrals. You have to be someone they would like to work with.

Use this scheduling link or the interactive feature below to get started.

After we meet, if it seems like a good fit, I can make an e-introduction for you to meet the firm's director of Wealth Management. They would onboard (transfer) your assets on a "like kind" basis (no changes to your positions initially). They primarily custody at Fidelity. 

For new referrals, they will host a kickoff meetng that will provide access to a secure document portal where existing account statements can be uploaded. Thereafter, their operations team will transfer their assets on a “like kind” basis, either before or during our first meeting.

In addition to access to their wealth management services, you will receive

access to their investment committee to learn about private market strategies, opportunities they see in the public markets, and their perspectives on investing, the market and the economy.

Use this scheduling link or the interactive feature below to get started by meeting with me first.

If for any reason post-transfer and onboarding, you want to go in a different direction, you can move your assets out of their custody the same way you moved them in. There is no specific commitment of time, fee, or penalty if you need to leave for any reason.

The one caveat is that, should you have embraced certain private market strategies that have some kind of illiquidity period, those investments would still retain their illiquidity attributes until maturity.

First, this is not for everyone. Some people cannot let go of sticking to more limited offerings by managing their own money. Others "feel bad" leaving their long-time advisor with whom they have some sort of personal or family entanglement, but who does not have a track record in this space. They have yet to embrace their right to be selfish about maximizing their financial position, and putting their interests first.

However, there is a section of the investing public who quickly grasp how availing themselves of this additional investment class can provide them more robust returns for less overall volatility, and how that is valuable (in fact, compelling) to incorporate into their portfolio.

Please understand there will never be any pressure or sales tactics if we meet. Enough people see the value in this, and onboard. I have referred several dozen of my best clients and prospective clients to this firm I partner with, and in-turn these referrals have referred their friends and family.

That being said, skepticism and due diligence are always warranted. I try to be mindful of my time (and yours), so please be sure to attend any meeting you schedule, come with good questions, but also have a respectful tone and demeanor.

Use this scheduling link to get started.