Fiduciary Services & Investing Advice

Today we welcome Gil Baumgarten, president of Segment wealth Management, Gil is a 36 year veteran of the investment industry. In 2010, he jumped off the Wall Street brokerage train to start Segment, a fiduciary firm where the interests of the client and the firm could align. He is a multi-year recipient of the Top 1,200 Financial Advisors in America distinction by Barron's and as a newly published author with his first book launching in May titled “Foolish”: How investors get worked up and worked over by the system. We'll talk about the game stop short squeeze and, and ugly truth: Wall Street still has a hidden agenda.

After 20 years of working in big brokerage firms, Gil escaped the shadows of Wall Street to start his own RIA fiduciary firm so he could advocate for his client’s best interests without a firm’s agenda breathing down his neck.

In this episode, we’re discussing…

·       [2:49] What a fiduciary means and what he does

·       [3:50] The difference between fiduciary and brokerage business and which entity regulates each of them.

·       [4:37] His experience working in Wall Street, the good, the bad, the ugly

·       [8:09] The Wall Street agenda and his advice about it

·       [9:19] The disadvantage of the brokerage industry vs. advantage of a fiduciary model for the client care

·       [11:01] How does a fiduciary get paid vs. Brokerage model

·       [14:47] About the book FOOLI$H and his advice on how should invest

·       [17:14] SEC regulations, about IRS and taxes advice

·       [21:30] Seven tips for better investment results

·       [24:16] His position, his advice about bitcoin investment and other kinds of currency like this

 Gil’s Top Tip’s

·       “When you pay a fee to somebody like me, my business is built in such a way that legally I am required to look out for only the person who is hiring me and paying me to contrast that with the brokerage business that doesn't operate that way. They cut side deals with mutual funds and they're just not in a position to be a full fiduciary.”

·       “That being the case, you could walk into a brokerage firm and say, help me with my $100,000. They're going to provide a flurry of activity for commission's and they're going to get paid, and you're going to move on down the road. And they don't have any fiduciary responsibility, nor should they. And so, making the brokerages all adhere to a fiduciary standard is not the solution to this. I think trusting somebody to make sure that you get all of your needs accomplished, may not necessarily be best done on a brokerage platform. That's my personal opinion.”

·       “If it involves risk for the firm, and it doesn't pay them, you're not going to find it in the maze. So that doesn't necessarily mean that all the client’s goals and objectives are being considered. So, when they give you a recommendation, it's the best thing for you to do given their agenda, not necessarily given the client's agenda, and that those two are not in total opposition. It's just not perfect.”

·       “The brokerages operate in a system of suitability. They don't have to recommend the best thing for you. They only have to recommend things that are suitable for you. And what comes with that is that the client has to acknowledge yes or no over the phone verbally binding as to whether that's okay with them for you to move forward”.

·       “If I'm going to do something for a client, that might create a taxable event for them, I normally will call the client and discuss that taxable event and give them some say in the matter, but our business is fully discretionary. We can buy and sell whatever we want. And we think it is that way because we are required not to front-run the clients not to be cut inside deals with other providers”.

·       “Focus on the long term. Don't hop around, buy broad market exposure and let it sit by cheap market exposure, because the difference between an expensive mutual fund and a cheap mutual fund, as long as they're buying stocks is not going to be that dissimilar and normally dissimilar by the amount of the fee. So, cheap investment results and let it sit. I would recommend that people always bet that the market is going to rise. The market goes up in 81% of all circumstances. If you're playing on that, 19% you're the fool”

·       “Don't be the guy or gal that plays that 19% for the same reasons that fish should avoid flashy objects. So, we should not go out and buy speculative things”

·       “Learn about taxes, primarily, we managed for unrealized gain, may unrealized gain be the gain that you've made in past years that you've never sold because taxes don't apply to increase in market value unless you sell it”.

·       “Another reason not to hop around from investment to investment, your money compounds a lot better when you sit tight, I would say avoid stock tips for on stocks trading under $10, you're not going to be able to build a quality portfolio of $5 stocks”.

·       “I would also encourage people to write down former tips that they wanted to act on and see how they do later, they tend to only notice the ones that they should have got bought because they went up so much. And then they feel like every tip I get is just my next opportunity. If you want to really have a fair evaluation of what you think you should do or should have done. Keep a listing of all that and research the losers just as well as the winners. So those would be my seven tips for better results”.

Resources from Gil

Segmentwm.com |   segmentwm/blog

ABOUT GIL BAUMGARTEN

Is a 36-year veteran of the securities and investment industry. After beginning his career at the venerable EF Hutton in the early 1980s, Gil became a top producer for UBS and Smith Barney, what is today Morgan Stanley. However, Gil found Wall Street routinely emphasized its own interests over those of the client. By the time 2010 came about, Gil jumped off the brokerage train to start Segment, a fee-only firm where the interests of the client could align with the interests of the firm.

In 2021, Gil published his first book, FOOLISH: How Investors Get Worked Up and Worked Over by the System. The best-selling book highlights the hidden problems endemic among Wall Street brokerage firms, as well as the deeply rooted self-destructive tendencies of investors, and provides investors with an actionable path forward.