One. And welcome everybody to another smart money Circle update. I'm Adam sarhan with me today is Ken Van leeuwen, CEO and founder of van leeuwen and Company with approximately 300 million in assets under management. Ken, welcome to the show. Good morning, Adam. Thanks for having me with you, that's my pleasure. Thank you for coming on. So, can I always like to begin? Can you tell us a little about your story and how you got to where you are today? Please?
Um, sure it's, you know, as people who can see me, but the listeners can't Obviously, but the perspective I've been doing this for a while Adam, and one of the things was that way back in the 80s. Actually, I and a colleague. We were institutional sales guys, at one of the major firms that still in existence today. Oddly enough and we will working with very affluent individuals. And we realized that affluent individuals why they could buy a million two million dollars of
municipal bonds a year. I had no idea about a mortgage or if they could afford a co-op apartment in New York or if they could afford to send their kids to private school or whatnot and that totally blew me away. Like the unsophisticated ssion of from a financial perspective, personal financial aspect of many of these wealthy individuals.
So we basically he and I said, hey maybe we could try to do this on our own Roan and do a financial planning firm and, you know, financial planning really began, let's say in the early 80s and this was kind of the late 80s, so we said, hey, let's give it a shot and we went on our own and started this financial planning firm. Wow, I love it.
So, if you can can talk to me a little about your investment strategy, I'm assuming it starts with the plan, but I don't want to make assumptions because I've learned the hard way, not to. So, by all means, Well, Adam, this is, that's a really great question because yeah, it all begins with the plan. You know, when we calculate rates of return that people are going to need to obtain various goals, right?
Like, whether it's sending your kids to college or retiring or buying a beach house or anything Financial, you know, like accumulating a certain amount of money by a certain amount of day. And then we outline and say, well, you need to get a percent rate of return on your money. Okay, well, what does a I said look like right well it means a certain allocation and then we invest accordingly, right?
Because one of the things is that we want to be very goal focused because it's funny Adam just this morning I was talking to one of my clients that I've worked with for 34 years and here they are their late 80s and they're still investing in stocks because they've learned that lesson, right? That they've got to learn to their money. He has to grow to protect their buying power.
It's not what they they're going into their shell and they want to buy bonds after last year or anything of that nature. So these folks listen to me. So it was actually pretty good but it starts to plan and then we make investments accordingly whether it's an individual, stocks individual bonds, bond funds stock funds, ETFs Alternatives. But It really stays goal. Focused on them.
Totally, I love that. So can let's talk about the plan and break that down if you don't mind or unpack that a little bit, what elements, go into a good financial plan and what mistakes you see, people make with the planning, Well okay we like in financial planning like you're building a house like you're and we actually talk to clients like this and it resonates with them or at least with ours, right? It's like you were hiring us to be the architect of your
financial life, right? It's like if anyone's ever built a home or built an addition or built a new bathroom or done anything kitchen redesign, they know that they have an architect or some kind of designer, and they go through a lot of questions in terms of what you want. So, when I'm the architect of someone's life, I start with the foundation, right? So, that's why we work in a bunch of different areas of people's lives.
Tax planning, you know, we don't do taxes but what we do is we want to eliminate his taxes legally as possible. We want to do the stuff that people don't like atom, which is do you have a will do? You'll be surprised about how many folks don't even have Wills or Powers of Attorney or health care proxies or directives, right? Not the fun stuff that you like to talk about or insurances,
right? Because we're based from where fee-based Financial As we don't retain, we don't get any commission, we don't sell product per se, right? So, but, you know, we want to avoid. But life insurance is a very key need for many, many people write or disability, insurance or long-term care insurance, right? Because and that's all the fun stuff. So that's like building that Foundation before we even start
saying, oh yeah. Well you want to buy that beach house at the Jersey Shore or you want to locate the The Florida, or you want to do this, or you want to send your kid to Harvard. I mean, you got to make sure all these other things are covered, right? So that we wanted to do as well, right?
We wanted to make sure and that's why we came at it from the financial planning aspect because that's what financial planning meant to us, right, is to say, hey, we got to cover lots of things before, we can get to all this fun stuff, you know, because people only want to know about the funds. Hey, should I invest, should I buy Airbnb? Should I do this? I mean those are all the things that people because that's the fun conversation, but a really good financial planner, or advisor.
Looks at a 360 degree level for Pete. And now, I love that. So you actually you're covering almost the blind spots and or helping people. Look at things that they otherwise wouldn't look at this way when they are. It comes time to look at the fun stuff. The stocks the exciting things or the Bonzer ETFs wherever they're going to invest the money. All the other Bases are covered. So it is where the t's are crossed. The i's are dotted. So to speak.
Is that correct? Yeah. And also, what you're doing is right, you're you're, you're talking to clients because they can understand that, right? They a lot, of course, many of them exposed to a loved one passing away, right? So they understand that unfortunately, right? They understand they understood that they, that they don't like paying taxes, right? So how can you? Oh, help me reduce my tax burden, right. Hey understand all that, right?
Because I don't know of anyone Adam who necessarily likes writing a check to the IRS or the state, their state, they live in an April, right? Right, right. So think the perspective of it is, those are all kinds of tangibles that what you can do for folks. And that's what they really do. They do get into But of course, then they want to talk about the Investments, whether that's my, let's go. There then, what's next question? Please, tell us a little about
your investment strategy. Once you've got that plan in place. How do you invest the money and speak to that a little bit, please? Well, one of the things we do is of course, when we look to invest is we develop an asset allocation we divest, you know, develop a what's the percentage of stocks versus bonds, you know, and in stocks, for example, it could be National stocks, it could be US. Stocks could be emerging market stocks could be many things, right?
So, what is that percentage? What's the percentage of bonds? How are we going to get to that? Are you in a category where maybe you can have alternative Investments, such as private Investments, whether its private Equity or hedge funds or you know, some of the more exotic kind of things and then we invest accordingly and And I think the most important thing that we do Adam is we report regularly to our clients. And what I mean by that is we like to say that we're a
client's CFO, right? Like and a lot of clients because most of our clients are corporate Executives, they can relate to a CFO. So they know that the CFO is, the money guy in the money guys. Worrying about are the dollars. It's appropriately. Invested, are you getting a return on your money? Are you sleeping when you can and that's that's kind of how we relate to them, right? But the reporting is the key thing, because then we can also say, you're on track. You're off track.
We need to do this. We need to lighten here. We need to overweight here and client seemed very in tune to that kind of methodology. I love it. It. So what are some? Let's talk about risk. How do you handle risk? How do you define it? And what are some mistakes people make with respect to risk management? Um, Well, first of all, Adam. There's a lot of risk management, tools, programs, nowadays out there, right?
So, you know, you can quantifying risk using very different metrics and there's a there's a few really good ones, right? So where you can show them what risk is from a numerical perspective. Well one of the things is, is that You really have to talk to clients and that's why what is lost to you? Like what is losing? For example, what's winning to you, right? You have to really get into a tell me, you know, because most of our people we work with, have
experience. They've they've invested before. What made you happy in your prior relationships. What made you unhappy? You know, how did it make you feel when Gnu, you know, you bought XYZ and you know for 10 bucks, a share. And it went to zero or how about you know, the penny stock you bought that you bought ten thousand dollars worth and you might as well, throw them the money out the window. I mean these these are all things that we talk to clients about and then they can relate
to that, right. And everybody has a story about loss and then you can talk about well how do you win because you know, There's always that adage on the street, right? And it says basically people hold on too long to their losers and they let go of their winners early, which is really true Axiom as well, right? And again, part of the big thing that we like to do in our world is we try to, we try to really understand the client psychologically and emotionally,
right? And we try to identify them, or Or I won't say categorize because I'm not, you know, educated enough from that perspective. But we want to learn how they work, how they think about money, it's super important to me because that's gonna give me sick. Then we'll have a better chance of success if I can understand that money personality, that
right. And I think that because as we all know people can sometimes try to defeat themselves and that's one of the things that we want to try to get away from and sometimes it involves, you know, like last year was a great year. Adam, we're going through some real examples now, right? Where last year, because we came off 2021, which was a really good year for most Our clients, right? We had 22 people didn't seem as concerned. As I thought they should be, you know, with the results.
Okay. Because they were coming off a good year, they kind of know this will pass because remember, we've also got conditioned, right? We're in covid in 2020, Market went way down and then basically, you know, the FED started pumping money into the economy. And then what happened is? Yeah, there was a bunch of you, it doubled? Yeah, right. And then we came right, people were all Kind of waiting for that again, right? And of course, in 2022. That didn't happen, right?
So this year and our meetings that were having so far, you know, here it is. February 15th, you know, clients are finally seeing. Oh yeah. On paper, I lost money because we do a balance sheet for 90% of our clients, right? So and track order over quarter how their wealth is doing and clients for the first time in a long time. Saw the lines going from the top left down to the right? Yeah, people it finally started to hit home. Okay. That wow I have less than I had a year ago.
Yeah. You know, and I think that that's now we've had to regroup with clients and say, Hey, you know, but this is what you're doing, this is what it's on paper, this is how we're going to make progressions, you know? Look, we can show you five years ago, you're still above what you had five years ago. So I mean it's interesting because you have to keep reminding folks and talking to them. I always think is one of the key keys and and listening To them, which is the most important.
See, I think that I learned this a long time ago, is that Not enough advisors financial advisors, really listen to their clients. I mean, really listen, and I think that's super important and I'm going to go ahead and take that a step further and just not just financial advisors. Let's just broaden it out that people people just don't listen to each other. Well, that's probably true. Adam asked my wife on select days. There's like mine. I love that.
Okay, so let's talk about, it's a risk and your investment process. So you just start with the plan just to regroup for listeners and then you have the allocation process you say, okay? Here's the plan, you're the goals. Let's invest accordingly. You come up with an allocation model that works.
You reassess every quarter. So you stay in touch with clients and you take their emotional IQ or their psychological IQ or temperature, however, you want to word it, which I absolutely loved by the way. And then from risk, you want to Sure that they're aligned with what's actually happening in the market. So they're not they don't wake up one day and call you up and say, hey Ken, what just happened? You keep them abreast of the situation as things going.
If you have to adjust, you adjust. Sure. And so far good recap of what very good Adam see because Adam one of the things that is right when you're working with clients, one of the big things that you have. As I like to say, you have the brother-in-law syndrome, right? And, and what's important is you gotta learn Learn about the brother-in-law because the brother-in-law is the guy at the July 4th party, right eye. And he says to your client. So how you doing with your, you
know? Yeah, it's wider. That you talked about. Oh and your client says well you know we're up 7% this year if he even knows so he'll say and the brother-in-law will say well I'm up 15%. Exactly. And so what happens is that then you know, of course also really why? How did what are you doing that? I'm not doing And so then a seed gets planted in your clients head that now what we have to try to do hey my brother-in-law's up, 15%, I'm only at seven. What am I doing?
So that's why it always comes back at them, to the plan, their goals, their risk tolerance. And it's not just the client, it's couples, right? Because many husband and wives have very different objectives and risk tolerances, right? So, So, you always have to be very mindful. At of, as I called the brother-in-law syndrome, the guy that the doer of good? Yeah, yeah, yeah, yeah, yeah, yeah. But you know and we all know how the brother-in-law Syndrome works out, right.
So they lose at the end well for what happens is like you know, because I record all this stuff and I have good memory. So the next time he sees his brother-in-law has your brother-in-law. Houses portfolio. We didn't talk about it. Oh. Okay. Interesting, you know, right? Yeah. So Nice. So next question can let's talk about some Timeless lessons. Please. I'm you'd like to share with you audience that you've learned along the way. Timeless lessons. Well I mean I think Adam there
the easy ones, right? The easy ones are stay invested through all different markkula Market turbulence has you know like you may adjust, you may raise a little cash, you may make some small moves but never lose that overarching philosophy. Have about fixating on your goals. Owls, and being an investor. All right, like, for example, Adam, I'll tell you, just a quick story. I have a client. She's going to be 104 in September.
Wow. And one of the things is, and if you saw her portfolio, Adam, she's a very wealthy lady because she's invested. Of course, she had the benefit of compounding on her side, her and her late husband, Blue Chip stocks that pay dividends. Okay? So, She never wavered from that through all the years. She told me because her husband was a very educated man. So, and that's what they did, right? So stay invested is it key thing also? Don't always rush. For the shiny penny, right?
What happens is that? Last year, of course, as we all know, was a tough year, right? Right? So happens, is that now people they want to find something different, right? They want to do. They want to make money of course. So should we be buying real estate? Should I be investing in private loans? I mean, I've had that couple question, you know, where I know a guy who lend money to people and, you know, will get 12% a year or something like that. Yeah.
So Beware of all those shiny pennies. As I like to say, you know, not every investment does great. Always, especially whether it's your investing in real estate, whether you're investing in equities, things like that nature. So, that's the key thing is the sometimes. Just sit back and keep doing what you're doing, right? And not rush for that shiny penny and some people by Nature. Always want that new thing that
new thing, right? That's where you know, a good advisor can help you is because it's kind of, like, Okay, well maybe we can take a you know a couple thousand dollars in rush for that shiny penny, but the predominance of your portfolio isn't going into that and sometimes you have to as I like to say, you have to be strong with people. You have to tell them things because really what you are and we are as a sushi re to them, right? You real you're taking on responsibility to them.
And I take that very seriously whether you have thousand invested reward or ten million dollars with investment. We take that money very seriously. And you have to do that right to just Keep them going down the path, right? And making sure that nothing happens to them that's on forcing. Yeah, I know. I love that. I have a ton of mistakes. Can, what would be sometimes mistakes that you'd like to share with the audience? You know, it's interesting. The couple things right, is the
overconfidence bias. Oh yeah. That that is a super big thing that people have to be very careful about where their think they're smart and it's not that they're smart book, wise or education wise, but they know more, right? That they've picked this great stock. Talk and it's gone up. 10%. Yeah. And then they think that they never have to trim. Yep. Or they just become so enamored with how well they've done that. They don't do anything else or they don't listen to any other
advice, right? Right. And that that is I think a super Big Challenge. Because then what happens is, and I've seen this many a time where the investment starts to decline and they did. He's not a genius. Let's as I said, wait a minute, they're not a genius anymore. Well, you know, the genius there, still a genius because it's still a great company and they can see everything y. It is very Point.
Yep, continues to decline and then they start to Rationalize to themselves, and to you and to other people in their lives about why they're still right? Like they never step back. And go. Huh. Maybe the thesis has changed? Yeah. Maybe there's something that I should be weary of maybe there's something that I should examine or, or you know, the old adage trees, don't grow to the sky. Maybe what I should just do is, maybe I should take some profits along the way, right?
I like to use these old adages, right? You never go broke taking a profit, I mean, It's kind of true. But sometimes people they, they just want to hang on or or which is really interesting to me, you know, and I talked earlier in the podcast about how to, you know, save taxes and stuff, but but will believe me if there's if there's gains to be had. Yeah, the tax man is going to get a little bit of a share. So you know what? We'll share it with them. Seriously.
It's a good problem to have the shame Yeah, it's a high-class problem. As we aliens, right? So, when the, when the tax Court, as I say, drives the horse, that's when I get cons, well, I can't sell it because then I'm going to have a capital gain. I mean, intellectually, that doesn't make sense to me. Not at all. Yeah. You're in the business of making money. So, okay, you know, I love that. So, I love what you're saying
here. Can I have a whole chapter in my book, just literally on cognitive biases. So, what's the best piece of advice you can share with the audience or with your 30 year old self? Well, if I had to go back to when I'm 30 years old, right, what I would say is, Never stop investing. Pick. An investment path.
You want to go down and don't stop doing that because of the changing market conditions, or presidential administrations or job or family, always be an investor, whether it's real estate, whether it's in, you know, stocks and bonds and just continue and the old word because we're talking to my 30 year old self is It's no shame in having a Balaji, right? Really, really true? Yeah, a budget. You know, when I hear people say Adam, oh, I don't have a budget,
I don't need a budget. That's a, that's a concerning thing to me, but I think it's really important for any person, right? Whether you're 30 or 104 as my client, have a budget know what you can spend, right? But more importantly, when you know what you can spend, then you know what, you can save, right? If you think globally, right? You'll still be able to do
everything you want. But just know what you can do and what you can't do. And then, you know, again, Adam, see nowadays in this modern world here, we are in 2023 people. You know, you sometimes disregard advice from years ago. Somebody once said, right for 30 days told me, right? Everything that you spend every day for 30 days. Wow. Analyze what you spent? Yeah to say, you know I spent two hundred and fifty dollars this month on coffee, for
example, or the big thing. You know, when I was commuting was shoe shines at the train station, right? You know. Yeah. And it would just go oh my gosh, I spent that much or the newspapers or you know, because I was commuting back in the day when we read. Papers, right? It's like on the newspaper. So I and then you look back and you go. Wow. I spent a ton of money. I didn't need to read three newspapers a day when I basically just could get through one. Right?
Right war or magazines, Adam, right? I mean it was kind of like a hundred percent all blind spots. I love it. So can before we go before we started recording, we're speaking a little about sales. It's one of your passions. It's one of your skills. Can you share a little or speak? A little about that to the audience of what besides listening? I know listings. Important. How would you go about if you were to share some skills skills with sales skills? Excuse me with the audience?
What would you say there? Um, Well, listening is the key. but then also, after you've listened, well, Repeat back to the client. What you heard them say. I love that and then translate it back to them. In actionable terms how you can help them and then ask Adam for their permission. To help them.
Can I help you with that? I love that, you know, we work with a lot of corporate Executives, and frankly, corporate Executives. Probably are one of the busiest classes of business individuals, right? Because they're always working on planes coming going all the time. Go, go, go, go, go. Yeah, never have time to do their own financial planning or reviewing of their their, their finances.
So I said is that something you know, you ask them is that something that we could help you with I love that. Um, and also what you need to do is you need to put it in, be really simple, atom. And this is what I learned from a sales perspective, I have an Advisory Board of clients right in my practice, and one of the things that one of my clients and esteemed attorney once mentioned, was that awk simply to people. Yeah. Because part of what we do and this is in sales, right?
Is to get them to trust you. So how do you get someone to trust you? You get them to trust you by being simple. You know, it's not calling a buddy or pounding them on the back. It's basically saying simple, a stock like talking words and in terms that they understand don't talk over their heads because immediately, when you talk over your head, their heads, you immediately will lose them. Because then what happens is Why is he doing this? It's steep. See, it's the same with all of us.
Have you ever gone to anything? You bought anything in the guy? The car salesman is one of them, you know? Like I have no idea. Adam me, quarantine, so don't talk to me about the car engine. Talking about the stereo or Howard drives or what my friends are going to say, when I drive, and they see my car that's the space that I want to know about,
right? Right. so and also really be prepared Adam to help them by see because if you're talking to someone, They don't come to you just because they want to idly waste their time. There is a legitimate interest there, right? A well that's another thing, right? Don't waste people's time, right? Um and also job I always believe is that, you know, keep asking them probing questions.
Don't get discouraged. If they don't make decisions right away, you know, you got to help them by like you got to ask them to say, you know, I can offer three different programs because we do financial planning for fees, right? You can have the high-end planning program or the mid-range planning program, or the lower range planning program. What would you like to engage in? And then point them, it's like
the old soda example, right? You go to the movie theater or when we went to movie theaters back in the day and they had to Super Duper soda and then they had the large soda and then they had the small signal and at the counter and you go home and I don't really want that big thing but I don't really want that small one. So then they direct you to the soda, they wanted you to buy 100% at the price, that makes sense because the other ones is actually I get that 100% right.
So you know again, Get into people's heads a little bit read sales books. Actually, you know, I mean, so many of us in our business or in business, in general, want to think sales is a dirty word. I don't think so. I mean, I think basically is without great salespeople or sale, you know, where would we be in this country? Right. I mean, if you got it, if you think that every politician wants to sell us something,
right? Because they want to sell us that they can be the president of the United States or a senator or Congressman or mayor, right? So they're selling to just basically. Yeah, I mean, is the blood life blood or oxygen of the economy without it doesn't function? So I am the same way as you. I love it and and the key is then to don't be embarrassed by it. Like some people don't want to be though, I don't want to be a Salesman, right? Why not old well, right, but how are you going to go?
Commit your value to people. Is super important, right? Love it's beautiful. What can thank you so much. What is the best way for people to get in touch with you? They can reach me a couple different ways. It's a, I know it's a long when they can send me an email and Ken dot van leeuwen. And here we go. VA en L. Ee. UW e. N at Van. Leeuwen Covey a n l ee, U wwen, co.com or Same old the
old-fashioned way. Pick up the phone 609. 58000. 88. We're based in Princeton New Jersey. We have a nationwide practice. We used to travel to see individuals now. Everything of course is a zoom called but you know we'll meet you on your X and your terms if you know we can determine if we can help you so nothing but yeah. Well thank you Adam. It's been a pleasure. I hope you have a good On again soon you got to be well, have a
great day. On again soon you got to be well, have a great day.