Broadway Bank Wealth Management will develop an investment strategy to help protect what you’ve worked so hard to build.
By The Portfolio Managers at Broadway Bank
Troublesome headlines and market declines feed what psychologists call a “recency bias,” where we place disproportionate emphasis on the latest events and newest information in our decision making. The result is loss of long-term focus as we overreact to recent market declines while forgetting about the stock market’s 100% cumulative return over the period of 2019-2021. While images in media coverage can be heart wrenching, and the atrocities endured by those directly touched by armed conflict are both real and severe, effects on markets are generally short-lived.
Consider how the market behaved on news of the Iraqi invasion of Kuwait which began on August 3, 1990. As measured by total return of the S&P 500, the market declined 6% in the following month. Three months in, it was down more than 10%. The decline shrunk to just 5% at the six-month point. At nine months, the market was slightly higher that it had been just prior to the invasion (Bloomberg). This pattern is typical for market reactions to news of major armed conflicts. A survey of instances over the last 90 years showed the median market decline was about 8% while the market was about 10% higher a year later (BCA Research). While these statistics are not intended as a forecast for how the current scenario will play out, they do lend perspective. The message we take from them is to think twice before abandoning a well-considered, long-term investing plan because of a patch of market volatility which may not last as long as the crisis which triggered it.
The greater danger to an investor’s wealth is inflation. The Bureau of Labor Statistics reported a 7.9% annualized rate of inflation in February, the highest since 1982. Inflation is an insidious thief that robs the purchasing power of your money over time. If your investment returns equal inflation, then your “real” wealth has not changed. While investment exposure to inflation-sensitive commodities such as gold or oil may help to combat inflation in the short term, the primary weapons against it are growth assets. These include stocks and real estate whose values have historically risen over time at a rate higher than inflation. While we may feel the impulse liquidate our investments to wait out a crisis, doing so would be far more likely to harm our efforts to fight inflation beyond the near term, while inflation does its greatest damage over the long term. Therefore, Broadway Bank Wealth Management strongly advocates sticking to a well-designed investment plan as a way to play the better odds for long-term success.
For 80 years, Broadway Bank has been an integral part of South-Central Texas, evolving into one of the largest independently owned banks in Texas. We believe in giving our clients sound financial advice that considers their unique goals and risk tolerance. Your plan-based approach will include a comprehensive asset management proposal, protection and distribution strategy to help you successfully reach your long-term financial goals. As your fiduciary, we will always hold ourselves to the highest standard of care by placing your interest above our own.
ABOUT BROADWAY BANK’s INVESTMENT MANAGEMENT TEAM: Our in-house, locally based Investment Management team is comprised of impeccably credentialed, best-in-industry professionals. We believe in giving our clients sound financial advice that considers their unique goals and personal preferences. Our team will implement your strategy with a custom-bult investment solution to help you successfully reach your goals. Clients have complete transparency and easy access to their team by phone, in person or online. If you are interested in learning more about Broadway Wealth Management, contact us at firstname.lastname@example.org or visit broadway.bank/wealth.
Broadway Bank Wealth Management goes beyond the surface to protect this unique asset for future generations.
By Reid Reagan, VP Oil & Gas/Mineral Department Manager
According to the National Association of Royalty Owners, there are an estimated 12 million oil and gas mineral owners in the United States. Together, these owners collect some $50 billion in annual royalty payments. For many individuals and families, mineral assets form the foundation of their wealth generation. Yet too often these assets are at best under-managed, resulting in a significant loss of financial opportunity. In a time of exponential change in both the global economy and the oil and gas industry, it is imperative that mineral owners have a complete understanding of their mineral asset portfolio and its full value potential.
There are many benefits to enlisting the services of a certified professional to assist with the management of your mineral and royalty assets. First, confirm and verify that you are getting paid correctly and timely for your royalty payments. It’s critical to monitor your monthly payments for accuracy and to ensure that you are getting paid in compliance with the terms of your oil and gas lease. Second, to reclaim time. The effective management of minerals can be very time-consuming and can become overwhelming to many individuals without the necessary tools and skillset. Third, to ensure that your future generations are in the best position to benefit from your mineral assets. This is accomplished by maintaining an up-to-date inventory and status for all your oil and gas assets and when required, managing the conveyance of mineral ownership to properly transfer title and associated revenue.
For 80 years, Broadway Bank has been an integral part of South-Central Texas, evolving into one of the largest independently owned banks in Texas. Our team empowers mineral owners to protect and optimize the value of their mineral holdings. Our team offers clients industry leading full-scale management services from maintaining current inventory and status for all your assets to marketing unleased mineral properties. We combine decades of industry experience along with cutting edge technology to help mineral and royalty owners navigate the challenging energy environment.
ABOUT REID REAGAN, CPL | VP, OIL & GAS/MINERAL DEPARTMENT MANAGER: Reid joined Broadway Bank in February 2020 with over 13 years of experience in the oil and gas exploration and production industry as a mineral and land professional. He has extensive experience in negotiating acquisition and divestiture transactions, oil and gas leasing, business development, prospect evaluation and due diligence. He has spent years developing his oil and gas transactional proficiency while working multiple oilfield basins including the Permian Basin, Anadarko Basin, Powder River Basin, Eagleford Shale and the Barnett Shale. If you are interested in learning more about our oil, gas, and mineral management services contact Reid Reagan at email@example.com or visit broadway.bank/wealth.
Broadway Bank Wealth Management focuses on selecting the right investment strategy for your needs
By Kelly Corbiere, CFA, CMT, CFP® and the Portfolio Managers at Broadway Bank Wealth Management
Bitcoin, the original cryptocurrency invented in 2008, has been attracting headlines as an extremely popular and widely followed investment opportunity. Bitcoin is also a technology and could be an inflation hedge, a tool to guard against political risks, a vehicle to democratize monetary policy, an anonymous method of transacting for scrupulous and unscrupulous players alike, or an investment. In short, the reasons someone may want to hold Bitcoin are abundant.
A common question we get is whether Bitcoin is a good investment. As with any investment, the answer depends on what it is worth relative to its price. Investments are traditionally valued based on the cash flows they generate. If the value justified by cash flows is more than the current price, it signals that investors should buy. The issue with Bitcoin is that it does not have cash flows as a business does, making it impossible to value using traditional models. Without a value that is anchored in economics, the price of Bitcoin moves in response to investor behavior which is motivated by factors that are difficult to predict or quantify making it a speculative investment. In this context, “speculative” means the basis for the investment decision is based more on assumptions than on hard data, well-established relationships among quantifiable factors and prior experience in similar scenarios.
The long-term price trend for Bitcoin has been generally positive. However, its volatility has been 15 times higher than that of the US dollar in foreign exchange markets, which are considered volatile in their own right. Bitcoin has experienced seven drawdowns of 70% or more in the last decade compared to just one drop of that magnitude for the S&P 500 over almost a century. Bitcoin has experienced four bear markets, defined as price drops of 20% or more, so far this year. It lost 14% during a single hour of trading during April 2021. One Wall Street firm calculates that if you missed the 10 best days for Bitcoin between 2013 and 2019, the return on your investment would be an average annual loss of 44%.
Bitcoin is no longer unique and the number of risks to its dominant position are growing. Thousands of similar crypto assets exist because barriers to entry are minimal. Although Bitcoin remains the largest cryptocurrency based on market capitalization, its market share has fluctuated wildly since its launch. Some of Bitcoin’s competitors have arguably superior technology. Central banks are also entering the game with the launch of their own digital currencies that may serve as formidable substitutes for Bitcoin over time. Moreover, tightening regulation, taxation and counterparty risks (as evidenced by theft directly from exchanges) offset some of the benefits of owning cryptocurrencies.
Bitcoin is certainly a disruptor and has gained legitimacy as its uses have broadened. Whether Bitcoin will continue its reign as the most widely used cryptocurrency over the long-term is less than certain. Neither the risks nor potential returns are easily quantifiable. A speculative position in Bitcoin could result in either large gains or losses for short-term and long-term investors alike. This exemplifies the caution frequently given to investors that past performance is no guarantee of future returns. While we are bullish on the blockchain technology behind Bitcoin, we prefer to obtain exposure to its application to cryptocurrency indirectly via companies that are beginning to use, accept or trade cryptocurrencies such as PayPal, JPMorgan and Bank of New York Mellon, to name a few. The crypto market is still in its infancy. We submit that investors seeking to protect their wealth carefully research investments in companies profiting from increased use of cryptocurrencies, because for now that is the more prudent way to gain exposure rather than holding substantial positions in the cryptocurrency itself.
For 80 years, Broadway Bank has been an integral part of South Central Texas, evolving into one of the largest independently owned banks in Texas with more than $4.6 billion in assets and nearly $3.0 billion in Wealth Management assets. Broadway Bank offers a full range of financial services including personal, private, business, mortgage banking and wealth management. Broadway Bank is committed to enhancing the banking experience through leading edge technology. With financial centers across San Antonio, Austin and the Hill Country, Broadway Bank delivers modern banking, locally sourced and personally delivered.
ABOUT THE AUTHORS:
Kelly Corbiere has more than 20 years of experience in investment management. Prior to joining Broadway Bank as a Senior Vice President, Portfolio Manager. She worked as a global equity analyst and prior to that she was an investment manager in a wealth management group for a major U.S. bank. She spent the early part of her career in fixed income. Kelly has earned the Chartered Financial Analyst (CFA) and the Chartered Market Technician (CMT) designations and is a CERTIFIED FINANCIAL PLANNER™ professional.
Broadway Bank Wealth Management’s Portfolio Management team is led by Jeff Nelson, EVP and Chief Investment Officer. Jeff has over 14 years of professional investment management experience, including five years in private practice providing investment management and financial services to clients. He retired from the United States Air Force after 20 years of service at the rank of Lieutenant Colonel. Jeff has earned the Chartered Financial Analyst (CFA ) designation and is a CERTIFIED FINANCIAL PLANNER™ professional.
Broadway Bank Wealth Management can help your family focus on healing
By Julie Hardaway, SVP, Director of Wealth Services at Broadway Bank
My grandmother was one of 12 siblings. Her family had one heirloom, a clock. The clock was passed around the family without conflict over many years, but sadly, this is not always the norm. Estate planning helps ensure that your exact wishes are fulfilled. It also gives clear direction on personal property to mitigate unnecessary conflict among loved ones.
While personal property may not have much inherent value, it may be priceless due to sentimental value. Most people do not think their family members or beneficiaries will battle over the division of personal property, and so they often fail to properly address the matter. So, what can you do to ease this process and ensure your wishes are fulfilled? Here are seven key questions to get you thinking about this issue.
1. Have you reviewed your estate plan and the provisions that specifically address personal property? Wills and trusts often define what “personal property” is, and that definition may need to be modified for your situation.
2. Does your estate plan contain a statement that you may leave a handwritten memorandum designating certain individuals to receive specified personal property? Have you written such a memorandum? I have administered estates and trusts for many years and have seen very few personal property memorandums. If you know of items that you would like to leave to certain people, you should write a memorandum to the executor of your estate. It should be wholly in your handwriting and signed by you. You could even discuss with your family members what items they would like to have. Such a discussion would give you the opportunity to settle any conflicts should more than one family member want the same item.
3. Does your estate plan address whether your estate will pay the cost of shipping items to beneficiaries? Shipping costs can be an unpleasant surprise, especially for furniture items. Think about where your family members live and any inequality that shipping costs may create, and whether the extra expense of shipping should be deducted from their share of financial assets or paid by them.
4. How will conflicts between family members or beneficiaries be settled? You may decide that your executor or trustee has the final decision-making authority in conflicts or that certain items be can be sold and the proceeds split. No matter what you decide, your estate plan should address these situations.
5. In the event that one family member wants more items than others, do you want personal property valued and distributions to be equalized with cash? Determine if items should be sold in an estate sale, auction or donated to charity.
6. Are you currently married and have children from a prior marriage? You should pay special attention to provisions in your estate plan that relate to personal property. If personal property provisions are left unaddressed, it is very possible that your surviving spouse may end up with your children’s heirlooms. This might cause a rift between your children and your surviving spouse. You should not assume that those items will make their way back to your children at your death or upon the death of your surviving spouse.
7. Have you spoken to your family or potential beneficiaries about your estate plan? If appropriate, you should talk with your family members or beneficiaries about the issue of personal property and your estate plan. The best estate plans are the ones that do not contain surprises. Make decisions now to ensure that the distribution of personal property is as painless as you wish it to be.
Carrying out a loved one’s wishes can be a complex and challenging process for families while they grieve. Planning ahead can help your family focus on healing and celebrating a life. Each estate is unique and some have assets that require special oversight like rural land, mineral rights or personal collections. At Broadway Bank Wealth Management, our team of highly knowledgeable and experienced advisors can act as executor, trustee or agent for your estate. We provide guidance and recommendations to ensure the administration of your estate is efficient and effective.
For 80 years, Broadway Bank has been an integral part of South Central Texas, evolving into one of the largest independently owned banks in Texas with more than $4.6 billion in assets and $2.6 billion in Wealth Management assets. Broadway Bank offers a full range of financial services including personal, private, business, mortgage banking and wealth management. Broadway Bank is committed to enhancing the banking experience through leading edge technology. With financial centers across San Antonio, Austin and the Hill Country, Broadway Bank delivers modern banking, locally sourced and personally delivered.
ABOUT THE AUTHOR: Julie Hardaway is the SVP, Director of Wealth Services for Broadway Bank Wealth Management. She provides guidance to Broadway clients regarding estate planning, and trust and estate administration. In addition, she leads the specialty services groups of Estate Settlement, Real Estate and Oil & Gas. Prior to joining Broadway in 2005, she served as the Staff Attorney for Bexar County Probate Court No. 1. She is a graduate of Southwestern University in Georgetown, Texas, with a Bachelor of Arts degree in International Studies. She earned a Doctor of Jurisprudence from Texas Tech University School of Law in Lubbock, Texas, and was licensed to practice law in Texas in 1996. Julie was elected to the Fellows of the Texas Bar Foundation in 2019. If you would like to learn more about our Wealth Management services, contact Julie Hardaway at firstname.lastname@example.org or visit https://broadway.bank/wealth.