“Build relationships.” With Jason Hartman & Wesley Botto

Before being able to take advantage of the future recovery, you need to position your personal finances in a way where you can capitalize on opportunities that present themselves. This looks like shoring up your emergency savings, getting rid of your credit card debt, etc. If you have a low burn rate of your cash, […]

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Before being able to take advantage of the future recovery, you need to position your personal finances in a way where you can capitalize on opportunities that present themselves. This looks like shoring up your emergency savings, getting rid of your credit card debt, etc. If you have a low burn rate of your cash, then you will be more agile and prepared to jump on opportunities that present themselves.

As a part of my series about “Investing During The Pandemic”, I had the pleasure of interviewing Wesley Botto.

Wesley Botto is a financial planner and CPA with Botto Financial Planning & Advisory. Wesley entered into the financial advice business because he enjoys building relationships. Previously, Wesley worked at Deloitte and quickly learned that the part he enjoyed the most was getting to know the client. Wesley has found that it is easier to solve clients’ problems if you truly know and understand them. That perspective combined with CPA background and attention to detail has led Wesley to lead a firm that provides high-touch personalized advice.

Thank you for doing this with us! Before we dig in, our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?

Thanks for having me! After majoring in accounting and earning a Master’s in accounting, I started my career at Deloitte. It was a great place to start my career and I continue to lean on many of the lessons learned there. Once I started having a family, I decided to pursue a career that allowed me to be home when I needed to be and have more flexible working hours. I left Deloitte and was very open-minded about where my career would take me. I started by helping small businesses with finance and accounting. My dad, Mark Botto, has been in the financial planning business for 35+ years. It was at that time that he asked if I wanted to spend a day a week with him learning the financial planning process and using my background to help his clients. Once I started working with him and saw the real value that we can add to our clients’ lives, I never looked back. I started full-time and have loved it ever since.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?

One of the great things about being in this business is that I get to see a lot of different people from many different walks of life. Actually, the reason that I started in accounting was because when I was as young as early teens my dad would talk with me about all the different career paths I could take. He talked with me about some of the career paths that some of his clients had taken (of course without telling me the names of the clients). From a very early age I started to envision what it would be like to pursue different dreams. At some point along the way, I landed on accounting. Not because I love debits and credits, but because of the doors that open by starting your career in public accounting.

So, to get back to your question, I still am fascinated to hear about the paths that our clients take. It is so interesting to hear how each clients’ goals are unique. One clients’ goal is to retire and live near Disney world (and work there too!), another wants to complete a marathon in every state, another wants to buy a Porsche, and yet another is content volunteering at a food bank and volunteering in their community. Some clients have goals that require a significant accumulation of wealth, others are content living modest lifestyles so that they can retire at an earlier age.

Everyone is different. So that leads to a lot of interesting conversations between my wife and I and with my own children. There is certainly no right or wrong in terms of goals that one has for their life. It’s up to you, and I feel like I get to pick and choose the ones that interest me most based on what I hear my clients talk about.

Are you working on any exciting new projects now? How do you think that will help people?

I get very excited about helping young families get off to a great start in their path to establishing financial independence. We work with many families who are in retirement or nearing retirement. We can add a lot of value to their financial lives because there are a lot of moving parts with them, and the numbers tend to be bigger so a slight tweak here or there can add significant value.

As a fellow millennial, I empathize with the struggle for millennials to receive quality financial advice. Before I got into the business, I heard of my friends and coworkers being sold products they didn’t need or understand. Often times they were sold these ideas by another millennial. So, I have been working hard to right this wrong. It shouldn’t be that difficult for a young person to receive quality, fiduciary advice. So this is why we are set up as fee-based advisors. We have been helping many young families that do not have significant assets built up yet. So many advisors might not be interested in working with them, however we want to help them. And there’s no product sale at the end of the tunnel. We work on a fee for advice platform that is easy to understand.

Given that our entire industry is trying to figure out how to work with young people in a way that makes sense for the client and the firm, the service model is constantly evolving. So far I’ve found that as it evolves, it continues to get better for the client. It is a lot of fun for me to look back and think about all of the young families that we’ve helped get on a great trajectory. I feel like the quality advice they receive today will help them for the rest of their lives.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

This is easy to answer, my dad has been invaluable. I’m always interested to hear people’s reaction when I mention that I work with my dad. Some people have tried working with their parents and it went sideways, so those folks are always intrigued at how we make it work. Some people would love to do it but never had the chance. I find it an incredible blessing to be able to spend this much time with my dad at this point in my life. Most young dads that are building their careers have to search around for a mentor or guide, but I didn’t have to look far.

My dad has been very helpful to me during the current market volatility. He’s been through many ups and downs in the market and he understands what clients need to hear. One thing that he tells me a lot that may sound basic, but is difficult to do all of the time is to just tell the truth. This can be difficult when a prospective client is talking with us for the first time and they share their hope that they can retire in a year. After digging into their situation, if we find that likely they won’t be able to have fund their lifestyle for the rest of their life if they retire in one year, that can be a very difficult conversation. It would be easy to beat around the bush and try to give them the news that they want to hear instead of the truth. So my dad has helped me with conversations like that, and helped me to understand that clients can want the truth and once they feel like we are being genuine and truthful with them, they can then deal with the facts — whether they’re what they expected or not.

Let’s shift a bit to what is happening today in the broader world. Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?

When feeling anxious, one thing that always helps is to focus on the things that we can control. So if you are feeling anxious about your health, I would recommend doing what you can control: wash your hands, stay home, exercise, eat healthy foods, etc. Just like with other sicknesses, if we are taking good care of ourselves and taking proper precautions, we can vastly reduce the likelihood that we get sick. Beyond that, we have to accept that some things are out of our control. But in my experience, if we focus on what we can control then our anxiety will subside.

The same applies to those that have anxiety related to their finances. Many families are feeling the crunch right now. Either they’re business owners and can’t make payroll or they’ve seen their investments take a serious hit. If we continue to focus on what we can control that can help with our finances as well. We have been reviewing our plans with our clients, and showing them that their portfolios were built to sustain shocks like this. We have their money that they intend to use in the short term in cash or near cash, which will allow the rest of the portfolio to recover. Once we go over that with our clients, we believe that their anxiety reduces because they understand that they will get through this.

Ok. Thanks for all that. Let’s now jump to the main core of our interview. As you know the stock market and the economy in general have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?

Great question, I have heard this many times over the last few months. I would first ask them how they are doing financially. If their income has been affected by the pandemic I would ask about their emergency fund because perhaps they should be saving the $500 a month to get their emergency fund to the level that it should be. If their income is unaffected by the pandemic, I would say keep doing what you’re doing. Some clients have more cash on the sidelines so they are actually increasing their monthly deposits. Many clients have asked about putting in a large lump sum in addition to their monthly deposits. I have recommended against doing that, and instead breaking up the lump sum and dollar cost averaging the money into the market over the next few months.

The volatility of the last month is a great reminder that trying to time the market is not the best idea. If the client already is doing the dollar cost average strategy, then stay the course. It’s times like these that the dollar cost average strategy makes even more sense.

Eventually the economy will recover and rebound. Certain sectors, like travel and hospitality might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?

Before being able to take advantage of the future recovery, you need to position your personal finances in a way where you can capitalize on opportunities that present themselves. This looks like shoring up your emergency savings, getting rid of your credit card debt, etc. If you have a low burn rate of your cash, then you will be more agile and prepared to jump on opportunities that present themselves.

Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?

Some stocks that are more attractive in this environment are high dividend stocks. With interest rates so low, dividends are higher than US 10-year Treasuries. Also, small cap value has been the hardest hit during the downturn. Is it reasonable for small cap value to be hit harder than other sectors, or is it more likely that this sector will rebound quickly?

Are there alternative investments that you think more people should look more deeply at?

We do not typically use alternative investments in portfolios unless a unique client situation arises.

If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long term investment what would you advise them to do with it?

Since they have made it clear that this is a long term investment and they do not need it in the near term, I would stage the money into the market using dollar cost averaging. When you’re in it for the long haul, it’s best to be diversified across many asset classes. So I would advise a portfolio skewed heavily toward equity (80%+) that is well diversified which will mitigate risk and increase predictability. This is of course a very quick and dirty analysis and I would have a few follow up questions first, to make sure I understand their situation completely. I’ve been surprised at times because someone may think that investing $10,000 for the long-term is the best thing they can do with their money, but after asking follow up questions I find out that they have credit card debt or have the equivalent of a 1-week emergency fund.

Ok, thank you! Here is a more general finance question. You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?

  • Cash is king. I have heard this many times throughout my life, however this really sank in when a partner at Deloitte gave me this advice right before I left the firm to set out on my own in advising small businesses. In times like this, everyone is being reminded about the value of liquidity. It is so important to not over-leverage if you’re looking to have sustainable long-term success — that is true whether you’re a business owner or a young person looking to set yourself up for financial success.
  • Do the basic blocking and tackling. An emergency fund never sounds exciting, but an adequate emergency fund has helped more people sleep well at night than unisom. As a young person it can feel like you’re invincible and that you ought to take risks while you’re young. That can be true to a certain extent, but the reality is that if you take care of the basic blocking and tackling you can take risks that do not have much downside. This includes regular investments to your retirement accounts.
  • “The time to buy is when there’s blood in the streets” — Baron Rothschild. This is important to know, even if it is just so that you remember the inverse — don’t sell when there’s blood in the streets! This has been made very apparent with the current downturn. Investors that have this perspective will recover from a downturn more quickly than the average investor.
  • Gamble responsibly. You can learn valuable lessons engaging in speculative investing at a young age. Go ahead, try to pick the next Google, Amazon, or Netflix. But just like you do before you walk into a casino, give yourself a budget before you start this investing. Focus the rest of your investments on the basic blocking and tackling (see above).
  • Find people that know more than you. Wise advisors are worth their weight in gold. Whether it’s a CPA, investment advisor, or just an older friend that has seen and learned more than you, pick their brain and put it into practice.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

“Someone is sitting in the shade today because someone planted a tree a long time ago” — Warren Buffett. I love this because it hits on a couple of things that are important to me: a generational mindset and delayed gratification. Another take on the same idea is that “we all stand on the shoulders of the generations before us.” This is true for everyone. If we can have a long-term perspective it also helps in the day to day because we live with more intentionality and purpose. If our goals are too short-term, we can opt for the quick fix that may have significant negative effects in the long run.

We have a beautiful 150+ year old oak tree in my front yard. I’m sure the person that planted it many years ago enjoyed the shade of that tree. But since then, many families have rested in the shade of that tree. If we can all adopt a longer term perspective, when it comes to finances in particular, we will make a profound impact on our community and our family.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂

Financial literacy to the masses enabling people to make an impact on the world. It is very rewarding to see how good advice and a few small tweaks in someone’s financial lives can make a profound impact. I have found that once our clients have received good advice and are on a sustainable financial path, they can start to look at how they can make an impact with their finances. One example is that a young couple realized that they are in good shape financially to start growing their family by having kids. Another example is a couple in retirement realizing that they will have more than enough to fund their lifestyle through retirement, so they make bigger gifts to the charities that they care about.

If we can cut through the confusion of finances and add some clarity to people’s unique situations, clients can live with confidence and make an impact on their community and future generations.

Thank you for the interview. We wish you only continued success!

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