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Wealth Beyond Numbers: “Significance of Wealth” Podcast Premiere

Founder & CEO Tom Ruggie, ChFC®, CFP® has launched a new  podcast titled “Significance of Wealth.” Join Tom as he delves into the evolving landscape of wealth management. In each episode, Tom explores independent thinking and tailored strategies that go beyond financial expectations, shedding light on alternative investments and private investments, addressing the unique needs of the ultra-high-net-worth, as well as the world of collecting as both a passion and investment strategy.

Check out the first episode, now available on Apple Podcast and Spotify.

Tom Ruggie Discusses Strategies for Tomorrow: Adapting to Trends in Wealth Management

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In this episode of the What Matters Podcast, Thomas joins Mike and Ashley to talk about the rapidly changing landscape of wealth management, delving into the future of the industry, and exploring emerging trends and technologies. They also discuss the importance of embracing change, underlining the impact of AI on financial businesses, and shedding light on the shift towards alternative investments.

Collectibles Prove to Be a Solid Asset Class for Investors

Anyone with a passion for certain collectibles and the patience to wait for values to grow could see some strong returns.

BY THOMAS RUGGIE, CHFC®, CFP®
Dec 15, 2023

Your youthful passion may just help fund your retirement: Collectibles, sometimes misperceived as passion projects for slightly eccentric investors, have morphed into an increasingly solid asset class in their own right.

For those willing to invest the time — and more than a few dollars – in a category that appeals to them, collectibles are offering a new generation of investors an exciting place to put their money to work. And while watches, wines and baseball cards shouldn’t replace your IRA, those with the right mindset, time horizon and sufficient passion for the items being collected should find themselves with strong returns as well.

The values of sports memorabilia, vintage automobiles, luxury watches and even collectible handbags have all seen strong growth over the last several years, even as other markets have stuttered or fallen.

Spurred on by stuck-at-home Americans flush with idle cash, values in the collectibles market surged coming out of the pandemic, as some collectors rediscovered an old hobby, and others stumbled onto a new one.

Even as the market has slowed somewhat, the value of certain luxury collectibles have still seen a year-over-year growth of 7%, according to the Knight Frank Luxury Investment Index, while other more niche items — like collectible Lego sets — have seen increases of up to 11%, according to a study published in the Research in International Business and Finance journal.

Those gains are better than real estate and gold over the same time period.

But before using recent performance as a justification for buying yourself a $20,000 watch, here’s what some experts have to say about the collectibles market, where it’s going and what’s worth the price tag.

Nostalgia rules

Things that remind us of childhood are fetching remarkable prices at auction, whether its Rocky Balboa’s boxing gloves or the old muscle car you admired in the parking lot of your high school.

“Those high school students are now in their 50s and have the expendable income to buy the muscle car they had always wanted, and are not afraid to pay for it,” said Joe Sabatini, president of exotic car show organizer Festivals of Speed.

As a new generation becomes the power spenders, demand in the marketplace shifts. Certain cars from the ’80s are now able to fetch up to $200,000 — valuations that had been previously associated exclusively with cars from the ’60s.

Following the trend line of nostalgia, Sabatini has a guess for what class of vehicle will pop off next: vintage Japanese cars.

Keep liquidity in mind

One key to investing wisely in collectibles: liquidity. Unlike market-traded assets that can be turned into cash quickly, most categories of collectibles take significantly more time to transact. In addition, to maximize profit, sellers need to be able to authenticate and properly market their assets — both of which require preparation and advance notice.

“It’s important that potential investors don’t earmark more money than they should to an asset class like sports collectibles,” said Brian Dwyer, president of Robert Edward Auctions. “Certain pieces have an inherent illiquidity to them, and if they have to be sold in a rush, it can be disastrous for the investor.”

That means investments in collectibles should be understood as providing long-term returns. For items like art and car collectibles, things like ownership lineage and provenance can drive up values significantly. Generally speaking, the holding period for collectibles should be thought of in multiple years, not months.

Correlated to the economy — contraction ahead?

For investors new to the world of collectibles, one note of caution: Like most parts of the economy, the collectibles market isn’t immune to the impacts of rising interest rates. Most experts in the space expect some degree of pullback over the next year as soaring interest rates slow demand and auction houses cool from their post-pandemic booms.

According to collectibles research group Altan Insights, the quantity of six- and seven-figure auction sales fell between 30% and 36% year-over-year, respectively.

Of course, that doesn’t mean there won’t be continued demand for certain items. While last year’s record-breaking sale of a vintage 1952 Mickey Mantle baseball card may have been a high point for the market, a proven asset like a Mickey Mantle card will continue to pay off. In general, the market for vintage sports memorabilia has proven resilient: Six-figure sales for vintage sports memorabilia were up 14% year-over-year, even while overall six-figure sales were down 30%.

Where to begin

Because collectibles markets have been strong ahead of the recent economic stutter-steps, buyers need to exercise extra caution when wading in. Working through trusted sellers is important, especially when purchasing big-ticket items, but buyers should also be cognizant of various market forces at play.

Ron Varney of Fine Art Advisors, for instance, cautions buyers in the art market right now. “High valuations have opened the doors for more artwork to come into the market,” he said, “and a lot of that isn’t what we would consider ‘investment-grade.’”

Fundamentally, collectors finding success are those with a true interest — whether it be in art, sports, wine or any other focused area. Investors who have a passion for their collection are not only more incentivized to hold on to their goods, but they are also going to be less likely to get swept up in speculative hype.

The best downside protection of all may come from the psychic income a collector gets from owning something they love deeply. Said Festival of Speed’s Sabatini regarding a client who watched a Ferrari they purchased grow to a multimillion-dollar valuation: “I don’t think those owners purchased the car as an investment. It was just a pure love of what the car was.”

Collectibles aren’t an asset class suited to every investor, but those with a passion for a particular class of items and patient funds to invest can find the category offers strong returns in the form of both dollars and happiness.

Cash Balance Plans: Big Deductions and Big Retirement Savings

By Thomas Ruggie, published November 10, 2023

With the IRS focusing more on high-net-worth taxpayers, is it time for business owners to consider implementing cash balance plans?

High-current-income business owners can’t afford to sit still with the IRS loading up its audit and IT staff to drive federal tax revenue. Cash benefits plans can help lower tax burdens and build a more affluent retirement and are worth investigating.

As the IRS grows more aggressive with high-net-worth taxpayers — even announcing it’s deploying artificial intelligence audit tools in its pursuit of additional federal revenue — successful business owners need proactive tax strategies that offer big benefits.

One of the most underutilized approaches is also one of the most powerful: cash balance plans, which create the opportunity for both big deductions and big retirement savings.

What are cash balance plans?

Cash balance plans, sometimes referred to as cash balance pension plans, have elements similar to certain other pension and defined benefits plans. They’re more complex to set up and administer than a standard 401(k), so relatively few advisers fully grasp their implications and benefits.

The U.S. Department of Labor offers a fact sheet on the complex plans, which were created under the federal Employee Retirement Income Security Act (ERISA). The plans come with some regulatory and oversight burdens, as the Department of Labor, the EEOC and the IRS all have roles in the plans’ oversight.

But don’t let the regulatory regime scare you. The premise of cash balance plans is relatively simple. It’s essentially a hybrid pension plan that offers significant benefits to the owner and potentially to other highly compensated people in the company’s management structure.

Who are cash balance plans best for?

The best candidates for cash balance plans are mature businesses with forecasted sustainable profits and a stable number of employees on their books. Cash balance plans require businesses to sign off on putting away a significant amount of money on a perpetual basis, limiting the amount of money businesses have to reinvest in themselves.

But if your business can do that, the deductions are excellent, and the rate of savings accumulation can be terrific.

What’s the benefit of a cash balance plan?

In a traditional 401(k) defined contribution plan, individuals and businesses calculate a contribution amount for themselves that they can afford today. Based on their current salary, lifestyle and 401(k) contribution limits, individuals determine the amount of money they want to contribute to their plan. It’s a straightforward calculation for individuals and their accountants.

Cash balance plans have a significantly higher contribution limit and more flexible time commitments. For individuals with multiple income streams, they also offer the ability to shelter additional income, then roll up those funds into an IRA at the end of the plan.

CBPs also allow for complete freedom for the underlying investment, meaning the individual can decide how it’s structured and who it’s structured with. Investors have access to traditional bonds, stocks, mutual funds, as well as alternative investments. In some cases, it may even be possible to have life insurance funded inside of the plan, effectively paying for insurance on a tax-deductible basis.

Conversely, cash balance plans depend on more in-depth and complex calculations. Rather than defining what you can contribute today, cash balance plans are based on a statistical calculation that factors in age, target retirement benefit and target retirement age. The contribution amount is predetermined based on an actuarial assumption and can differ year to year within a set range.

What are the drawbacks?

First, the complexities make it a less utilized tool, and there are moderate expenses to create and administer it. Second, because it’s less well known and less frequently used than other kinds of tax strategies and retirement plans, there are fewer well-versed cash benefit plan advisers. Check with your financial adviser, CPA or tax attorney, and if they don’t know what they’re doing, you’ll need to find someone who does. Most screening can be done by answering a few simple questions about your business and our employees.

Additionally, unlike a 401(k) — for which almost everyone is a prime candidate — the mandated contribution rate of a cash balance plan means that only individuals with a specific income flow are good candidates. In a cash balance plan, consistency is key. Individuals who are thinking of starting cash balance plans for their companies need to be sure that they have the long-term qualities needed to continue to fund these plans.

And for growing companies that eat cash for breakfast, lunch and dinner, cash balance plans provide too little flexibility, both in terms of available capital, as well as for employee growth; the majority of businesses that utilize cash balance plans have less than 100 employees. Businesses with cash balance plans need to be able to contribute the designated amount, even with variation from year to year.

Treasures Abound at Daniel Frank Sedwick Auction

Watch a portion of Tom’s presentation

Tom Ruggie, ChFC®, CFP®,  Founder and CEO of Destiny Family Office, presented on the ‘Management of Collectibles in Wealth Portfolios’ to participants at the Daniel Frank Sedwick LLC  Treasure Auction 34, held recently in Winter Park, FL.

Tom, a 30+ year veteran of the wealth management field is also an avid collector of sports memorabilia, autographed baseball cards, and wine, who has published articles on collectibles and alternative investments in Kiplinger, Forbes.com, Crain Currency, and Sports Collectors Digest.

He spoke about the impact of collectibles as an alternative investment, the importance of including them in financial, tax and estate planning, and introduced his Collectibles Scorecard, which helps collectors understand where they are and where they ideally want to be in 10 critical areas directly impacting their collections.

Collectible Vintage Photos Emerge as Investable Asset Class

By Thomas Ruggie, CHFC®, CFP®
Published on Kiplinger, July 9, 2023

Many of the most valuable vintage photos are sports-related, and limited supply and high demand, as well as careful and trusted authentication, are key.

With global financial markets sliding sideways, visionary investors are on the lookout for new asset classes. One tangible subclass you can actually see with your eyes is worth checking out: vintage photos.

Fine art pieces have long been found in the portfolios of high-net-worth individuals and institutions — and even pooled, in recent years, and turned into quasi-securities. The unique digital images known as NFTs (non-fungible tokens) were a massive craze-turned-crash.

Vintage photographs occupy a different space, more closely adjacent to the world of rare collectibles. Many of the most valuable vintage photos are sports-related: In 2020, a 110-year-old photo of legendary baseball player Ty Cobb sold for an eye-popping $390,000. Auction houses like Robert Edward, Heritage, Lelands and even eBay routinely facilitate trades of images for tens of thousands of dollars each.

As with collectibles like sports trading cards and autographs, the key to value in vintage photographs is not only limited supply and high demand but careful and trusted authentication. Investment-grade vintage photographs tend to be authenticated by one of a handful of well-known firms, such as PSA (where Mark Cuban and Kevin Durant are significant investors).

PSA was also instrumental in the creation of a system for grading vintage photographs that has become the market standard. Photos are classified as being one of four types, based on proximity to the original negative. Types III and IV, the least valuable, are produced from duplicate negatives. Type II photos come from the original negative but were made two or more years after the photo was taken. Type I photos are printed from the original negative within two years of the original event.

Most or all investment-grade vintage are either Type I or Type II photos. The $390,000 Cobb image was judged to be a Type I photo, taken and developed on the same day (July 23, 1910) by a known photographer, Charles Conlon of the New York Evening Telegram).

As with all forms of art, the value of a vintage photograph has a subjective element that is dependent on the content and composition of the image itself. Original photos of timeless celebrities will always have value, even if they aren’t particularly vintage. A 1993 print of British model Kate Moss by fashion photographer Albert Watson sold for $25,000 in 2017.

But in a world that is now and will forever be awash in cheap digital content, all types of high-grade vintage photographs have the power to hold collectors’ and investors’ attention.

In line with fine art and collectibles, a driving force in the vintage photo market is a community of passionate enthusiasts and connoisseurs who find satisfaction in owning rare things of beauty or historical significance. But vintage photos have also drawn an increasing number of investors primarily interested in financial return and diversification.

As for how investors can access this market, there’s no single or simple answer, but the more reputable auction houses and well-known dealers are good places to start.

Even for those with a passion for collecting will want to limit asset subclasses like vintage photos to 10% or so of your overall portfolio. (I’m a sports memorabilia collector, and my collection, acquired over several decades, hovers around this mark in mine.)

It’s also good to remember that these aren’t necessarily highly liquid assets and that they’re better suited to longer holding periods. Within your portfolio, I think it’s useful to think in terms of three pools: one up to 10 years, one from 11 to 20 years and a third that’s 20-plus years. All tangible collectible assets should go into the latter two pools.

This also means that serious investors/collectors will have a mindset of buying during market downturns, just as with financial assets. But while collectibles markets will soften during financial downturns, such assets can be surprisingly non-correlated to other markets, in particular the stock market. That’s a useful feature for wealth management planning and may be particularly relevant if today’s sideways trend continues.

The many disruptions on the horizon for our AI-infused world may help stoke the deep-rooted human longing for tangible assets and simpler moments. Together, I see those factors continuing to drive the market for vintage photographs. That means some pictures will be worth not only a thousand words, but tens or hundreds of thousands of dollars.

Crain Currency Interviews Tom Ruggie

Read this interview by David Zax, a freelance financial reporter whose work has appeared in Bloomberg CityLab, Entrepreneur Magazine, Fast Company and The New York Times.

Published Feb. 15, 2023

Crain Currency

Tom Ruggie’s 31-year career spans managing wealth both for standard investors and ultra-high-net-worth clients. Since founding Florida-based Destiny Family Office in 2015, his focus has been increasingly on the latter. He spoke with Crain Currency about the excitement of having entrepreneurial clients and how working with ultra-high-net-worth individuals grants access to the “upper stratosphere” of the investment world.

Why do you especially like working with the 13 clients of your multifamily office? 

They’re entrepreneurial. Most are either currently entrepreneurial, or the wealth came from entrepreneurship. Candidly, I’m probably not a good fit for G5-type wealth [i.e. inherited fifth-generation wealth]. What resonates with me is working with people that are like me. I started with nothing and have built a very nice business through hard work, from scratch.

What are the ways that entrepreneurial energy manifests in the client relationship? 

They tend to be appreciative of what we do for them. They tend to listen very well to recommendations. And they tend to be quick decision-makers. They know what it takes to reach a level of success because they’ve done it themselves. They know it requires hard work, being studious, being up more hours of the night. I’m still wound that way. I’m like my top client. In theory, I don’t have to work anymore, but I love what I do so much.

When you moved from more typical wealth management to the family-office space, how did things change for you? 

I was amazed. I was shocked to see what is available and how an investment banking company might treat me as the CEO of a family office versus the CEO of a wealth management firm. That was by far the biggest “aha.” We got into a lot more PE-type offerings, and that has actually progressed to doing direct investments. I’ve been shocked at how strong and consistent the performance is with some of these companies. The landscape changes when the firms looking for your business are aware that you have UHNW clients. It’s a different conversation, and you get hooked up pretty quickly with the upper end of the investment stratosphere.

I cringe when I say this, but something I kept saying to myself when I saw all this was “I understand why the rich get richer.” Because they get offered opportunities that are just not available to somebody that’s not rich. As someone who grew up lower-middle class, it goes against my grain. But at the same time, if the opportunity is there, you should take advantage of that sort of thing.

What’s a direct or co-investment you’ve been able to make that you’re excited about? 

Within our co-investment portfolio, the first company was Hipgnosis, which was brought to us by Blackstone. It’s a neat concept, a company based in the U.K. that holds rights to various music. They just purchased Justin Timberlake’s book of music rights. If Blackstone is becoming majority owners, history says they have a pretty good reason. Everybody makes mistakes, but Blackstone doesn’t make too many of them.

What’s something you know now that you wish you’d known 10 or 15 years ago? 

The Great Recession was a great learning stage for me. I had sleepless nights in 2008, worrying whether I was doing the best thing for my clients. Fast-forward to now, and I just have a sense of confidence that regardless of what’s going on out there, we are doing what’s best for our clients’ long-term interests. I don’t have those sleepless nights anymore. That attitude also conveys to the client. Clients know if you’re scared.

Tom Ruggie Speaks at Jolt! Conference

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Tom Ruggie, ChFC®, CFP® was recently the closing keynote interview at the 2023 Jolt! Conference, sponsored by the nation’s leading martech innovator Snappy Kraken. CEO Robert Sofia and Tom shared an inspiring conversation focused on how Tom’s passion for collectibles and his expertise in alternative investments have helped create a unique niche for Destiny Family Office, and are part of an overall commitment to excellence fueling the growth of Destiny Wealth Partners to a firm with nearly $1B in assets under management. Jolt! Has been named one of the top financial conferences in the country by Kitces.com.

Tom Ruggie Co-Hosts National Collectors’ Program

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Tom Ruggie, ChFC®, CFP® was the guest host, recently, on the GR8 American Collectibles Show, presented by Professional Sports Authenticator (PSA) and the National Sports Collectors Convention. The program airs Wednesdays at 6 p.m. EST on www.PSAcard.com, and can be seen or heard nationally on Pandora, I Heart Radio, YouTube, from the PSA Facebook page, Boston-area radio stations and more. Tom was interviewed for about 40 minutes about his deep passion for sports and sports collectibles, about collecting as an investment, and about what collectors need to know to prepare and protect their families if they are making their collection a part of their estate plans. The interview followed a six-page article in the July 2022 issue of PSA Magazine, titled The Autograph Archivist, highlighting Tom’s collection and expertise in helping like-minded high-end collectors with their financial needs, and his article on Forbes.com, titled Deconstructing A Collection: Preparing Your Family To Handle Your Investment Down The Road.
For this episode radio personality, author, and entrepreneur Tom Zappala (who usually teams up with former Boston Red Sox star Rico Petrocelli), was joined by John Molori, co-author with Tom and Ellen Zappala, of The Cracker Jack Collection: Baseball’s Prized Players. The Zappalas are also co-authors of award-winning books such as The T206 Collection: The Players & Their Stories, the 2016 release, The 100 Greatest Baseball Autographs, and most recently The Diamondbacks Collection: 50 of the Greatest Cards in Sports Collecting History, which details the stories behind cards in the collection of Ken Kendrick, managing general partner of the Arizona Diamondbacks. Molori’s credits include Patriots Football Weekly, Boston Baseball Magazine, SiriusXM, and ESPNW.com.

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