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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.

Winning Mentality in Wealth Management

Tom Ruggie doesn’t believe in shortcuts—whether choosing investments for his clients or getting through his CrossFit WOD (workout of the day). “I choose to do the most difficult workouts appropriate to my ability, and push from there.” For more than 25 years, he has applied this sort of winning mentality to his wealth management business. 

Tom attributes Ruggie Wealth Management’s success in large part to delivering a ‘fiduciary’ standard of client care—in which clients’ interests are placed first and foremost. “There is a tremendous need for fiduciary advice, free from conflicts of interest. I strongly feel that as independent Registered Investment Advisors we have a significant competitive advantage in our clients’ eyes, because we have positioned ourselves as objective champions of their financial success. We want to do things right, and that includes investing for a clear purpose that’s spelled out in depth in clients’ financial plans. We believe in making realistic financial projections, investing for the long term, communicating weekly, and when necessary, delivering hard messages about spending and retirement dates to keep clients on course. 

I love building teams and competing. Our team takes pride in playing a critical role in helping clients from across the wealth spectrum achieve their goals — ranging from a comfortable retirement to giving away fortunes. And for that, there is no shortcut.”

From the very first phone call…

Tom Ruggie is many things. He is a husband, father, entrepreneur, sports enthusiast, Chartered Financial Consultant®, Certified Financial Planner™, and one of Barron’s Top 1200 Financial Advisors for the eighth time. Whatever the hat, he believes that once the big things are done, it is often the little things that distinguish good from great. “Little things” like promptly returning phone calls or emails, immediately taking action when a need arises, proactively reaching out with new opportunities, and just checking in to see how things are going…all the things they don’t actually consider “little” at all.

From the very first phone call, Tom and the Ruggie Wealth Management team want to prove to you what it is like to have a firm that has been recognized among the top in the country make you their top priority. If this is the type of Financial Advisors you want, let’s talk. Call us today at 352.343-2700.


Securing An Estate Plan Brings Peace of Mind Today and Provides Hope for Tomorrow

It has been said by many wise people in various ways that studying our past gives context to the present and hope for tomorrow. Assessing your financial history and current reality leads into creating an estate plan as a part of your comprehensive financial strategy.

Having an estate plan can be one of the most effective ways of lowering estate taxes while providing for your family’s needs today and leaving a legacy for the future. As your estate planning partner, Ruggie Wealth Management may:

  • Coordinate with your attorney and CPA to implement your estate plan from beginning to end
  • Retitle assets to reduce or eliminate estate taxes or avoid probate
  • Conduct routinely scheduled planning reviews
  • Review and coordinate your philanthropic/charitable contributions

At Ruggie Wealth, our passion is to serve people and to see your financial goals come to life. Call us today at (352) 343-2700 to ask any questions or to set up a time to meet with our wealth management advisors. We are ready to help.

Pragmatic Retirement Planning by Professionals You Can Trust

When it comes to your retirement, we reject formulaic answers or cookie-cutter plans. At Ruggie Wealth Management, we avoid the temptation to idealize the road ahead. Instead, we look at where you are and where you need to be financially by looking at multiple indicators that can help you prepare and improve your financial health in the years ahead. We think through multiple scenarios, (for example, how do you best avoid outliving your money), provide action steps to help set you on the right course, monitor how you’re doing, and consistently communicate where you are in meeting your goals.

Our innovative Ruggie Method Distribution Strategy replaces conventional evaluation processes which determine how and when an individual’s retirement savings should be distributed, with a statistical method. This Ruggie Method Distribution Strategy is also ideal for helping foundations determine the optimum annual distribution of their portfolio balances.

Call us today at (352) 343-2700 to ask any questions or to set up a time to meet with our wealth management advisors. Planning for the future starts today. We are here to help.

RWM Partners with National Advisors Trust Company to Bring You World-Class Trust & Custodial Services

Ruggie Wealth Management has expanded its trust solutions for clients whose financial, family or business needs require the services of a corporate trustee, by becoming a Trust Representative Office of National Advisors Trust Company, FSB (NATC).

With $10 billion in assets under administration, NATC is one of the largest independent trust companies in the nation. It is nationally-chartered and regulated by the Office of the Comptroller of the Currency, (a bureau of the U.S. Treasury Department) It is also a member of the Federal Deposit Insurance Corporation.

By working with NATC, your Ruggie Wealth Advisor and your estate planning attorney are able to create a solid, effective estate plan that helps you minimize estate transfer and gift taxes while providing a flexible trustee solution. Together, we help improve the overall transfer of wealth between generations, and help you remain confident about the future of your estate.

Your estate planning professional can work with you to recommend and establish the appropriate trust. They will appoint Ruggie Wealth as your investment advisor and NATC as a corporate trustee, co-trustee or agent for trustee. Families can retain as much involvement and responsibility with the trust as desired.

Individuals sometimes appoint themselves, a family member, attorney, or family friend as trustee of their trusts. We know there’s no one-size-fits-all trustee solution that works for every situation. For many individuals, the administrative aspects of serving as trustee are time consuming and challenging. It may be difficult to ensure compliance with the trust document.

By appointing Ruggie Wealth to act as the agent, the trustee will still retain fiduciary responsibility, while the trust company provides asset custody, trust-style statements and trust officer support.

Ruggie Wealth works directly with the trustee to manage trust assets, help perform trust administration duties as outlined in the trust document, such as distributions, statement production, tax reporting and bill paying and achieve the stated financial objectives.

For more information, talk with your Ruggie Wealth Advisor.

Trust Services

  • Revocable trusts
  • Charitable trusts
  • Irrevocable life insurance trusts
  • Special needs trusts
  • Irrevocable trusts
  • Institutional trusts
  • Agent for trustees

Custodial Services

  • Securities safekeeping
  • Income collection from securities
  • Settlement of securities trades as directed
  • Payment of funds when directed
  • Timely statement delivery
  • Custody for alternative investments

Retirement Plan Services

  • IRAs: custodian or trustee
  • Defined benefit plans
  • 401(k): daily valuation platform
  • Defined contribution plans
  • Roth 401(k) feature within a 401(k) plan

Why I Dislike Annuities

The following is an excerpt from Tom Ruggie’s book, “Ruggie Rules – for choosing and working with a financial advisor.” If you would like to learn how to obtain this excellent resource, click here.

3DBookWhy I Dislike Annuities – by Tom Ruggie

How you pay someone to give you advice or manage your investments speaks volumes about whether that advice best serves the advisor or you. If product sales are mixed with advice, the potential for conflicts of interest increases, and objectivity may be compromised.

Annuities have lots of bells and whistles that make them sound appealing to many investors, but when you truly evaluate these contracts, you find that most investors do not realize what they are giving up in the form of fees, lack of return, liquidity, or income design to get these benefits.

That’s only the start of why I dislike annuities. Annuities are cost-prohibitive, not easily understood, and oversold, especially to retirees.

  • They are cost-prohibitive because they generally carry larger internal costs, which reduce performance for the investor.
  • Their promises of principal protection and guaranteed income streams sound alluring, but when you look under the hood, many of these products fall short of even modest expectations.
  • Annuities are often misunderstood because they are fairly complex instruments. I’ve read hundreds of annuity brochures, prospectuses, and disclosure documents, none written in plain English. I’ve actually had annuity salespeople who sell significant amounts of annuities not be able to properly explain to me all the details within the annuities they sell to their clients. Scary, right?
  • Many annuities are sold for their “guaranteed income benefits,” which can increase regardless of market direction. That sounds good, right? The illustrations do a good job of showing the ‘growth’ to your future income, but what is often left out are the realities of these products’ capabilities.

A few examples of how annuities become expensive are shown below; it isn’t surprising for us to see annuities where most, if not all, of these apply.

  • Participation/Index Rate: The actual percentage of the underlying index’s return that an annuity holder earns. A participation rate of 50% means that you only get half of the index’s return.
  • Performance Cap: The maximum percentage of the index’s return that you are credited. If the market is up 10% but you have a cap of 3%, then you can’t earn more than the cap, regardless of the excess, which is kept by the insurance company.
  • Market Value Adjustment (MVA): A monetary adjustment to the annuity’s cash value that applies when you withdraw funds in excess of the “free amount.” The MVA is a mechanism whereby the insurance company passes on its interest rate risk to contract holders. When rates rise, the MVA is negative; when rates fall, it is positive. In many contracts this MVA can apply even after surrender, so many people are stuck even after they’ve had their money tied up for years or decades.
  • Then there is the “guaranteed income or living benefit,” the mother of all pie-in-the-sky arrangements. Here, the insurance company promises to increase your contract’s future income capability at a certain rate each year; often the lingo used can give you the impression that you’re ‘earning’ a certain rate, but in reality this is not real money that you could walk away with, but rather a level of funds from which you can draw on an annual basis at a specified distribution rate at a future point. This, too, is sometimes painted to be a rate of return; for example, “This annuity pays 7%.” In today’s low-interest-rate environment this isn’t likely to be the same as if you had a CD that pays 7%. Both are unicorns, by the way. Rather than a rate of return, this is a distribution rate, meaning the rate at which you can receive payments from your account from its income benefit base.
  • In theory, it sounds appealing for your income ability to increase over time and for you to be able to draw a guaranteed amount of funds. However, consider the fact that, when it comes time to distribute funds, the insurance company will first return to you your own money at a particular distribution rate and that, in reality, you’d have to live a very long time to (1) Get back your own money, (2) extract the full value of the “income base,” and (3) recoup the costs you paid for that benefit. The good deal falls apart.

Perhaps the biggest fallacy in annuity sales is that you can have your cake and eat it too, which is to say, your annuity contract can give you market-like returns without market-like risk. Yes, some index contracts can allow you to participate in some of the upside of an index, such as the S&P 500, but how much of that index are you likely to earn?

All that being said, in a few situations annuities could make sense, and there are “fee-based” annuities available, which lower the cost to the purchaser, thereby enhancing the ultimate return the client receives. However, because these don’t offer big paychecks for annuity salespeople, they’re hardly ever the products of choice, even when one would hypothetically make sense for a consumer.

Click here to learn more about “Ruggie Rules.” You can also give us a call at (352) 343-2700 to set up a consultation. We look forward to meeting you and answering any questions you might have.

It’s Not Always A Good Idea To Rollover Company Stock

RWM couple advisorIt’s true, it is not always a good idea to rollover company stock from a 401(k) plan to an IRA. In fact, doing so might mean you pay more in taxes to Uncle Sam than necessary.

If company stock held in an employer-sponsored 401(k) plan has appreciated, the difference between the amount paid for shares (the cost basis) and the current value of those shares is known as net unrealized appreciation (NUA). For instance, if an investor paid $10 a share for 1000 shares ($10,000) for stock that is now worth $15 a share, then the investment is worth $15,000, and the NUA is $5,000.

If the shareholder completes a rollover from a 401(k) plan to an IRA, those shares of company stock will be liquidated, along with the other assets in the account, and moved to an IRA where the assets will have an opportunity to continue growing tax-deferred. When the assets are distributed from the IRA, they may be taxed as ordinary income. If the investor is in the 28 percent tax bracket, the taxes owed would be about $4,200.

There is an alternative that could be a better choice tax-wise. An investor can request company stock be distributed in-kind and sent to a taxable account. The stock is not liquidated. The shares are moved to the new account. The investor may owe ordinary income taxes (and penalties if he or she is not yet age 59½) on the cost basis ($10,000). However, the net unrealized appreciation ($5,000) will not be taxed until the shares are sold. Taxes on the cost basis would be about $2,800.

If the investor takes a distribution right away, and the shares have been held for more than one year, the proceeds may be taxed at the long-term capital gains tax rate, which is currently lower than the ordinary income tax rate. If the investor is in the 15 percent capital gains tax bracket, another $750 would be owed in taxes. In this example, the investor could save about $650 in taxes overall.

Please keep in mind this is a hypothetical example and is not representative of any specific situation. Each investor is unique and your results may vary.  Executing an NUA strategy seems pretty straightforward, but it can be tricky, and not everyone is eligible. If you would like to learn more, please give your tax professional a call.

* This article first appeared in our weekly email newsletter. To subscribe to the Ruggie Wealth Management Weekly Commentary email [email protected] or call us at  352.343.2700

Special Note From Tom Ruggie: Market Volatility And The RWM Process

9887 Tom Ruggie in front of RcroppedWhile the current market volatility is uncomfortable, it’s not unusual or unexpected. And while we know we CAN’T control external factors such as what is happening in Washington, Wall Street or Main Street, (or China or Greece for that matter), we CAN and DO control how we prepare for and respond to fluctuations that may result from those factors.

At Ruggie Wealth Management, we believe in and stick to a process that:

  • Ensures our clients’ goals match their current situations
  • Provides sound financial planning
  • Utilizes disciplined investment management
  • And offers responsive client service

These are things we CAN control. Our process helps us consistently make good decisions over time, and to take emotion out of the equation. And while in the short-term good decisions may not produce desired results, we stick to the process because we know it has paid off consistently over full market cycles.

The education and communication we provide through vehicles such as this Weekly Commentary are part of this process. This week, we will send out our first Video Commentary (watch for it by week’s end). In it, we will discuss what we’re seeing in the market, what we’re doing to monitor your investments and how we will make adjustments if and/or when they are needed.

We value your relationship and partnership and our team is here to talk with you whenever you need us. We invite you to let us know what you think about this newest way of staying in touch. Let us know, too, if anyone you know might benefit from the RWM level of service you’ve come to expect.

If You Sleep More, You May Earn More Money

sleeping business man moonResearchers were trying to evaluate the importance of sleep so they focused on two American cities in a single time zone: Huntsville, Alabama (on the eastern edge of the central time zone) and Amarillo, Texas (on the western edge of the same time zone). The sun sets an hour later in Amarillo, so the assumption was made that people get less sleep in Amarillo than they do in Huntsville.

The findings reported in Time Use and Productivity: The Wage Returns to Sleep, by Matthew Gibson of Williams College and Jeffrey Shrader of the University of California-San Diego, were people who get one hour less shuteye, over a long period of time, earn about 4.5 percent less.

From an economic perspective, the idea may seem counterintuitive. After all, when you’re snoozing you’re not producing. However, from a psychological point of view, it makes a lot more sense. A British study of 21,000 employees found those who slept six hours or less each night were less productive than employees who slept for seven or eight hours.

Of course, sleep wasn’t the only issue that lowered productivity. According to the study, physical inactivity, financial worries, mental health issues, musculoskeletal issues, bullying, impossible deadlines, and unpaid caregiving all negatively affected workers’ output.

Sleep issues, however, may become more important as we become attached to devices like tablets, laptops, and smart phones. Research described in Scientific American found two hours of tablet use before bedtime suppressed melatonin release. Melatonin is a hormone that lets us know it’s time to sleep.

So, if you’re having trouble getting to sleep and use a smart phone or tablet before bed, you may want to turn down the brightness of your glowing screens before bed – or switch back to good old-fashioned books.

* This article first appeared in our weekly email newsletter. To subscribe to the Ruggie Wealth Management Weekly Commentary email [email protected] or call us at  352.343.2700

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