Michael Policar, Fiduciary Wealth Manager at Hightower Bellevue, joins us to talk about his experience moving from a big wirehouse firm to a more independent advisory business, why he chooses ETFs for client portfolios, and what the word “fiduciary really means to him.
Transcript
Speaker 1:
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Scott McKenna:
Hey guys and welcome to another episode of Speaking Logicly, my name is Scott McKenna and today I’m joined by Michael Policar, who is a fiduciary wealth manager at HighTower Bellevue. And also host of his own podcast 15 Minute Financial Advisor. Michael, how are you doing?
Michael Policar:
I am doing great Scott. I am honored to be here. I really appreciate you inviting me to be a part of your show.
Scott McKenna:
No problem. So first question I have right off the bat, I noticed you have fiduciary in your title. Right? A lot of people usually probably just go with wealth manager. Why did you decide to add that? And what is being a fiduciary mean to you?
Michael Policar:
Great question or questions, I should say. I added it because when I made the decision to move on from the wirehouse side of this business, the big banks, it was important to me to have and carry that legal obligation to put my clients best interests first. So fiduciary to me is more so than just a word, but it’s actually how you operate, it’s a system of how you operate as an advisor and really how you operate as a human being.
Michael Policar:
My goal is to always put the best interests of my clients first. And in life my goal is to really put the needs of those around me first, because I think when you put that energy out into the world, it comes back to you so much more than what you could do if you were just out there trying to grab, grab, grab. So to me, it’s almost a way of life, which I know it sounds cliche or nerdy to say that, but I left the wirehouse world very deliberately to seek out this fiduciary obligation. So to me it’s really important most people probably just say wealth manager, but the word fiduciary means a lot to me.
Scott McKenna:
Awesome. And let’s talk a little bit about your transition moving from a large wirehouse where you had a lot of resources, right. But also there were some constrictions, can you just walk us through what it was like to go off and move more independent?
Michael Policar:
Yeah, boy, what was it like? I was almost three years ago now. So it was January 2018. It was a little bit not scary, but just unknown, kind of like jumping off of a boat at night into a lake where you can’t really see anything in the water, which is not advice that I would give to anybody. Right. If it’s nighttime, don’t go swimming, wait until the sun comes out the next day. But I didn’t know what I didn’t know. So at the wirehouse we were the custodian. I didn’t know there was a thing called a custodial relationship really, because when I was at Wells, Wells was the custodian or first clearing. When I was at Merrill, Merrill was the custodian. They had their own financial planning software. You didn’t have to build a tech stack. You didn’t have to choose other vendors.
Michael Policar:
It was all done for you. And that can be good or bad, right. In that you don’t have the control over what you want, but you also don’t have to worry about, Oh, what am I missing? What do I need? What are the pieces here? So the move from a business perspective on operating or operations, I guess I should say, that was much, much easier because… And when I say operations, I mean, the things that I was doing for clients are the things that I do for clients. That was easier because it was just about the client. So on the wirehouse side, you have to do what they tell you to do essentially. I remember one time we got an email that said, we’re lowering your grid rate. Your grid rate is obviously what you get to keep out of the revenue you generate.
Michael Policar:
We’re lowering your grid rate by 2%, but you can earn 1% of it back if you sell X number of dollars worth of mortgages. And so I responded to that, just into the abyss of whatever the 250,000 employee email chain was, I hit reply. And I said, so you’re mandating that we sell mortgages. And the answer came back was, well, no, we’re not mandating that you sell anything. We’re just not going to pay you as much unless you do. And to me that never sat well. And so things like that don’t exist on the independent side, things like that don’t exist at HighTower.
Michael Policar:
We are able to find the clients what they need, go out and find a good solution for that. Whether it’s a product or an ETF or a mutual fund or an insurance product, it doesn’t matter. It’s whatever is going to get the clients further down the road toward where they want to be. That’s how we operate. And that’s how I’ve always thought this business should be done. I just, because I started in the wirehouse channel, didn’t know that there was this other world out there where you could actually put the client’s needs first.
Scott McKenna:
Yeah. It sounds like duh. Right. But when you’re at these larger firms and curious your experiences as well, personally, I was thinking about becoming a financial advisor, but some of the bigger firms that I had interviewed with were those sell insurance, sell mortgage to your friends, family. And then if you get enough, maybe we’ll sponsor a series test for you, right? What was your experience like coming up in the wirehouse world?
Michael Policar:
Great question. It wasn’t quite as blatant go sell this, go sell that. It wasn’t on the insurance side, I interviewed with a couple of those types of firms as well, that are whole life focused or permanent life insurance focused, investment planning second, financial planning if there’s time. That wasn’t good for me, it wasn’t a good fit just from the get-go. But the wirehouses they had… Essentially, they had the money, they had the training program, they had the resources to take somebody from a totally different industry, which was me. I was in advertising and broadcast advertising and move me from that career to this career, train me on how they wanted things done. And I say that very deliberately, try to get me the education that I need to be able to go out and gather assets. And that’s really what the focus was, or at least my feeling of what the focus was on the wirehouse side is investment planning doesn’t really matter.
Michael Policar:
Let us do that. Let the firm do that. The wirehouse can do that. You just go out get the clients, plug their money into these pre-packaged programs that we have, and you’re off to the races. To their credit there are a lot of those pre-packaged programs and managed portfolios, and there’s a lot of things that work pretty well that are not… I don’t want to get to say anything negative about that, but the focus was really how much money can you extract out of the accounts of these people that you’re bringing in and how much revenue can you generate for the firm? And the biggest issue that I had at the end of my wirehouse time was that the DOL fiduciary rule had just come out, and for the firm that I was at the time was really, they dove in. They said, okay, well, we’re going to adopt this. We’re going to be all in on it.
Michael Policar:
And so they made big moves. And then when the rule fell apart or was dismantled, they went away from that. And that was at the time that I decided to move on, shortly thereafter I left and went to the fiduciary side because the writing’s on the wall at this point, if you’re not putting the best interest of your clients first, why are you even in this business? Otherwise your fiduciary responsibility at a publicly traded firm, like the ones that I worked for is to the shareholders. So for me, that didn’t really sit well with me. So I started exploring ways to move into a role, into a position side of the industry that would really engage me to act or oblige me to act in the best interest of my clients, which is how I think this business should be done.
Scott McKenna:
Awesome. You mentioned the pre-package products, right? Obviously the wirehouses have been doing it for many, many years, but we’ve seen it a lot, especially on the independent side, advisors leaning more towards things like model portfolios, whether it’s a paper model or fully managed. So curious your process, when you switched over, obviously HighTower has a ton of resources that you guys are able to use, but when you switched over what processes did you get into to help circumvent some of the loss of those resources that you had at a wirehouse?
Michael Policar:
Good question. So what I did was instead of leaving the firm I was at and starting my own team within HighTower. I joined an existing team that was already within HighTower. And our team today one of our advisors is our portfolio manager. And he works with some clients, but his primary focus is really managing the money, creating the models, making the trades happen. He runs our investment committee meetings and the investment committee involves several of the folks on our team, but he puts it all together.
Michael Policar:
So I give him a lot of credit and a lot of the responsibility for performance so that I don’t have to focus on that. My goal is client focus and returns are important to clients, of course, but what I’ve found is that regardless of what the returns are, if I can help a client buy their beach house that they’ve been wanting for 25 years or 10 years or whatever it is. If I can save the client $12,000 a year in taxes by pulling money from a certain place in their first four years of retirement, those are the things that really, really seem to be a difference maker.
Michael Policar:
So I was lucky in that I didn’t have to reinvent the wheel. I have somebody there that is already replicating that strategy from before. It’s not perfect, but it’s pretty good. And I have a lot of faith in the people around me to manage the money in a way that is proper for all of my clients. And I do have some flexibility within that structure to add or subtract things from our model portfolios. So it’s you don’t just get a one size fits all portfolio based on your risk level. There is some tailoring that goes on and we have the ability to make one-off trades here and there, add exposures that certain clients may want, or that we think clients may need to help them achieve their goals in the long run.
Scott McKenna:
Awesome. And it falls in line with what a lot of advisors we’ve been talking to, it’s more and more about adding value around things like tax and that’s one of the things that we’ve been working on a lot. Recently is helping to optimize tax using ETFs, right? So a lot of advisors look to ETFs for making tax loss swaps for the obvious reasons, right? They’re more tax efficient than a mutual fund that liquidity. So I definitely agree. I think more and more the future of the advisor where they’re going to be adding the value is going to be on that fiduciary side and with the financial planning and tax strategies, et cetera. Curious your thoughts on, what do you think the future of the financial advisor’s role is going to look like within the next 20 years or even further down 50 years?
Michael Policar:
Oh boy, 50 years I don’t know. That’s getting down there on the calendar. I think what’s going to happen is we are going to continue as advisors. We are going to continue to adapt and adopt to technology. I think most advisors on January 1st of 2020, were come into the office. We’ll sit down, we’ll talk with you, we’ll get you a cup of coffee, we’ll get you an espresso. Let’s go over this. Let’s do our review. What else has changed in your life? A lot of that. I think that is still going to exist, but that’s going to become what video conferencing was in 2019, 2018. That’s going to be, if we need to, we can meet in person. There’s a couple of reasons for that. One, I think traditionally, most advisors, niche or niche, or however you want to pronounce it was geography.
Michael Policar:
So, Hey, I’m in Bellevue, Washington, I’m in Seattle, Washington, or even North Seattle or South Seattle or whatever, that was what their defacto niche was. I think now we’re having people that are specialists in certain areas. You see it all over the place. You see there’s an advisor in Indiana who only works with optometry doctors and actually optometry doctors who check several boxes. It’s not just any optometrist. There’re several advisors that work with just doctors. Some of them might be in residency, some of them might be whatever it goes beyond that. I’m not sure if that means attending or… I don’t know. I’ve learned most of that terminology from TV shows. But I think the specialized advisor is going to be… It won’t matter where they’re located. So I’m located in Western Washington, right? The Seattle area. But I would say at least 50% of my business comes from outside the State of Washington and it’s because of having that niche focus and getting really good at one thing and becoming referable to more and more people that meet that criteria.
Michael Policar:
I think there’s going to be a lot of virtual first meetings like this over some video conferencing technology, whether that’s Zoom or Riverside or Skype, which I don’t know if people are using that anymore because of Microsoft Teams, FaceTime, I think is still an appropriate way to-
Scott McKenna:
I don’t know anyone who is using Skype.
Michael Policar:
Yeah. Google Hangouts, which used to be G Chats, which used to be whatever, whatever, whatever, all of these things are morphing and advisors are adopting the technology and becoming more and more comfortable with it ideally. Some people aren’t sure when their camera’s on or off, but ideally that it becomes something that is the go-to.
Scott McKenna:
Yeah, that’s totally interesting. And it’s not just financial advisors, it’s the whole industry. Also, as a company like we were as a marketing director, we were gearing up and we were ready to hit every advisor conference in the U.S. and then some even in Canada, in Europe, and then now everything’s totally flipped. So the whole industry and every industry is completely flipped on its head. Everything is now digital first. So it’s interesting to see, like you said, I think a lot of advisors were using playing golf, for coffee or dinners, like steak dinners, right. To meet and prospect, and that’s gone away. For you, how have you switched up your strategy in terms of meeting with clients, getting time on their calendar and getting their attention? Right. Because it’s so much harder now to get anybody’s attention given there’s 100 Zoom calls, so many podcasts, videos, et cetera, all fighting for their-
Michael Policar:
Yeah. That’s a really interesting question. I’ve been doing a lot of the Zoom calls. I’ve been doing a lot of video conferencing. I started to do that when I left the wirehouse channel, again, as somebody who has a lot of business, that’s non-local, I needed that. I wanted that for a long time. So the shift from having those coffee meetings, flying all over the country to meet clients and potential clients, that’s slowed down for me quite a bit. I used to travel not frequently. When you say you’re gearing up to go hit all the conferences. I don’t travel like that, but I would probably average, I don’t know, maybe 20 flights a year, so 10 destinations, something like that, mostly for business. And it would be probably five or six different cities. And sometimes I’d visit those cities twice.
Michael Policar:
So if I’m going to Los Angeles or the Bay Area, I may go there once or twice a year, instead of just once, because there’s so many people that I need to see, or so many folks that I need to get on their calendar. So that’s just been a regular part of my business. This year I’ve only flown to three different cities and it was all pre COVID. Really, it was just the month of February, I think I went somewhere in January, but I can’t remember, but February I was gone three out of four weeks seeing clients. Now it’s all been virtual a lot on the phone. I’ll let clients and potential clients know that I’m available for a video call, or if they want to just jump on a phone call that I’m good with that too.
Michael Policar:
So allowing the client to dictate what is convenient for them and what their preference is, is just a further extension I think of what being a fiduciary means. I’ve had client calls on Saturdays, I’ve had client calls at 8:00 p.m. To me, it doesn’t matter, work from home has actually helped that I believe. Because if I know I have a call coming up at 8:00 p.m. on a Thursday, then I might take some time to spend with my son or my wife and my kid, and go for a walk or whatever, which by the way, at this time of year is pretty difficult in the Seattle area. Although it looks like the sun’s peaking out right now, but we’re pretty much in the rainy season until July now.
Michael Policar:
But really, I think it’s just allowing the client’s preferences to dictate how we meet. To me, I don’t mind, there’re a lot of advisors when I was… Earlier in my career, a lot of older advisors would say, you have to have them come to you. You can’t spend time driving all around to go visit people and this and that. And I think it’s just a preference for the advisor, but to me it’s less about me and more about what do my clients want? How do my clients want to engage with me? And if it’s over the phone, then we’ll get on the phone. If it’s over a video chat, we’ll get on a video chat. It makes no difference to me.
Scott McKenna:
Awesome. I want to go back to… You’ve mentioned a couple of times. Number one, is it niche or niche?
Michael Policar:
I think it’s supposed to be niche, but I go with niche because I’m lower class, I suppose.
Scott McKenna:
Yeah. Niche sounds a little uppity to me. I don’t know
Michael Policar:
It does. Like you’re drinking tea with your pinky out.
Scott McKenna:
Yeah, exactly. Number two, what is yours? Your niche and number three most important. And I’m always really curious about this one. How did you figure out that that was going to be your niche?
Michael Policar:
Yeah. Very good question. Anybody can choose any niche they want, right? Theoretically a lot of the training we’ll talk about, what’s your natural market? What are the things you like to do? What are the hobbies you have and this and that? Well, my niche is people who work as W2 employees for publicly traded companies who earn 50% or more of their annual income in company stock. So you hear there’s a lot of people, especially on Twitter, which is how you and I met that are equity compensation experts. And a lot of them focus on startups because equity is such a big part of recruiting and retaining talent for startup companies specifically in tech, but really in a lot of different industries. I’m more on the public side of things. And I understand a lot of what the equity compensation concerns are in private equity and prior to companies being public.
Michael Policar:
But my focus, my niche is folks that work for publicly traded companies, established blue chips. There’s two things that got me involved in that. One, the team that I was a part of at my previous firm, a wirehouse, managed or facilitated, I should say a pretty large, I would say probably top 50 companies, equity compensation plan. So it’s not the biggest company in the world and it’s not the second biggest company in the world of which one is headquartered in California, one is headquartered in the Seattle area. But by getting to know the tax issues, the estate planning issues and the functional issues on how specifically RSUs can be used, how they’re effective, how they can be less effective.
Michael Policar:
And then I’ve morphed that into understanding employee benefits and coordinating employee benefits. So when you work for a big company, like the second biggest company in the world by market cap, you can’t call somebody and say, Hey, I have questions about my 401(k), my deferred comp, my RSUs and my XYZ, whatever other employee benefit, ESPP. You have to call one person for the 401(k), a different person for the RSUs, a different person for the deferred comp, a different person for the ESPP.
Michael Policar:
So the need that I feel is I take all of that information, all of that expertise and clients can call me and I can say, we need to do this with your 401(k), this with your deferred comp, this with your RSUs and this with your ESPP. And this is how it will work in concert towards what you have told me is important to you and your family. And so that’s how I fell into the niche that I’m in.
Scott McKenna:
I wanted to go back. So you mentioned before getting into being a financial advisor, you were in advertising broadcasting, right? So obviously that helped you with the development of your podcast. We talked about it a little bit before, you’ve seen a lot of success from it and curious to pick your brain a little bit on what made you start it? And how you think about it in terms of your business.
Michael Policar:
Yeah. I think creating content is one of the more important things that an advisor can do if they’re actively seeking new clients. And the reason I think that has just been reinforced because I got a cold reach out from somebody on LinkedIn. And they said they came across the podcast and they like the way that I think about personal finance issues. And to me, that really reinforces creating content. I’m not putting anything out there that nobody knows, right? It’s original content because I’m writing it in my voice or creating it in my voice or speaking it literally in my voice, but it’s not original. I’ll talk about taxes in an episode, and all that information comes from the IRS website or Google or whatever.
Michael Policar:
As a financial advisor, there’s nothing that we know that the public can’t find out by Googling it. It’s just that they don’t want to, and they’re willing to pay for the convenience of just coming to us. So I think content creation is a part of that. It’s a pre-interview if you will. So it’s kind of like my resume or my cover letter for somebody who may become my client in the future. It gives them a chance to study me to a certain extent before they decide they want to bring me in for an interview. If that makes sense.
Scott McKenna:
That makes total sense. I totally agree with that. It’s almost like you can go ahead and by watching a video of someone or listening to their podcasts, you get a sense of who they are in their voice. I have an uncle that sells insurance and he was like, how do I get into this video stuff? I have no idea how to do it. He works for one of the big agencies. And I said, don’t try to reinvent the wheel. You don’t have to think about anything new or crazy, you could literally just take the content that they send you because it all has to be approved anyways. Right. Just take those written things and say it on video. And I bet you get two, three times the engagement on any of that content.
Michael Policar:
I would agree with that. And I would say, just turn the camera on. Everybody has a smartphone now, mostly everybody. So flip it around, turn the camera on and start recording don’t necessarily go live right away. I don’t do a ton of video stuff. I’ve done a few videos here and there. I think they’ve been okay. But for me, the audio is a lot easier because I can cut out the ums and the aahs and all of that stuff. On a video you really can’t. On a video you have to be buttoned up, you have to know what you’re going to say, how you want to say it, and then say it, especially if you’re doing it live. And I get that there’s a lot of room for being human, being natural and being authentic. But like you said, kind of your earlier question.
Michael Policar:
How does my background in broadcast media affect this stuff? Well, one, I’ve never been afraid to get on a microphone because regardless of how many people are listening, I shouldn’t say never. I was definitely afraid to do it, the first time I did it which was probably… I was 21. And I was brought into the morning show for the radio station that I was working at. But anyway, to be put on the spotlight that at 21, from a radio station that reaches 700,000 people that was nerve wracking. But now when I’m at home here, just recording in my studio, which sometimes is my bedroom closet, sometimes as a corner of my office. And once in a while is my car. There’s no fear, you’re not nervous because you know that whatever you record, you can go and edit and make it sound a little bit different.
Michael Policar:
You can clean it up if there’s audio issues, you can take out things that you don’t want to say. So that has really helped, but I think just getting your thoughts out there as an advisor, if you’re looking to attract new clients, it’s going to find the people that it resonates with naturally. Now you have to do some promotion and get it out there. And I’m probably not really good about doing that sort of thing. I tweet about my episodes and Facebook posts and LinkedIn posts, but that’s really it. So if I wanted to reach more people, I would be a little bit more aggressive with SEO type stuff. And things that little tips and tricks that you can do. Taylor Schulte, who has several podcasts and started the Advisor’s Growth Community. And he has a podcast about advisor marketing.
Michael Policar:
He is really good at all of that stuff, I think because he’s been doing it for so long, but he thinks about it from a really strategic position and says, how can I make what I’m doing more and more effective? I didn’t really do that. I got started because I feel like I have a lot to say, unfortunately, I don’t think I have the greatest voice in the world for podcasting, but I do have kind of a… I suppose, a deeper maybe voice that resonates well.
Michael Policar:
So that’s the thing that helped me, and I felt like I had a lot to say. I’m 108 episodes in now, 108 just came out today in fact, and I still have a lot to say, I could probably do another 108 episodes without thinking about it too much. So I think getting your thoughts out there in a way that is easy to understand and is accessible, I guess. But no, if you can explain it in a way that’s accessible to people, compounding for you and me is an easy thing to understand, but for somebody who’s never heard of it before, how do you explain it in a way that they can understand it?
Michael Policar:
So that’s what I think something like podcasting, blogging videos, it’s all the same. It’s all content creation, it’s all your voice, your personality, who you are coming through. And when people see that and hear that and watch that it gives them an idea of, you know what? This is a person that I might be able to get along with, a person that I might be able to work with. So that’s been the biggest benefit, I think.
Scott McKenna:
Awesome. So we’re at 35 minutes. Is there any other topics you wanted to cover?
Michael Policar:
One of the things that’s important that we didn’t really talk about when it comes to models and really for me, for my clients, it’s tax efficiency. So we didn’t go down the rabbit hole of ETFs, which obviously you guys are much better educated on than I am, but I’m a big fan of finding ETFs that fit for what the clients need, the right exposures that the clients need that are more tax efficient. Mutual funds have traditionally been probably the realm of most financial advisors and models. And I’m talking years ago, right? ETFs aren’t new anymore, but the tax efficiency and educating myself more so than anyone on how they can be so much more tax efficient, allow my clients to keep more of the money that they’ve earned and that they earn as rates of return. To me is an important thing.
Michael Policar:
So I’ll talk to a client that’s worth $7 million and I’ll try and find a way to save 250 bucks or 450 bucks or whatever. It’s a number that is really inconsequential to them. But that’s, again, the fiduciary duty that I have is how can I do better for this client? How can I take what I’m doing and move the ball forward for them? And the more I can do that, the better it gets for everybody. The client’s happy, they’re sending me referrals, so I’m happy and have phone calls or Zoom meetings or whatever. And they’re always good. They’re jovial. Even in March and April this year, everybody came to it with a good attitude. I don’t know what’s going to happen, but here’s what our plan says. And we’re going to take it one step at a time. So I think understanding the difference between a mutual fund and an ETF from a tax perspective is huge. And those are the types of things that I look for to add benefit to my client’s lives.
Scott McKenna:
Awesome. What’s the website for your podcast?
Michael Policar:
I actually don’t have one. That’s part of the SEO issue, but if you Google 15 Minute FA or Michael Policar, any of that you’ll find me. If you Google Michael Policar, you’ll probably find a doctor in California. That’s not me. That guy has a lot more years of experience in his field and schooling than I do. But if Google Michael Policar, 15 Minute FA, or just 15 Minute FA, and you’ll be able to find it, it’s on all the podcast channels, Apple, Google, Spotify, iHeart, whatever, it’s on there somewhere.
Scott McKenna:
Awesome. For those who are interested in learning about ETFs a little bit more and screening for them, you can go ahead and go to logicly.finance/freetrial. And you’ll have some instructions on how to get a free trial of our platform. We have plenty of tools to screen for ETFs and also do some tax loss harvesting, prospecting. Thank you guys again for listening to Speaking Logicly, and again, if you haven’t checked it out, all episodes are now available via video on our YouTube channel.
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