Our region is home to many successful people with good jobs, nice homes and impressive résumés, but what is it that separates the merely successful from the truly wealthy? According to Mark Fried, founder and president of TFG Wealth Management, it is not how they make their money—or even manage it—but how they preserve their wealth and create more of it.
“Most people view investments as a large pile of money and ask, ‘How much can I grow it?’ which typically means taking more risk to create greater returns,” Fried says. “We ask, ‘How can we make your money and your investments work harder for you without increasing risk?’ … We change the way in which people look at what it means to be financially secure. It is not just how big a pile of money you have but what it can do for you now and in the future.”
Fried is not your typical financial advisor; he is uncommonly qualified to understand the tactics of the wealthy and utilize them for his clients’ benefit. Beyond his training and certifications, he has started and managed banks, mutual funds and insurance companies, so he understands how they make their money. He has also worked for some of the country’s wealthiest families and knows the techniques they use to preserve their wealth.
His diverse experience includes being director of the Pennsylvania Economic Development Authority, vice president in the Investment Advisory Department of W.H. Newbold and Son, president of Stone Bridge Trust Co., investment advisor for a Fortune 400 family, and former owner of a benefits and 401(k) company that assisted hundreds of small-business owners. All these roles have helped to distinguish him from other financial planners and advisors because they exposed him to the strategies and methods used by successful businesses and the very wealthy.
These are tactics that other advisors and the financial press do not employ, simply because they speak to a wider audience. Though his clients typically have $500,000 to $10 million of investible assets, Fried says, “Our clientele is specific not by income or assets, but by how they think about money.” He looks for clients who are responsible, who want to work with a true professional and who want to be financially secure. TFG Wealth Management is a fee-based financial advisory firm. In addition to the standard investment and planning services, it works to bring strategies and concepts not typically discussed with the average investor.
One strategy that makes the firm unique is that it helps clients find areas where they are losing money unknowingly or unnecessarily through wealth transfers. Wealth transfers could be the result of how one is investing, inefficient use of their savings, investment fees, or taxes and penalties they are charged by the government, their financial planner or the company with which they invest. One point Fried makes is that money lost to wealth transfers is not just comprised of that dollar amount, but also the lost opportunity to earn interest on that money.
Keeping a Reserve
One of the biggest mistakes investors make, he believes, is to either borrow or use their savings to make large purchases. “College is a cash-flow problem, not a $250,000 purchase problem,” Fried says. “Investors who empty their retirement accounts to pay for college destroy 20 years of savings. We can put them in the position to pay for college and not destroy what they have worked for.” One means of providing this is through the use of a private reserve strategy.
The private reserve strategy is not something the investor buys, but a concept they employ to fund large purchases. It allows them to secure a loan against money in their account and pay it off using the interest generated by that money. The goal of the private reserve strategy is to increase long-term efficiency by leveraging the differences between amortized payments and compounding interest. Over time the savings of an investor employing this strategy will far outpace that of one who saves and drains their accounts because it reduces the impact these purchases have on their reserve and maintains the earning potential of these savings and investments. Because most financial professionals don’t focus on this area of asset management, the average investor is not exposed to the concept.
“Institutional and professional investors understand that it is as important not to lose money as it is to make it. It takes so much to make it up,” Fried says. TFG Wealth Management’s goal is to bring the principles of institutional asset management to the so-called Main Street investor.
Many retail portfolio managers and financial media outlets spend their time touting the benefits of specific companies or securities. Institutional asset managers, on the other hand, allocate capital between a wide range of diversified asset classes—more than are available through the typical mutual-fund-based portfolio. They look to expose their portfolios to attractive areas of the market while avoiding those with the potential for depreciation. In other words, every investment is made evaluating both the upside potential and the downside risk. Diversification is not just an important strategy in the search of returns; it can also be valuable for preserving capital.
By preserving the savings its clients have earned and investing them according to Fried’s uncommon understanding of the affluent, TFG Wealth Management helps the successful become wealthy.
TFG Wealth Management
12 Penns Trail, Newtown
Phone: 866-296-8156
Web site: www.tfgwealthprs.com
Rob Hall is a photographer based in Plumsteadville.
