Words of Wisdom From Master Advisor Nick Murray

1. If you are still prospecting, no matter what else is wrong with your business, you will yet succeed. If you stop prospecting, in the absence of a steady flow of referrals/introductions, then no matter what else appears to be right with your business at the moment, you are ultimately going to fail.

2. “Rejection” does not hurt, other than to the extent we allow it to do so. The only way to hear “yes” is to risk hearing “no.”

3. Most people who invest most of their capital in fixed income investments as they go into retirement will run out of money well within their lifetimes, and will die destitute and dependent upon their children. Equities: life. Bonds: death-in-life.

4. Optimism is the only realism. It is the only world view that squares with the facts, and with the historical record.

5. Get a year’s living expenses in a money market fund as quickly as you can, even if you have live on coffee and rice while you’re saving toward this goal. This will allow you to turn down business that doesn’t feel 100% right to you. It will give you the strength to tell any prospect to go to the devil, and make it stick.

6. It is infinitely easier to turn a one-million dollar client into a two-million dollar client than it is to turn ten one-hundred thousand-dollar clients into two-hundred-thousand dollar clients.

7. Money is love. The wise advisor will always look for clients who wish to use their money as an expression of love.

8. Your price is only an issue to the extent that your value is in question.

9. Every year on your birthday, fire the client who has given you the most grief since your last birthday.

10. Never take part of an investment account. Win it all, or pass on it all. It’s not just the gaps, the overlaps and the lost fee efficiencies that make divided accounts a no-no: it’s that you’re getting sucked into a performance derby.

11. When we are telling prospects and clients exactly what they need to do in order to achieve their most deeply-held financial goals, it is not possible for them to counter with valid objections, because there are no valid objections.

12. The origin of all wealth is threefold: personal initiative, hard work, and thrift. Tell me the percentage of your income that you’re putting away, and I’ll tell you whether you’re going to achieve your financial goals.

13. The world does not end. It only seems to be ending. This time is never different.

14. Americans say they want safety and income. What they really want is all the income they can get, and the illusion of safety. More money has been lost in the quest for the chimerical combination of safety and high yield than in all the stock market crashes in history.

15. Stop trying to prove anything. You can’t prove the sun’s coming up tomorrow, nor that you or your client will be here to see it even if it does. A great advisor never accepts the burden of proof.

16. There is no such thing as a “standard” deviation. Reality always comes at us out of deep left field.

17. The only sane investment objective in retirement is an income that grows at a minimum of the same rates at which one’s cost of living is rising.

18. There is no statistical evidence fore the persistence of performance.

19. Disciplined diversification is a pact with heaven: I will never own enough of any one thing to make a killing in it; I will never own enough of any one thing to be able to be killed by it.

20. All investment “new eras” end in ruin, because all inventions follow the same arc, from miracle to commodity.

21. Never take your business problems home with you. That way you can never take them out on the people who love you.

22. Price and value are inversely correlated. When the price of any investment sector is rising, its value is declining; the converse is also true.

23. The most fascinating aspect of all financial crises is their essential sameness.

24. Life is too short to work with anyone you don’t like, and /or who doesn’t like you.

25. Get our of debt, and stay out of debt. This can be a very cyclical business. If you’re a genuinely high-quality advisor, you will lose accounts and AUM in a “new era” speculative orgy. Keep you nut as low as you possibly can.

26. What goes around comes around, even if it’s on a very long, elliptical orbit.

27. Inflation is always and everywhere a monetary phenomenon.

28. The iron law of the commodity cycle is: supply responds directly to price, even as demand responds inversely to it.

29. The advance is permanent. The declines are temporary. There have been twelve bear markets with a mean decline of 25% since the end of World War II. The first one started on May 29, 1946. that day, the S&P Index closed at 19.5. As I write, twelve ends-of-the-world later, it is 1400. Stocks are up seventy times over these six decades because earnings are up seventy times.

30. Almost all of life is in the Grateful Dead dong “Uncle John’s Band.” The rest is in “Box of Rain.”

31. The dominant determinant of the real long-term returns real people really get isn’t investment performance. It’s investor behavior.

32. Every Christmas, assemble your entire family and watch the A&E move The Crossing, about Washington’s attack across the Delaware on Christmas night, 1776. This, and not It’s a Wonderful Life, is the true American Christmas classic. Every April 13, assemble them all again, and watch Apollo 13.

33. Protectionism always raises consumer prices above where they would otherwise be; it also invariably destroys more jobs than it “saves.”

34. All investments are income investments. They are made for the production either of current income, or of future income, or of income for someone else. The only sane test of an investment’s long term income producing potential is its long term total return, not its current yield. By that one sane test, stocks are a far better income investment than bonds.

35. The computer in your cell phone is a million times smaller, a million times cheaper, and a thousand times more powerful than the mainframe computer used by E.F. Hutton & Company on the day I joined that firm, May 1, 1967. This is a billion fold increase in computing power per dollar. In the next quarter century, there will be another such billion fold increase, at which point technology will have essentially solved all our current problems: energy, the environment, poverty and disease. This is the exact worst moment in human history to turn pessimistic.

36. Freedom is never free.

37. No one who really understands baseball ever referred to the 1969 World Series champions as the Miracle Mets. They were anything but a miracle. Indeed, from the middle of the 1968 season on, they were well nigh inevitable.

38. There is no completely bad time to be prospecting, but the very best time to be prospecting is when the market is down 20%. Amateurs will have stopped calling their clients, and your timeless wisdom will never get a better hearing.

39. The only sure way to be trusted is to be single-mindedly, relentlessly trustworthy. The only way to be sure you’re always absolutely trustworthy is to tell the pure, unvarnished truth all the time, and let the chips fall where they may.

40. Stop asking for referrals. Ask for introductions.

41. And in the end, the love you take is equal to the love you make.

How to Protect Your Hard-Earned Assets

Have you ever wondered how a lot of big business owners in America managed to keep their empires afloat and their properties intact even after a major trial or setback?  With the help of highly capable legal and financial professionals, they have learned to master the art and science of sound asset protection planning.

Sadly however, here in the Philippines, most of our countrymen have been lax when it comes to  keeping their money and property safe. Usually, Filipinos have the following mindset when it comes to asset protection planning:

-“I don’t need those sophisticated asset protection stuff, anyway, I only have a simple sari-sari store! Let’s just leave that to the rich and famous like Henry Sy or John Gokongwei!”

-“Lawyers are expensive! Why would I need to spend so much when I only have so little?”

-“This business has been passed on and survived for many generations. So why would I need asset protection now when they didn’t need it before?”

The people who think this way, whether they know it or not, are actually more at risk of losing everything they have worked so hard for.

The goal of asset protection is to shield assets from the reach of creditors, especially the government in the form of taxes.

Asset protection should simply be about structuring the ownership of one’s assets to safeguard them from potential future risks. Most asset protection structures are commonly used business and estate planning tools, such as corporations, limited partnerships, trusts and the like. Properly implemented asset protection planning should be legal and ethical. It should not be based on hiding assets or on secrecy. It is not a means or an excuse to evade taxes.

Asset protection will not work to insulate the proceeds of crime. Only properties that have been legally acquired are covered by asset protection methods. If an asset protection plan is implemented, it should be for legitimate business purposes, not as an instrument to defraud creditors.

There is no one “magic bullet” in asset protection. The term “asset protection” encompasses a number of planning and structuring mechanisms that may be implemented by a practitioner to minimize a client’s exposure to risk. For each client the asset protection solution will be different, depending on (i) the identity of the debtor; (ii) the nature of the claim; (iii) the identity of the creditor; and (iv) the nature of the assets. These are four threshold factors that are either expressly or implicitly analyzed in each asset protection case. The analysis of these four factors determines what planning would be possible and effective for a specific client.

A.​ Identity of the Debtor

In analyzing the identity of the debtor, one should consider the following initial issues:

1. Is the debtor an individual or an entity?

a. If the debtor is an individual:

i. Does he or she have a spouse, and is the spouse also liable? For example, the spouse may be liable as a co-signor of a personal guarantee or as a co-owner of community property assets.

– If the spouse of the debtor is not liable, is it possible to file an action in court in order to transmute the assets from community property to the respective separate property of each of the spouses?

ii. Are the spouses engaged in activities that are equally likely to result in lawsuits, or is one spouse more likely to be sued than the other?

b. If the debtor is an entity:

i. Did an individual guarantee the entity’s debt?

ii. How likely is it that the creditor will be able to pierce the corporate veil, or otherwise get at the assets of the individual owners?

iii. Is there a statute that renders the individual personally liable for the obligations of the entity? Often, clients assume that if assets are placed within a limited liability entity, such assets are shielded from lawsuits. Another common assumption is that a lawsuit against such an entity cannot reach the owners of the entity. These assumptions are frequently erroneous.

B. The Nature of the Claim

It is not sufficient to know the identity of the debtor. The practitioner will also need to know what type of a claim will be brought against the client. Here are some variables:

1. Are there any specific claims against the client, or is asset protection being undertaken as a result of a general fear of lawsuits and the desire to insulate the client from lawsuits?

2. Has the claim been reduced to a judgment? If the claim has been reduced to a judgment, what assets does the judgment encumber? For example, a lien will cover only those assets that are titled in the name of the defendant. If there is any variance, the judgment lien will not attach. Similarly, a notice for a debtor’s examination will impose an automatic lien only on those assets which are titled in the name of the debtor.

3. Has the claim matured to the extent that any transfer of assets will constitute a fraudulent transfer?

4. Is the claim brought against the debtor a tort claim? Tort claims are generally covered by liability insurance. To the extent that asset protection is desired, it is because the plaintiff will deem that the insurance coverage is not sufficient, and will seek to get the defendant to contribute to a settlement with the defendant’s own funds.

5. Certain debts are subject to pre-judgment attachment, if: (i) they arose in the context of the debtor’s business, and (ii) the amount owed is readily ascertainable. In this case the plaintiff does not need to wait until he obtains a judgment in order to encumber the asset. However, the amount of the debt must be evident from the face of the instrument sued upon, such as a promissory note or a liquidated damage provision.

6. An always relevant question is the dischargeability of the claim in bankruptcy. If the claim is dischargeable in bankruptcy, and the debtor’s debts are exempt or otherwise unreachable, then asset protection planning may not be warranted – a bankruptcy discharging the claim will be sufficient.

a. The fact that a claim is dischargeable provides leverage when negotiating with creditors.

b. Asset protection planning and bankruptcy planning usually go hand-in-hand. Often the goal of asset protection planning is to structure the debtor’s assets so that upon the filing of a bankruptcy the debtor’s claims are discharged and assets are retained.

7. What is the statute of limitations for bringing the claim?

8. What is the size of the potential claim? Creditors become more aggressive if the liability is greater. In addition, certain asset protection strategies are more expensive than others.

C. Identity of the Creditor

The third factor to be considered before implementing an asset protection strategy is the identity of the creditor. Here we are referring to certain creditor traits:

1. How aggressive/lazy is the creditor? How smart/knowledgeable is the creditor and the creditor’s counsel? Accurately answering these questions will help us determine the scope of collection activities that the creditor is likely to engage in. This tells us how much protection the debtor requires.

2. Is the creditor a government agency? Taxing authority? Some government agencies possess powers of seizure that other government agencies do not. For example, the Bureau of Internal Revenue and Bureau of Customs, with due process, have the power to seize assets that it deems are used to defraud the Government.

3. Is the potential creditor a spouse in an action for annulment of marriage or declaration of nullity of marriage that has not yet been filed?

D. The Nature of the Assets

The final factor that needs to be analyzed is the nature of the assets we are seeking to protect. This factor, to a much greater extent than anything else, will determine what may be done and what needs to be done to protect the debtor:

1. To what extent are the assets exempt from the claims of creditors?

2. How are the assets titled? If assets constitute community property, it is usually irrelevant that the assets are titled in the name of one spouse. The creditor can attach all of the community property, even if only one spouse is the debtor, provided that the debt inured to the benefit of the family. This may hold true even if the debt arose prior to the marriage.

Each of the issues presented above should be carefully considered by the legal counsel or financial planner before structuring and implementing an asset protection plan. Consult a specialist for adequate and sound asset protection planning.