Sadie Goodwin July 30, 2017 No Comments

Racing Ahead

Racing Ahead

Whether it’s cycling or building her practice, Tara Unverzagt pushes her limits.

Charles Keenan

This article originally appeared in Morningstar.


Financial planner Tara Unverzagt knows something about grit. Around 15 years ago, she was looking into enrolling her son for training at the local velodrome, a track for bicycle racers. She found her own riding club offered training sessions for adults, and she soon was hooked. She trained on Friday nights at the velodrome and piled on training miles on the roads around Southern California, and then started to race.

All the riding led Unverzagt to the 2013 UCI Masters Track World championships in England, where she won four gold medals and a silver in her age class of 50–54. Winning wasn’t just about training, though, but being able to go inside what cyclists call the “pain cave.”

“If you want to be good at track racing, you are going to be diving into the pain cave, and staying there,” Unverzagt says. “You get to a place where your body just sort of shuts off, and you don’t feel the pain anymore, and you can just go for a while.”

Good Financial Habits

Unverzagt has also pushed herself to build her practice, South Bay Financial Partners, based in Torrance, Calif. In 2017 she onboarded 65 clients as part of a succession plan with her mother, also a financial planner. Her book of business now totals about $150 million of assets under management, but she still sees work to be done. For one, she believes many people haven’t developed the skills necessary to build wealth. “My generation and below have been brainwashed into thinking credit cards and debt are great,” she says. “Financial literacy has gone completely away.”

To combat the issue—and recruit future wealth clients—Unverzagt has introduced three levels of coaching in her practice, geared toward people aged 20 to 35. “I’m interested in giving them a good foundation,” she says. “These are probably people who have little to no net worth.”

She teaches habits that will help accumulate wealth, such as budgeting, saving, and creating an emergency fund. She has started working with the children and grandchildren of her clients, charging a flat fee of $125 to $200 a month, depending on the level of service, and will open up the service to others in early 2019 if space is available. “The goal is to get them from the financial coaching and into the financial planning side, where you actually have assets,” she says.

For that side of the business, where clients have as much as $10 million in assets, Unverzagt also sets herself apart by charging flat fees, rather than the industry standard of 1% of assets. Annual fees range from $4,000 to $16,000 per year, depending on the complexity of the service. “It just doesn’t equate to me that I would charge you more for doing the same job just because you have more money,” she says.

Healthy Money Discussions

Unverzagt, 55, learned those strong values about money at an early age. She grew up in a house where money was talked about. “It was transparent,” she says. “We had a very healthy money conversation in our family.”

Her mother was a financial planner in the 1970s, when the field was nascent. She would tell Unverzagt and her siblings each night how much dinner cost per person. They were taught responsibility with money, and were given $10,000 by their parents to attend college. The amount was enough in the early 1980s to fully pay for Unverzagt’s tuition at Purdue University in her home state of Indiana. Yet Unverzagt never spent the $10,000. She studied computer science and worked in the summers to pay off the next year’s tuition as a Kelly Girl temp, a computer consultant, and a programmer. She saved by eating Subway sandwiches and low-priced meals at happy hours.

After graduating, she worked at Xerox and Locus Computing, rising to the level of group director at the latter and getting an MBA at Pepperdine University. She left Locus in the early 1990s to become a financial planner, giving her more flexibility to raise a family. She worked as a consultant for her mom while studying for the exam to become a Certified Financial Planner. Her husband brought their 3-month-old son down to breastfeed during breaks of the exam in 1994. “I wanted to be home with my kids like my mom was, while being able to continue working,” she says.

Taking Over

Unverzagt assumed the majority of her mother’s clients in 2017, and now her mom works for her, helping review financial plans. Those plans, of course, include equity exposure, which Unverzagt prefers investing in individual stocks, with about 75 to 100 core holdings. She believes mutual funds lack transparency and exchange-traded funds come with disadvantages such as requiring investors to own laggards. She also worries that ETFs’ losses in a crash could exceed those of the underlying stocks. “It’s an unknown, and I don’t want to buy into that unknown,” she says.

At heart, she’s a value investor with a focus on income. These days, she likes sectors such as utilities, consumer cyclicals, and consumer durables. She’s selective with technology, a sector that’s hot but warrants caution. “Tech is the future, so you have to be there, but you need to be careful and strategic about what you invest in,” she says.

For fixed income, Unverzagt uses bond ladders going out 10 years. She likes five-year Treasury bonds, given the flatness of the yield curve recently. “It’s a sweet spot: You get almost as much yield with a five-year bond as with a 30-year bond, and you don’t have the long-term risk,” she says.

Unverzagt subscribes to Morningstar Office to stay up to date with client accounts. She uses Morningstar’s Back Office Services to download client data from Charles Schwab and TD Ameritrade, the two platforms she uses for trading. She also taps Morningstar ByAllAccounts to download data from held-away accounts. Morningstar Office allows her to do a complete analysis of client portfolios, including running reports on asset allocation, industry diversification, and bond ladders.

“I can slice and dice people’s portfolios any way I want with a click of a button,” she says.

Unverzagt doesn’t have time to train for another world championship with all her new clients, but she still manages to race on her bike now and then. It’s fitting that “Unverzagt,” her married name, means “undaunted” in German.

“Life-enhancing experiences always happen when I’m outside my comfort zone,” she says. “I try to do things that are not in my wheelhouse. It pushes me ahead of everyone that is trying to find their comfort zone.”

Charles Keenan is a freelance financial journalist.

Sadie Goodwin July 30, 2017 No Comments

XYPN Ep #210: Taking Over the Family Business – The Career of Tara Unverzagt

Ep #210: Taking Over the Family Business – The Career of Tara Unverzagt

This episode originally aired on XYPN.

Today we have XYPN Member and South Bay Financial Partners founder Tara Unverzagt on the show! Inspired by her mother—who was one of financial planning’s early pioneers—Tara knew from an early age that she wanted to be a financial planner. She joins us in this episode to share her experience growing up in the field, the valuable lessons she learned from having an advisor as a parent, and how she put her own twist on financial planning to do things differently.

You can find show notes and more information by clicking here.

Sadie Goodwin July 30, 2017 No Comments

CNN – Why wealthy parents who bankroll their adult children are hurting them

Why wealthy parents who bankroll their adult children are hurting them

By Anna Bahney
Updated 11:32 AM ET, Tue July 23, 2019

This article originally appeared in CNN


For some wealthy parents, the pressure to extend their social and financial status to their adult children can be overwhelming.

The recent college admission scandal revealed shocking things parents were willing to do to secure spots at top schools. But those same motivations drive some parents to bankroll their kids’ lives into early adulthood, often to the detriment of the family.
“How many times have we seen in wealthy families where the breadwinner is so inundated with making a living and providing for a family, that love, intimacy and closeness are shown through financial means,” says Dr. Alex Melkumian, a psychologist and financial therapist.
Support that keeps a young person living above their means can undermine their independence and create deep insecurities.
Dr. Bradley Klontz, a psychologist and certified financial planner who researches money disorders, calls this “financial enabling.” Often arising between parents and their adult children, financial enabling involves extended financial support that not only affects the enabler’s finances, but can also cause lasting damage to the young adult.
“The delay of financial independence is associated with a lack of purpose, creativity, drive — it can be extremely crippling,” says Klontz. And that’s to say nothing of the damage caused to the family relationships. “People then have a tendency to resent the source of their money, even while they rely on it.”

Parenting without enabling

When children grow up with the expectation of a wealthy lifestyle, it becomes harder for them to maintain that lifestyle once they are on their own. And the parents feel pressure to step in and help.
“It has to do with growing up with one identity and becoming an adult and expecting to continue on that identity,” says Tara Unverzagt, a certified financial planner in Los Angeles. “You don’t have the job to support it. Your parents have the income.”
Unverzagt works with families struggling to find the line between supporting their children and offering too much help. All of it starts by talking about money, and making sure kids have realistic expectations.
Make sure you are setting your kids up for a lifestyle they can sustain. “Because if they can’t, you’ll sustain it, and it will bleed you dry and impact your own retirement.”
She says that many ultra-wealthy parents can afford carrying a child’s expenses into adulthood but others end up hurting their own finances by supporting their kids. “They feel they should be able to do these things for their kids endlessly and afford them,” she says. “But if you continue to do it, the money can run out really quickly if you’re not paying attention.”
And that’s to say nothing of the message sent to the adult child.
“You’re telling that child, she can’t do it on her own,” says Unverzagt. “Some moms and dads want her to feel that way, that she can’t live financially without that parent. You should be striving to have an independent adult.”
Unverzagt started talking about budgets with her own three children, now all recent college graduates, when they were two years old.
“I feel it is your job as a parent,” she says. “A 4-year-old’s money mistake is nothing. Have them make a bubble gum mistake instead of buying a house at 25 they can’t afford. Are you going to enable those bad financial decisions at 24 and 30?”

Breaking the enabling cycle

Having unlimited options can be paralyzing to some young people.
“Having too many options can be overwhelming,” says Meghaan Lurtz, president of the Financial Therapy Association, who has a PhD in personal financial planning. “It happens to wealthy children a lot: I could have 1,000 careers, I could have any car I want. I can’t pick one. They appear to be the laziest bums on earth because they have so many options in front of them, it is paralyzing.”
She says that a strategy to aid in moving forward is to put boundaries on endless opportunities.
She advises parents to be clear about their expectations of adult children. “Tell them, you need to have a job, even if you’re a teacher and making $30,000 a year. You need to do something, and have purpose.”
Working with a financial therapist, a counselor who can help people think and feel differently about money, can be helpful to people in that paralyzed state, she says.
It’s okay to want your children to have the best, she says, and many people have the resources to do it. But the key is to give kids the tools to achieve it on their own.
“It is an important step to talk about what it is like to have money and the responsibility that comes with it,” Lurtz adds.
Sadie Goodwin July 30, 2017 No Comments

CBS NEWS – Americans still think they can make money flipping houses

Americans still think they can make money flipping houses

By Irina Ivanova
July 19, 2019 / 7:51 AM / MONEYWATCH

This article originally appeared in CBS NEWS.


While fewer Americans are buying homes these days, more of us than ever believe we should be. The portion of people who say real estate is the ultimate investment — better than stocks, bonds or gold — has hit a new high.

Nearly one-third of Americans believe real estate is a better way to invest money for the long term, according to a survey released this week. Younger people are more likely to say so, with 37% of 23-to-28-year-olds ranking real estate above stocks, bonds, gold and savings accounts as an investment. This is the strongest sentiment for real estate in the seven years Bankrate has run the survey, said Greg McBride, the website’s chief financial analyst.

Sadly, real estate is no better an investment today than it was in the previous century—and that’s to say, mediocre at best. For people with a bit of money to put away, the stock market will almost always give the best return.

Between 2006, the peak of the previous housing bubble, and 2019, average home prices have increased just 13%, according to the S&P/Case-Shiller Home Price Index. In that same time period, the S&P 500 rose 125%. In other words, stocks did 10 times better than real estate.

Despite the stock market’s better returns, “it remains rather unloved,” said Bankrate’s McBride. “We’ve been doing this survey for seven years and we’ve been in a bull market for the entire seven years, but investors haven’t really warmed to it.” Just 1 in 5 think the stock market is the best long-term investment.

Things you can touch

A house is a much more unwieldy investment than a stock portfolio. It costs money to buy and sell and maintain a property, and it can lose value over time, like an iPhone or a car. If housing is an investment, buying a house is akin to purchasing a single share of stock—except instead of paying a quarterly dividend, the investment needs you to put some money into it periodically to keep it in good shape.

Nevertheless, familiarity breeds contentment when it comes to real estate. While less than half of Americans own any stocks, nearly two-thirds own the home they live in. Many if not most Americans are at least aware of homeownership through family, friends or neighbors. And of course a house is a physical asset in a way that financial instruments are not. “You can kick it, touch it, look at it; you know it is there. It provides a sense of comfort that is missing when we hold stocks and bonds,” said Anders Skagerberg, a financial adviser at Skag Financial in Salt Lake City, Utah.

The way most people think about home sales also leaves out many costs, artificially inflating real estate’s perceived rate of return, said Tyler Reeves, founder of Plimsoll Financial Planning in Birmingham, Alabama.

“You find out that this house was bought for $300,000 and sold five years later for $400,000 — wow, that’s a quick $100,000!” he said. “What they don’t see is during that five-year period, they had to get a new HVAC unit, and a hot water heater, and pay a mortgage for five years.”

Repairs and maintenance are an often-overlooked aspects of homeownership, especially for younger homeowners. Upkeep alone—tasks like yard work, carpet cleaning and maintaining the gutters—can run $3,000 a year, according to a recent Zillow study.

Unexpected repairs can cost much, much more. One young Tennessee homeowner spent $21,000 over six months to repair her modest 1950s ranch house, she wrote in Business Insider. While she admitted that “procrastination made some of the problems worse,” many of the repairs were the inevitable result of normal wear-and-tear: replacing the roof, fixing cracked ceilings and upgrading some electrical systems.

Even in a best-case scenario with minimal upkeep, property almost always comes with carrying costs: the mortgage, taxes, homeowners’ insurance, fees for water and services like trash pickup and even a homeowners’ or condo association. Those taxes and fees are why first-time homebuyers are often told to budget 30% on top of their monthly mortgage payment to get the “true” cost of owning their house.

Today, a would-be house flipper could buy the $300,000 house in Reeves’ example for a $70,000 outlay (down payment plus closing costs) and a monthly payment of $1,130, assuming she has excellent credit. After five years, the lucky debtor will have paid $45,000 in interest payments alone, and—under the 30% rule—about $20,000 in taxes and other costs. If she sells the house for $400,000, after accounting for the agents’ fees and the interest, taxes and maintenance she’s paid out along the way, she would have made a profit of $22,000.

In that best-case scenario, the flipper got an impressive 31% return on her initial investment. But if instead she’d­­ put $70,000 into a stock-market index fund five years ago, she would today have $34,000 in profit—and arguably for a lot less work.

“We have many more clients that have broken even or lost money in real estate than have made a killing in it,” Adam Van Wie, a financial planner in Jacksonville, Florida, told CBS MoneyWatch. “We more often than not try to talk them out of it, but many of them never listen.”

Like stock-picking made hard

Still, the ongoing housing crunch makes it unlikely the draw of making a quick profit in housing will ever fade. If anything, financial planners report an increase in the amount of people coming to them with dreams of real estate riches.

“In the last couple years, it’s come up in conversation with almost half of my clients,” said Reeves. “Seven, eight years, ago you wouldn’t have expected it.”

Reeves, like most financial planners, emphasized he wouldn’t discourage real estate investing for the right person. But it’s much more like a job than most people assume, and doing it profitably requires treating it like one.

“I know people who make money buying and selling and renting real estate, just like I make money buying and selling stocks and bonds,” said Tara Unverzagt, founder of South Bay Financial Partners in Torrance, California. “But that’s their life. They spend a lot of time learning the cycle and when to ‘buy low and sell high.’ ”

She added that in real estate, just like in stocks, “the average person tends to buy high and sell low and lose their shirt.”

Sadie Goodwin July 30, 2017 No Comments

CNN – Is $2 million enough to feel wealthy?

Is $2 million enough to feel wealthy?

By Anna Bahney CNN Business
Updated 10:14 AM ET, Fri May 31, 2019

This article originally appeared in CNN.


How much does a person need to feel rich?

A recent survey from Charles Schwab revealed that a net worth of $2.27 million would be enough. But can you really put a number on it?

For many people, being wealthy means being financially independent and not having to work for a living, says Bradley Nelson, of Lyon Park Advisors. He says a family with a net worth of $2.27 million could easily be wealthy.

If that family spent a conservative 3% of their assets each year, they would have $68,100 a year to live on. That’s more than the median household income in the United States of $61,000 — without even having to work.

But that wouldn’t be enough for some people. And for others, wealth isn’t a financial concept at all.
That’s why finding what makes you feel wealthy takes a strategy rather than a single specific number, says Nelson.

“I know people who make $250,000 to $500,000 and feel poor, and other people who make $70,000 and feel rich,” says Tara Unverzagt, a certified financial planner.

She points to research showing an income of about $70,000 is optimal for emotional well-being, and $95,000 is ideal to feel positive about your life, including meeting long-term goals and the inevitable comparisons with everyone you know.

“But for most people, when they get to $2.27 million, if their friends have more, they won’t feel ‘rich,'” she says. “And today with so many billionaires, many feel having mere millions is nothing — and to some degree, that’s true.”

$2.27 million? ‘Not even close’

Matt Doran is a wealth manager in St. Louis with a personal net worth of “more than $5 million, but less than $20 million.” He’s not fixed on a number, though, and has no intentions of slowing down.
He works with clients who are worth more than $2 million and says, “they don’t feel wealthy and neither do I.”

For Doran, the drive to continue earning money and growing his assets builds security for his family and allows him to support the things that give his life meaning — the people, places and causes that he loves.
“And $2.27 million doesn’t get me there,” he says. “Not even close.”

Doran says he and his wife and daughter spend on things typical for families at their income level. For example, they have a lake house in Michigan, with a boat.

“Our spending is really about lifestyle. While not overly extravagant in our opinion, we do drive nice cars, travel frequently and help others regularly,” he says. “We, like many others, find ourselves spending on experiences more than things because they enrich our lives and relationships.”

In his view, the purpose of building wealth is to generate more income. And the more income you make, the more options, flexibility and opportunities you have.

“When someone has financial resources in a substantial amount, they have choices they didn’t have before,” he says. “How to work, when to work, what work to pursue, where to live. How to spend their time.”

The reluctant millionaire

Russ Ford considers himself wealthy, but it has taken him a while to say it without feeling guilty.
Ford was 21 years old when he inherited $2 million from his grandfather.

“I got $1 million free and clear I could pick up and go to Vegas with,” he said. There was another million in trusts. That’s in addition to money likely to come his way through his parents’ estates.

“I do feel wealthy,” he says, “But in today’s society, I’ve felt guilty about it. I’ve worked through it to understand the opportunity to do good with it.”

But for a young person with seven figures, that kind of money can evaporate a lot faster than people think, says Ford. “Feeling wealthy can lead to a lot of temptation. You feel wealthy when you don’t have to think about money. The minute you don’t think about it, you can get into a lot of trouble.”

After college he became a financial planner, got married and had a son. Ford says that at first, his inherited wealth caused a lot of pressure and stress.

“The pressure comes from having the money and feeling like I can’t let my grandpa down and I can’t let my son down,” he says. “I was feeling a lot of pressure from the culture around me to keep up with the Joneses and becoming a father magnified all of that. The money has definitely made me more anxious.”

He’s appreciative of what he has, but he’s not interested in accumulating more money.

“I know that chasing more isn’t going to make me more happy,” he says.

Ultimately, the money that caused his anxiety helped him and his wife out a lot when he experienced loss of income due to his health. It helps his family have more of what they value the most — time together.

“Money certainly gives us more of that,” says Ford. “It gives us security that we’ll have more of that in the future and feeling secure in that makes me feel wealthy.