90: Demystifying Private Wealth Management

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0:57in this week's episode of the rich habits podcast we're going to demystify what it means to work with a private wealth manager there are literally tens of thousands of you listening right now in your 30s and 40s making six figures and above per year looking for the playbook for financial independence and early retirement. And we believe our podcast does a wonderful job of laying out the groundwork to begin building that for yourself. However, we take pride in the fact that our podcast is always a way for us to introduce to our listeners, industry experts and new investment opportunities. And today is one of those episodes.

1:36We're joined by Joe Percoco, the co-CEO of Titan, and we're super excited. And let me be very, very clear. Titan is the new standard for wealth management in America. For over a century now, iconic Wall Street investment firms have catered their white glove wealth management services exclusively for these high net worth investors, sort of walling off the high earner but not yet rich investor like myself and countless others that are listening to the show right now. Titan is an award-winning wealth management firm based in downtown New York City that actively manages the wealth of their members across the United States.

2:12They provide investment advice as well as relation access, which is something that we're going to get into here in a little bit. But I want to make sure before we jump into the episode that everyone knows that Titan is not your mom and pop shop wealth management firm. They've reimagined what it means to be a high earning investor. Titan is literally the American express of wealth management firms. So Joe is here joining us. We're really excited to have you, man. Welcome to the show. Thanks so much for having me, Robert and Austin. Really excited to be here. So let's kick off this conversation by saying that I've had an account on Titan now since 2021.

2:42You guys are going to see a little screenshot that'll pop up on your screen to show that. And I just want to say that so you guys don't think that, wait, no, Titan, they're just advertisers. They're here to talk. So they can, no, that's not the case, guys. I've been a user of Titan, just like we've been users of all the other cool platforms we talk about for years now. And we want to make sure that when these new products get introduced to the marketplace, you guys are the first to know. But the interesting thing is when I made my account on Titan, things felt a little less fancy. So for those of our listeners who might have heard of Titan before, but now they're seeing this sort of reimagined product, Joe, can you walk everyone through one, who you are, two, what Titan used to be, and now three, what Titan is today in 2024 and beyond?

3:21So I'm Joe. I'm from a small town in New Jersey called Hillsborough. It's one of those towns where roughly one third of it is farmland. I got to New York City. I entered the world of finance, worked at Goldman Sachs, worked at McKinsey. And once I paid off my student loans, trying to figure out how to manage my own wealth was actually really daunting, despite studying finance as an undergrad at Wharton. And so that was really tough. So I didn't see anything out there that I really liked for my own money. I'm the oldest of 12 cousins. I didn't see anything I liked for their money. And so I kind of just felt compelled to try to go build something I myself would want to use.

3:57And that today is Titan. So for folks who've been around, they can kind of see the exact march we've been on. The goal is to someday build something as large, as sophisticated, as powerful as the Goldman Sachs private wealth management business or the JP Morgan private wealth management business. We started a couple of years ago back in 2018 with a fleet of actively managed products. And then naturally we need to go launch passive products. We need to go launch an investor advisor motion. We most recently launched lifestyle perks motion. And you can kind of see how that picture all adds up to what we're trying to do in the hill we're ultimately trying to climb.

4:33So Titan simply put, we're a wealth team in your pocket, but we do a lot of powerful stuff under the hood for our clients. So, you know, for someone who's about to like download this app or like log into their Titan account, like what would they expect to see when they log in? Yeah, the analogy I use is Apple Store. Most people, when they walk into these different money products, money apps, they're like overwhelmed with complexity. There's all these dashboards, there's charts, you can buy, you know, anywhere between three to 5 ,000 public securities, then there's all these buttons. And ultimately, most people have a shoulder shrug, they're not sure what to do.

5:07So we had the exact opposite approach. How do we ensure that every SKU or product or investment strategy in our store is the top notch world class version of that? So you don't have to have the paralysis of choice. And there should be a genius bar waiting back there on your beck and call to answer any question you have with pretty immediate response times. So that's what you'll see when you download the app. You'll see our handpicked Apple-like best investment strategies. We have one for alpha called Flagship. We have one for cash called Smart Treasury. We have one for indexing called Automated Stocks.

5:42We have the Apple genius bar known as our investor relations team. And then we also do bonus step, like our corporate access team gets clients access to restaurants, concerts, you name it. Folks really love how simply we've stitched together such an awesome product, both between wealth and access. As someone who's a big believer in the mantra that you're one TikTok, one phone call, one Zoom meeting away from a totally different life, the white glove concierge of Titan really impresses me. You all state that wealth isn't just about having money, but it's about having access. And I couldn't agree with you more.

6:16And so getting a seat at the table where the opportunities are presented, it just really reminds me of the Rich Habits Network and what we've built is giving our fan base and our followers and our clients access to our deal flow. So further explain the White Glove Concierge and what it is for our listeners. What are the perks? What are the opportunities and how can they learn more about this part of Titan? And Robert, yeah, you hit on the nail, which is that most of the industry, you know, they just sell kind of glorified commodities and they put wrapper brands on it. What's the real stuff that you're getting at the investment banks?

6:53If you're a high net worth client, you're getting access to different sorts of products like alternatives. But not only that, you're getting access to ideas. So for example, several of the investment banks this morning, as of today, today for folks who are listening is the immediate day after the election are getting hit in their inbox with, we have a private call, clients only with, you know, an ex general of the military to just understand foreign policy with this new regime. So access to ideas, access to services. So most people don't understand the different tax services that are needed to drive what's called tax alpha.

7:27And then additionally, and this is kind of more the off the book stuff, they'll ping you Austin or ping you Robert, say, hey, we got extra tickets to the Jets game. You want to come to the box? So there's this whole rapper experience delivered by your private wealth manager. And you can think of them as the quarterback for your money, for ideas, for the services, for the perks. And that unfortunately hasn't yet been democratized in a material way, which is why we're really, really excited to have seen success and keep making progress on that. One of the things that I talk about the most is for Austin and I, our job, because you don't have to be first to an investment, you just have to be ahead of the masses.

8:07And like you say, and I love that what you said, this is that you're getting ideas and information the legal way is that that is one of the things we get to do every single day that I love the most. And that is providing information to people ahead of the curve. Because if you're ahead of the curve, whether it's humanoid robotics or nuclear or whatever the sector is, that's where you win the most. And I like this because that access gives people that information ahead of the masses. Because as we always say, by the time it hits Facebook or Instagram or TikTok, it's probably too late. And so I love that you talk about that as part of the access is having that connectivity and that information and those ideas, because that's where the real money is made.

8:53Could not agree more. If you think about what the state of the world is today, we think of it as a black box experience. I'm a sports guy. So I liken it to you usually hand over your money. So let's say a money manager, if you choose to use them, and then your ticket is outside the stadium. They have this walled entity where they're making decisions, they're trafficking in information flow. Maybe you get an email, maybe you get a quarterly update, but otherwise it's bifurcated. You give them your money and then you try to figure out what's going on yourself on CNBC, Wall Street Journal, you name it.

9:26So to summarize, you give person money, but then you try to figure out what's going on yourself. Ultimately, if you're wealthy enough, and let's say you're an endowment who's given your money to a hedge fund manager, you literally call hedge fund manager directly and you say, explain to me what's going on in markets now or else I hang up the phone and I pull my money. And so I've always wanted to, we call it, give everyone personalized courtside seats to their capital. You should not only give Titan money, you should open up the app and have everything explained in really crisp, simple English, what's going on and why straight from our investment team's desk.

10:05Most often, one of the things they love about us the most is just the education component. No one ever has a money teacher formally. We happen to learn everything else in college. You learn philosophy, literature, calculus, you name it. But no one teaches you the essentials of managing the currency by which you live. So to your point, Robert, ideas in education is just this sleeping killer or sleeping reason you win if you know how to harness it. So now before we jump into our next question, let's hear from one of our sponsors of this episode you've all heard us talk about the importance of diversifying your investments for a while now and there could be a major opportunity today in private market real estate especially with the market timing right now because we know it's a lot of hassle to be a landlord and of course requires a ton of upfront cash we were focused on finding an option that everyone could have access to which means you can now become a real estate investor yourself whether you have$50 or$5 ,000, and you'll have an entire team looking for opportunities to add to your portfolio with today's sponsor, the Fundrise Flagship Fund.

11:12You'll gain access to the potential returns of real estate without the headaches of property management or maintenance. Check out the link in our show notes to become a real estate investor today. As always, carefully consider the Fundrise Flagship Fund's investment material before investing, including objectives, risks, charges and expenses. This and other information can be found in the Fundrise Flagship Funds prospectus at fundrise.com slash flagship. Just want to really encourage you guys to go check out this one. I've been a Fundrise investor now for I think five years, six years. I mean, right when I graduated college in 2018, I jumped on this platform.

11:48I've got several thousand dollars invested with them. I'm riding the wave up, down, left and right as it relates to commercial real estate. And I really want to encourage everyone who's built their base and wants to diversify in real estate without going out and buying a single family home or a duplex or something like that to go check out the Fundrise flagship fund. You can get started with$50,$100,$5 ,000, whatever fits your budget. It's really, really cool. So a thumbs up from Robert and I. All right, let's now jump into our next question. Just to kind of dig now into sort of these strategies, Robert, I'd argue that between the two of us, I'm the more analytical one.

12:22I'm always excited to research new stocks and investment strategies. So in Titan's case, you guys offer what you dub like this flagship strategy product, which essentially is an actively managed portfolio of 15 to 20 single stocks that have these proven track records and show potential for long-term capital appreciation for your investors. So what is the strategy? And for your members, where has it normally fit inside of their well diversified portfolios? Is it something that they put their money into supplement growth? Is it It's something they say, I'm going to do this plus the index funds. I'm going to go all in on this strategy.

12:55How do you guys, one, what's the secret sauce around it? And then how are you sort of presenting it to your members here? One of the real exciting part about Flagship, we wanted to build them as baby Berkshire. And this, you can tell, comes from our old school finance academic roots. And just take a moment there, if you don't mind, joke, walk people through what Berkshire is in case they're not familiar. Absolutely. So Berkshire Hathaway is run by Warren Buffett and the late Charlie Munger, who passed away. Buffett has been, you can call it, the father of what's known as quality investing or growth investing now based upon his actions.

13:30And that means there's a variety of different ways one can make money in the world. You can, I don't know, go buy different local franchises of Dunkin' Donuts or McDonald's, try to build a flat cash-flowing empire, make money that way. You can go buy and sell commodities. You can try to call quarterly earnings. Like, will Tesla go up or down this quarterly earnings cycle? You can trade futures. You can trade options. You can buy and sell crypto. A lot of the great investors have all coalesced around what's called quality investing. And it's very simple. They have a private equity-like approach to investing in stocks.

14:03That means I should think about if I only had 20 punch cards, as Buffett famously articulated, if I could only make 20 investments in my lifetime and each of those had to really matter and I had to make sure they were long-term oriented, they were gonna do good things with my money and there was the right risk-adjusted returns. Are those wonderful businesses at a great price? So notice the two legs of that. Is it a wonderful business? And what does that mean? It's resilient, it has good growth prospects, it has good margin potential, it has high returns on capital, great. And then great price.

14:37is it overvalued or undervalued by the market? So Buffett built an entity called Berkshire Hathaway with Charlie Munger to pick what are the top punch card-like investments. This top one right now is a company called Apple. I imagine a lot of us use the product. Others have included Coca-Cola, Geico, and so on. So with Flagship, we said we want to build our version of that, a quality set of 15 to 25 investments, sector agnostic, focused on large cap U.S. investments, designed and geared to hopefully outperform the market and provide alpha exposure. So we love it because it complements what's called beta or just tracking the index for our clients.

15:16To your question, Robert, some people use it for a lot of their wealth. Other people use it as an attach to their S &P 500 index fund. So folks use it for different purposes, but namely, the goal is growth at a reasonable price or baby Berkshire. I'm curious. I mean, you don't have to get too personal here, but how do you use Titan? as the co-CEO? Are you looking at having a lot of your personal wealth inside of this strategy? How do you use Titan? Yeah, Titan has a really large percentage of my net worth, and I'm in flagship auto stocks, smart treasury predominantly. So namely, the major core food groups of just overall investing.

15:54My view is people really complicate investing, and oftentimes discussions center around the long tail of, are you trading options or not? Are you now trading futures? Are you in and out of this stock? How much NVIDIA do you have? In reality, that should be a very, very low percentage of one's net worth unless you have a disproportionate advantage. You kind of really just need to nail, are you exposed to a really heavy degree to the US economy in a thoughtful way? So you could either do that via indexes or something like flagship. And then for your liquidity bucket, are you earning interest on your cash or is it wrongfully just sitting in a checking account?

16:30If you can nail that, You're 90 % ahead of like most folks. So I have a very simple approach, even to my own wealth. I love that. And, you know, I'm just thinking too through here. It's like, I'd argue a lot of our listeners, including myself, right? I very much have, call it$800 ,000 to a million dollars invested in the markets across a bunch of different sort of platforms and ETFs and individual stocks and cryptocurrency, like all the fun stuff there. And so like, for me, I use three or four different platforms to help me check those boxes, right? I use Fundrise for commercial real estate because I have no option of ever buying a commercial real estate property as a single investor here.

17:05I use Coinbase for my cryptocurrency. I've got a couple of these things here. So as it relates to our audience right now listening to this episode, how do they begin to weave Titan into their sort of diversified portfolio of different platforms? Do they move money into Titan? Do they open an account on Titan and do net new capital toward that? Is Titan maybe the way that they think about their treasury? is Titan the way they think about those 15 to 20 stock strategies. How should people be thinking about using Titan alongside some of the other platforms that I know a lot of our listeners have?

17:35Yeah, definitely. What we often see do is clients will pick us for one of the initial core food groups. They'll confirm, okay, who are these guys? Let me get to know them. Is this thing on? And then once they see, okay, they trust us and so on, they use us then for all the core food groups. So we see people either start with just flagship because they're really excited about the active exposure. The alternative would be, you know, trying to hunt through maybe different alternatives or if they have access to hedge funds or even actively managed ETFs, it's kind of a bit of a crazy world. So they really like our approach in the simplicity or smart treasury, which is kind of the, you know, instead of having to react to all these different spammy, you know, here's the cash yield rate, like add a hundred thousand dollars and we'll increase it by five basis points.

18:18Instead of having to react to that, they love that our team automatically is moving their capital and their cash to get the highest earning yield. So then thereafter, they'll use this for a core food group. But no, we're totally fine with people having these other platforms if they want exposure per se in direct crypto assets, or if they want to own, let's say, specific real estate assets, that's awesome. And they should express those things. The thing we always remind is it's not that you shouldn't express it. it's what percent of your overall wealth are you risking on that platform? So i.e., as I'm sure you guys are both aware, just an allocation decision.

18:56Your pie, what percent of your pie is going to this? It's not that the slice in itself is bad. It's just is the slice too big or too small? So that's what people usually call us for is just help with, am I holding too much cash? Am I holding too much crypto? What should I do with it? So we coach people a lot on those questions. So walk me through so I understand for myself and our listeners, because this is very intriguing and I love what I hear. What is different if you take away the bells and whistles, you take away the perks of Titan? What is difference between Titan's portfolios and a standard fiduciary firm that would be in wealth management?

19:33What is the secret sauce that Titan has that others may not? Two, it would be cost and simplicity. And then the third, you could say, is also some of the performance of our vehicles. So let's go through each of those three. First is cost. I have a personal mission. I want to go to war on this 100 basis points advisory fee before then you get layers and layers of fees inside these other products. And so cost is one of these just hidden villains that affects portfolio returns. I hate the sleepy old guy who just puts you in a commodity but charges 1 % for it and barely communicates with you. So our products, once you're inside, the highest asset fee is 20 basis points compared to the market, which can give you 100 basis points plus.

20:19Secondly, simplicity. This is really important because most people have really difficulty sticking to plans that are created for them, for their wealth, because you just can't fall asleep at night feeling that it's good. And so we have a framework and a philosophy at Titan called the three G's. I can walk into that which is you need to think about your wealth as three buckets of money not one so most people will say should i invest my money now and notice um the word you my money it's like a singular bucket should i go take my treasure chest and move it in the market or move it out so our framework where we coach people to say you need to think about as three there's a liquidity bucket a growth bucket and a retirement bucket we call that the three g's guard growth generation they really appreciate that because it enables them to go get those compounded returns in the growth bucket in particular.

21:11And lastly, performance of our products. So for instance, our cash product, we're able to get folks highest after-tax returns, at least in our available universe and money market funds, because the product itself automatically moves client capital instead of, let's say, Austin, just dormantly keeping cash and getting whatever the rate is via the banking entity. So we wanted to build something that's simpler, it's a lower cost, and the products help deliver better outcomes via our philosophy and the construction. IE, when you boil it all together, just can we actually deliver Apple for your money?

21:45That was the goal. I love that answer. And that was amazing. I had a one-on-one call with a client the other day and asked them what they were paying for their wealth management. And they were paying 2.5%. Oh gosh. I don't even know how that's legal. I said, fire them tomorrow and I will get you in a much better place. I know all the right people to help you because that is egregious and just so, so wrong. And just one more thing real quick, Joe, walk me through, how are you guiding all these people? How are you coaching them? Are you doing Zoom calls? Do you have a team of people that work with all the clients that are coming in to get them situated?

22:24Walk us through that real quick. Totally. We use technology. We also use relationships over digital means and also in-person means. So lots of our clients actually just prefer to get a 60-second video update on, let's say, we increased our position in TransDiamond flagship. TransDiamond is an aerospace supplier, has a borderline monopoly in their industry. They're like, I don't need a phone call, but I love the, let's call it the Instagram or TikTok-like content that's actually coming from a wealth manager in the app. The, let's call it digital relationship we have, or let's say the schedule call with our investor relations team or myself, or let's say we have a Zoom call explaining presidential impacts on, let's say, foreign policy.

23:06And then in person, we always have clients coming in person to our office pretty much every day. We're here based in Greenwich and Soho. We deliver education information to our clients however they want it. Soon, we're going to be really excited to make a big push into artificial intelligence, which is just another means for how we can deliver information in real time. We're not dogmatic. There's some companies that say we're tech only or humans only or pretty much customers only. If you want a phone call, great. If you just want a little notification in the app so you can get back to your day job and just know we're on it, we'll do that for you too.

23:41I love that. Let's wrap things up here with the research. You all provide your members with weekly insights on market trends. You answer member questions on investment ideas, what you covered, performance, and more. You also publish quarterly deep dives into your investment performance, the latest investment trends, and major market events. So who's writing these reports? And do you have any examples of recent topics so our listeners can get a feel for what the information is, what they can expect in being a member of Titan, and then we'll go from there. Now, before you answer that question, Joe, I just want to take a moment to hear from this episode's sponsor, Monarch Money, which by the way, just received the award for best budgeting app of 2024 by the Wall Street Journal.

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