Seven Questions with Tony Sirianni: Josh Rogers, Founder and CEO, Arete Wealth
The last few months have been unprecedented and unexpected, a perfect storm if you will, of management challenges both on the employee and client level. You have had to deal with employee safety issues that no CEO has training for, a complete shift in how we do business every day, and directly correlated market upheaval. What have you implemented at your firm to address this dual threat–Take coronavirus first:
Arete Wealth has 35 branches across the nation, and our home office in Chicago supports each of them. We stay in sync with state mandates, city ordinances and other pandemic-related precautions happening at local levels. Those ordinances are heeded and enforced. For our own headquarters where I am based – as well as across the country – we have implemented work-from-home policies employees can utilize to ensure their safety. Virtual meetings were normalized before, but are more important than ever to keep us connected to our advisors, their offices, and their investors.
It goes without saying the health of our teams and their communities is a top priority. As we continue to standardize health and safety measures in our workplaces, we are grateful to be moving ahead through these times.
How about the continuing market volatility? What are you telling your advisors to do/ what are you hearing from clients?
The current mood of an Arete Wealth advisor or investor may be very different than what you would expect in today’s market. We are hearing relief and gratitude from our clients. Why is that?
At the precipice of this pandemic in March 2020, I sent a note to the Arete Wealth field to first check on their safety. Once that was established, I advised them to seize on ‘opportunity in the midst of the storm.’ During tumultuous market times, our firm’s approach to investing really shines. I founded Arete Wealth in 2007 on an endowment-style approach to investing – namely, allocating between 10% – 30% of a portfolio into non-marketable, non-correlated securities. These types of securities (some registered but most of them being private exempt securities) helps investors weather storms just like the one we are in now because this style of allocation is proven to preserve wealth. After the market crash of 2008, 2009 was a banner year for Arete – and now in 2020, our fee revenue is up year-over-year. Arete Wealth is proud to be a leader in exclusive access to non-liquid, bespoke alternative investments that support long-term wealth growth and help ‘weather the storms.’
What about the economy longer term? Especially a post-election market that may face increased regulation and taxes directly impacting investing like: cap gains, step up basis, carried interest, and income– Where do you think we will be in 6 months, and how can advisors and their clients take advantage of that long term direction?
I’m extremely optimistic that just as the “Roaring ‘20s” occurred in the wake of the last global pandemic following the Spanish Flu, we’re about to embark on the greatest 10-year global market expansion we’ve seen in generations.
I do not foresee an increase in the capital gains tax rate because more than likely, Congressional power will be split between parties with Republicans holding the Senate. (From what I have researched, I don’t feel President-Elect Biden is in favor of increasing capital gains tax rates anyway.) To the extent there are worries about capital gains taxes, we will see an increased interest in opportunity zones before 2020 year end as well as other tax-friendly investments. Tax policies may evolve to implement a minimum corporate tax, which there’s already bi-partisan support for.
Along with anticipated economic growth, I think the next decade we will see increasing focus on a more even distribution of wealth to equalize significant wealth imbalances – without direct influence from governments.
What about our business? What do you think the long term impact of the Pandemic and volatile markets will be on the advisor business model?
Significant, seismic shifts were starting to happen in the wealth management industry even prior to the pandemic. Take for example the consolidation of TD Ameritrade and Charles Schwab. This move is further evidence that large-scale custodians are quietly seeking to take even more market share from the independent financial advisor. The only way I see independent advisors justifying themselves is two-fold: 1. They will have to work with more accredited investors (the good news is that I believe there will be huge growth in the number of high net worth clients looking for personal advice over the next decade) and 2. They must offer compelling, differentiated services with the experience, advice, and first-class products high net worth investors want. This includes access to deal-flow and unique, bespoke alternatives; enhancements to their services that are complimentary to wealth, such as lifestyle services (i.e., art, wine, and luxury collectibles consulting); and truly personalized service, inclusive of client-facing technology that provides comprehensive, real-time reporting on all portfolios. I am proud to say Arete Wealth specializes in all of these, and it shows our remarkableness to both advisors and investors.
Social justice issues are endemic to our industry and front burner right now, what is Arete doing to address concerns, and what can our industry as a whole do?
Our firm’s Investment Committee has made a conscientious decision to look for more products with positive social impact components in 2021 and beyond. In addition, our hiring practices have always focused on finding and developing advisors representative of all voices. It is no secret our industry is predominantly white and male, so in addition to the talented team members we have representing those voices, we want to bring other perspectives to investing. Finally, we are actively recruiting to expand our advisory board with more diversity, primarily within gender and race identity. These are all initiatives for inclusion that other firms could also replicate, and we hope to see others follow our progress in these areas.
To make change permanent a firm has to have a strong culture. How do you maintain firm culture in a Zoom world, without live firm gatherings and in person mentoring?
Where possible, I continue to visit advisors – whether that be for an outdoor meeting, an outdoor meal or for a round of golf. This is not always possible to do in today’s environment, so we have leaned more heavily on creating culture through virtual experiences. Our annual conference was hosted in an online environment, and we were able to bring together over 125 advisors, team members, product partners and industry experts in a safe and personal way from the comfort of their computer. Keynote speakers, info sessions, happy hours and even interactive entertainment including magicians and musicians were carefully curated to ensure a truly one-of-a-kind, only-at-Arete experience! In fact, the virtual format was so successful we plan to host it annually with a focus on products and training – that way, future in-person meetings will have a larger focus on building culture and collaboration in a social environment.
With what’s behind us and what’s still to come, what makes you the most optimistic about 2021?
This environment has been challenging for everyone. The pressure we have all been under, both in our work and our personal lives, is intense and unprecedented. The analogy is like being in a pool: Are you barely treading water? Are you swimming along? Are you lapping the competition? Assuming we can all swim at some level, we have the choice how to show up each day. Extreme flexibility without any structure leads to bad behaviors. There are some who choose to barely tread water by sleeping in, wearing their pajamas all day and foregoing most healthy habits because they feel in this environment, they can. Those who are swimming or lapping the competition are getting up each morning with purpose. I’m still wearing suits to work each day. I may not see as many people as I used to, but I have work to do, and I want to show up for that work in the most focused way possible. I still have all the tools I need including my phone, my email, my video calls, my calendar. What excites me about 2021 is seeing the energy our advisors have…the ones who are swimming, lapping the competition and setting up their clients, themselves, and our firm for a successful year ahead – despite any challenges.
Joshua Rogers is the founder and Chief Executive Officer of Arete Wealth, the financial investment entity within the Arete family of companies.
As CEO, Joshua is the steward of the firm’s financial management products and services, offered through more than 30 offices and over 140 advisors nationwide.
The company – a full-service Broker Dealer, Registered Investment Advisor (RIA) and Insurance firm – focuses on wealth management for high-net worth individuals and institutions, alternative investment access, venture capital and private equity programs. The firm has boasted year-over-year revenue growth rate under Joshua’s tenure after he founded the company in 2007.
With nearly 20 years of experience in financial services, Joshua is a seasoned financial executive, a visionary leader and an accomplished business developer across multiple industries. His industry affiliations include an elected position to represent all 3,000 registered small financial services firms across the country on the Financial Industry Regulatory Authority’s National Adjudicatory Council (FINRA’s NAC). NAC reviews disciplinary and membership proceedings to ensure the market integrity of financial firms and advisors.
In 2018, Joshua applied his financial expertise as a managing member of Windy City Crypto LLC, which administers investment options in the expanding and evolving cryptocurrency market.
Prior to entering the financial services industry, Joshua left Georgetown Law to pursue innovation and co-invent several patents, including the ‘name your own price’ e-commerce concepts that drive Priceline.com. His inventor career took a turn towards financial services when he rose in the ranks of a brokerage firm on Wall Street, then American Express Financial Advisors, and finally Ameriprise Financial. He lived in New York City then Washington DC before relocating to Chicago.
In his expanded business and community works, Joshua lends executive perspective to the board of the Chicago chapter of the Young Presidents’ Organization (YPO) as well as the Board of Trustees of the Museum of Contemporary Art Chicago (MCAC). He is a past board member of Threewalls, a non-profit art gallery that supports Chicago artists, and Illinois Humanities, an organization with a focus on public policy, media, business and arts.
Joshua is a graduate of St. John’s College in Annapolis, Maryland, where he is an elected Board Member with oversight of the university’s Finance, Investment and Audit committees. He also teaches Entrepreneurship at both St. John’s Annapolis and Sante Fe campuses.
Joshua finds energy to lead an accomplished professional career by balancing it with his personal interests including global travel. He’s also a voracious reader, a published writer, an art collector and passionate follower of all things in the realm of aesthetics.