2 min read January 2023 — In an interview with Invest:, David Tawil, managing partner for Texas at Private Wealth Asset Management, talked about the importance of education in wealth management. He also discussed how people view financial freedom and the biggest challenges the industry is facing. “The biggest thing right now is the economy and markets. This has been a tough year, and no one will tell you otherwise,” he said.
What are some highlights or milestones from the last year for Private Wealth Management?
We launched the firm in Texas one year ago. We manage a little over $1 billion in assets firm wide, as well as significant assets on the oil and gas side. We are quickly approaching $2 billion in assets under our management. We have seen tremendous need for what we are doing, especially our energy platform. There are many people who manage investments but we are a unique platform that brings planning expertise to everything we do. We are a planning-first organization because you can’t truly manage someone’s interests if you can’t plan for the road ahead. Planning is a core competency that we lead with. It also starts with people. We need qualified people to manage client assets and manage complex assets like oil and gas assets, most firms don’t have a specialty in managing assets in those areas.
There is not a lot of transparency in the asset management business and we are a disruptor in this space because we take a different approach. Our investment professionals are CFA Charter holders, which is the highest designation in the industry. We also have non-practicing attorneys on staff to help with planning. We are really focused on people first because everything starts there. We have a great technology platform but it all starts with our people.
We are not a traditional money management firm. A lot of our clients are from Texas, specifically South Texas, where a lot of wealth comes from oil and gas. That forms a unique client base. We now have offices in San Antonio, Midland and soon in Fort Worth. We have launched a second brand called PW Energy. That is because one unique thing we do is mineral management. We manage oil, gas and minerals for high-net-worth individuals and this business is growing incredibly rapidly. This is one reason why we created our own unique brand in addition to Private Wealth Asset Management. In addition to providing mineral management for individuals, we are now serving as a back-office manager for other institutions and large bank platforms. We are growing rapidly.
How do people view financial freedom and how has that definition changed?
That definition is different for everybody and it starts with education. A big part of what we do is work with second- and third-generation individuals. When you take the time to educate each generation, then they understand the strategy that you are putting in place. It starts with planning but second to that is solid risk management. You have to understand how to de-risk a platform as much as you can. You can win the lottery but that doesn’t mean you can manage that appropriately. You don’t have freedom until you are educated.
What are some concerns about inflation and what should investors be concerned about?
You need to be concerned about purchasing power and saving but most importantly you need to know how to do that safely. For the entirety of last year, we were hedged for our client portfolios. This has been a great educational experience in managing risk for our clients. We predicted turbulent markets but no one predicted we would be down 20% and that inflation would be at all-time highs. We were prepared for this. Interest rates are easy to prepare for from the standpoint that we have been preparing for years as they were artificially low. If you are prudently managing assets, then you are managing that risk and interest rates are that risk. We mitigate that by keeping the duration of a portfolio very short. We had a target duration of around two to three years and that allows us to have rapid maturities as interest rates rise. The problem with that is that if someone is living off fixed income, then you are just treading water. If you held cash over the last two years, you are losing money safely. You were getting a 0% return, but inflation is 2%, so you were locking in a negative rate of return. As interest rates go up, this is a great opportunity to lock in a better return but inflation has also risen. The gap for those people is widening and that is the risk we were preparing for.
What is the biggest challenge in the wealth management industry?
The biggest thing is the economy and markets. This has been a tough year, and no one will tell you otherwise. It requires a lot of work and focus but it is also one of the biggest opportunities at the same time. The other challenge is finding people who have the expertise to work in our space. We firmly believe in succession and legacy planning but not from the sense that most people are thinking. We want families to know that we are training the next group of advisers who will be with them after our older advisers retire. This is hard because most firms want revenue to hire younger people but we believe that we need to help them grow alongside our clients, so they are familiar with them. This helps to continue that relationship for years to come. This is often ignored, especially by bigger firms. They don’t have the budgets to invest in that.
What is your outlook for Private Wealth in the near term and what are your top priorities?
Our top priority will always be our clients. That is not hard to answer. We need to continue to help our clients grow and manage the assets that they worked hard to achieve. This means we need to invest in our business for their betterment. Our outlook is extremely positive. We are in markets that we love to be in and our prospects for growth are off the charts. Our outlook is extremely positive and extremely growth-oriented. Our brand has morphed and grown in new ways and we are passionate about what we are doing. There is a giant need for our services, especially on the energy side. The other focus is that we are a relatively new firm, so we are trying to grow our community.
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