• January 9, 2019

    Crown Financial Partners Keeps Clients on Plan When Markets Swing

    Investment Chief Seok Jo counsels perseverance rather than retreat

    By David Beck, Content Director - Crown Financial Partners

    Many pundits are comparing the recent plunges in the markets to the turmoil that occurred in late 2008 and early 2009. Both were dramatic downturns creating lots of nervousness among investors.

    Dr. Seok Jo, chief Investment officer (Ph.D., CFP, ChFC) at Crown Financial Partners, in Beverly Hills, CA ( has the benefit of hindsight, having witnessed the 2008 crisis as a financial advisor. He notes that the economics and business conditions in 2008 were a lot more severe than in 2018-2019. At that time the nation was gripped by the lack of economic growth, high unemployment, bursting of a real estate bubble, subprime mortgage crisis, and the major heart dropping turmoil in the financial sector that included the disintegration of Lehman and other institutions.

    “Right now, we have had a significant pullback,” says Jo, but it isn’t as bad as it seems. Though the S & P was down 6.2% for the year of 2018, the third quarter was very good.” Moreover, he adds, the U.S. has held up pretty well compared to international markets which were down 14% according to the EAFE and other benchmarks.

    Market volatility is nothing new and while investors can celebrate the bull markets of the last few years, they need to expect occasional pullbacks as the price they pay for investment growth.

    To be sure, the fundamentals are sound. Economic growth is still strong though it may weaken somewhat in the coming months. Job numbers are consistently good as employers added 312,000 to their payrolls at the close of 2018. The chairman of the Federal Reserve Jerome H. Powell seems to be satisfied that the economy is not overheating which would require consistent hikes in interest rates. He commented, “With the muted inflation readings that we’ve seen coming in, we will be patient as we wait to see how the economy evolves.”

    It’s All About Proper Planning and Realistic Expectations

    Still, investors can expect more than a few dramatic falls in the market, caused mostly by individual events that may or may not foreshadow larger systemic problems. The losses experienced by Apple in China and trade war incidents are just a few recent examples.

    Whether the markets are set for modest rises and dips, dramatic growth or whether we are in for a sustained period of economic distress, investors need to focus on their goals and think about the longer term.

    “The way we invested in 2008 and the way we invest now is very similar,” says Seok Jo of Crown Financial Partners. He goes on to underscore the Crown Financial approach. “Most people have some short-term, mid-term and long-term uses for the funds they are accumulating. So, we try to address each of these goals and set up a portfolio allocation for each.”

    “After a thorough understanding of a client’s needs and goals is attained, a proper allocation with specific targets is constructed,” observes Jo. “The markets fell fast. Someone who had a 60% equity allocation might have been pulled down to 50.”

    Some people wanted to take the risk off in 2008 and go into cash. Some did the opposite. They viewed the downturn as an opportunity and bought more equities.

    Reward for Staying the Course

    Dr. Jo gives as an example a recently divorced couple with roughly the same size investment portfolios. One former spouse liquidated his entire portfolio as the market was falling. The other spouse stayed in. The equity portion of her portfolio fell substantially. After speaking with Jo and staying focused on her plan, she accepted Jo’s advice to rebalance her portfolio by selling bonds and buying more equities to bring her back to her target allocation. “As emerging markets and other asset classes fell, we bought equities in these asset classes that had gotten beat up.”

    So what happened? The man locked in his loss as he cashed out, and was always too nervous to get back in. The lady had a more long-term investment perspective. Her patience was rewarded by participating in one of the longest bull runs on record.

    Seok Jo believes clients need to have a very disciplined approach and invest for the long term instead of trying to time the market. He and his partner Jonathan Beck spend a significant amount of time educating their clients on market volatility and trying to ensure clients have proper expectations. They often remind clients that equity markets could lose substantial value very quickly. They ask clients how they would feel and use that as a gauge in determining risk tolerance.

    Seok together with his team at Crown Financial Partners implement a three-step strategy for clients: gauge clients’ comfort level with risk, educate them about investing and then set realistic targets and asset allocations to match their short and long-term goals.

    “We have planning discussions very early. We have quantitative charts that illustrate market returns over long periods of time. It has the S & P returns since its inception in 1926. And we show clients the ups and downs. But if you look at the investment horizon over 90 years, there is a lot more black than red.”

    What are the lessons from 2008 that apply now? Make sure your finances are well planned and organized. Reassess these plans on a constant basis and have realistic market expectations. You need to be willing to accept a short-term correction to realize the long-term benefits.

    Consider that some investors didn’t panic in the fall of 2008. To the contrary. They put funds into stocks even as they continued to be hit by major losses. But they acquired equities at the best valuation in years. When the rebound came, as it eventually does, they profited handsomely.

    It’s about planning and discipline.

  • December 13, 2018

    Time to Make Property Insurance a Key Part of Your Wealth Management Strategy

    By David Beck, Content Director - Crown Financial Partners

    Natural disasters are no longer an isolated occurrence. It seems like each day the media is reporting on wild fires in the west, hurricanes and floods in the south, tornadoes in the Midwest and superstorms in the east.

    The recent devastating California wild fires are just one example. Seventeen major storms including 10 hurricanes hit the U. S. in 2017 alone, according to data from Stormfax Weather Almanac. Six of those storms were ranked as a Category 3 hurricane or even higher. Consider that at least two major hurricanes have caused havoc in the U.S. just about every year since 1997.

    No matter what a family’s net worth, it is vulnerable. What’s more, the financial impact on a high net worth individual and his family can be immeasurable.

    That’s why more and more wealth managers are advising their clients not to take their “investments” in property and casualty insurance lightly.

    “In the recent California wild fires and Florida floods, we’ve seen multi-million dollar homes and property wiped out in minutes. The time to review your policies is before the disaster strikes,” comments Jonathan Beck, President of Crown Financial Partners, a boutique wealth management firm out of Beverly Hills, CA.

    Jeff Kaplan is Senior Vice President at Risk Strategies, and head of the family office practice. He advises high net worth families to do their homework. A key consideration--there is a big difference between the average insurance company and the few select firms that serve high net worth families. “A $300,000 ranch home is totally different to rebuild than a home of $2 million. You are taking on that risk depending on who you are insured with,” emphasizes Kaplan “If you are getting your taxes done by a high net worth professional, you probably should, have your insurance done by high net worth specialist as well.”

    The plain truth is most high net worth individuals do not have adequate property insurance. And so, many are turning to firms and professionals to advise them. Experts in the insurance industry admit they have not done a good enough job promoting themselves to their target audience. In addition, by and large many wealth managers have not spelled out the importance of property insurance, especially in these days of high-risk natural disasters.

    “More wealth managers are slowly paying attention to the area of property insurance because their clients expect to have risk management services which encompass all financial risk,” points out Kaplan.

    It’s a big differentiator of wealth management approaches. Crown Financial Partners has individuals on staff, such as Daniel A. Katz, who specialize in property/casualty coverage. Katz is vice president, risk management and runs the P &C risk management division. He focuses on analyzing the risk exposure of his high net worth clients to determine how best to quote and recommend policies. Taking into consideration the clients’ overall wealth strategy, Katz helps advise them on coverage and limits with the goal being to best protect his clients’ assets.

    “Clients can be paying large sums for insurance, so it is essential for them to know what they are paying for and whether or not their policies are deficient,” says Jonathan Beck.

    What are the steps high net worth individuals should take before a disaster strikes? First make certain you are working with a competent broker and brokerage firm. Like Katz and Kaplan, brokers and their firms could play a crucial role in obtaining proper coverage and assisting with claims. Next contact your wealth manager. He or she can help you determine how much coverage you should have and additional services you might need in your policy depending on where you reside.

    For example, some policies for California residents cover fire-fighting services. They actually send people to the family’s home to monitor the fire, put out small fires, clear landscaping and spray fire retardant, among other tasks.

    Also, says Jeff Kapan, make sure you are covered by a carrier who specializes in high net worth and review your policy coverage with your risk manager and wealth advisor. Any gaps in coverage effectively means you are self-insuring. This is where clients need to coordinate with their wealth mangers and make certain they have sufficient assets to cover whatever their policies do not. Why is this important? If you don’t have earthquake insurance and an earthquake hits your area, you could lose your home. Then what? Do you have the assets to rebuild on your own? What will the impact be on your financial plan? That’s something you and your wealth manager need to plan out.

    For example, in the recent fires many California residents were forced to evacuate their homes. Some, lost their homes completely. Loss of use is the part of a policy that determines how much the insurance the company will pay you to rent another home until your existing is rebuilt. In high-cost areas, that expense could be drastic. High net worth individuals want to make sure they have adequate loss of use coverage. It’s not the same in all polices.

    In addition, most high-end policies will provide the client with cash for the value of the home if it is totally lost and the insurance will pay to clean up the site. Depending on the location, most high net worth clients decide not to rebuild on the devastated property. They take the cash and buy a new home in another area and sell the property. The average insurance company does not offer the option of cash or rebuild.

    Recent reports from federal and state governments suggest that the impact of disasters will only get worse in the coming years. That’s why Jonathan Beck of Crown Financial Partners, advises clients to ask, “what does your insurance look like now and what should it look like in the future. And, how does it fit with your overall wealth management strategy.”

    In the final analysis, high net worth clients should find out if their wealth management firm has property insurance expertise and then make sure to review current policies. Include a discussion on possible additional services or coverage. Wealth managers should do more than protect clients from a 500-point drop in the market. They need to shield them from the risk of $5 million loss from acquiring the wrong property policy.

  • October 28, 2016

    Crown Financial Partners is honored to be a Corporate Sponsor for the Building Bridges between Israel & Asia Event at the Beverly Hills Synagogue.

    Click here to visit website

    Beverly Hills Synagogue [YINBH] is a member of the Young Israel family of synagogues.

    [YINBH] strive[s] to provide our members and visitors with a meaningful and inspiring prayer and Torah learning environment.

    [YINBH] shul is renowned for its leadership role in charitable and social welfare projects, both in California, and in Israel. Support for the State of Israel is central to our members, who are leaders in the support for Israel’s economy, security, and religious character.

  • November 11, 2015

    Crown Financial Partners is honored to be acknowledged as the Presenting Sponsor for the 2015 ETTA Gala at the Beverly Wilshire.

    Since 1993, ETTA has been a premier provider of services for adults with disabilities.

    ETTA offers residential housing, job training and placement, life skills, educational and social programming. ETTA’s mission is to enable people with special needs, and their families who love them, to live fully enriched and active lives throughout Los Angeles. [ETTA] empower[s] people with disabilities to achieve greater independence, inclusion, and growth.

    Click here to visit event website.

  • November 4, 2015

    Crown Financial Partners is honored to be acknowledged as an Entertainment Sponsor for the CFV’s 2015 Autumn Appreciation Dinner at the Castaway.

    Since 1956, the Community Foundation of the Verdugos has provided counsel to donors and financial support to organizations with diverse needs within Burbank, Glendale, La Cañada-Flintridge, La Crescenta, Montrose and Verdugo City regions.

    Click here to watch video.

  • September 20, 2015

    Municipal Bonds for a Rising-Rate Era

    Step-up muni bonds feature payments that rise over time, but there are risks

    by Gregory Zuckerman, The Wall Street Journal

    Step-up bonds seem to be becoming more dominant in the muni market as a rise in interest rates seems more likely. Are they a smart investment now?

    Grant Carlson, San Francisco

    Step-up municipal bonds are long-term bonds with initial coupons that rise over time, at set periods, as long as the bonds aren’t called, or redeemed, by an issuer.

    Because the bonds may be redeemed, they often trade at a higher yield than comparable bonds without a call provision. If interest rates rise and the bonds aren’t called—perhaps because the issuer deems it costly to refinance their debt—the yield of the bond increases, or steps up, giving the holders a bonus.

    Step-up muni bonds can be popular when investors anticipate rising interest rates—as they do today—because they can provide a higher yield in such an environment. They’re also in demand lately because most high-grade municipal bonds sport meager yields. Even if the issuer pays the debt back early, an investor will have enjoyed higher payments with these bonds than with standard muni bonds.

    “Step-up bonds make sense if an investor has a view that rates will rise over time and wants the future coupon to rise with the higher expected market rates,” says Michael Degernes, head of municipals at Aberdeen Asset Management. Mr. Degernes says prices of these bonds usually are less volatile than other munis as rates rise.

    For those interested, Chris Brigati, managing director and head of municipal trading at Advisors Asset Management, recommends buying step-up munis when they are first issued and can have a “lower price point” than other high-coupon muni bonds.

    But if interest rates stay low or drop and the bonds are called, investors must reinvest the proceeds in a low-rate environment. These bonds aren’t “for everyone,” says Jim Colby, senior municipal strategist at Van Eck Global. “You can find yourself losing bonds you deem attractive.”

    Adam Buchanan, senior vice president at investment banking firm B.C. Ziegler & Co., notes that some issuers have “checkered histories or are speculative startup projects” and were forced to issue these bonds because it was their only means of raising capital in the muni market. It is important to do extensive research on these issuers, he says.

    Step-up munis usually are callable on the date the coupon steps up, Mr. Buchanan says, pointing out the risk that investors who hold such bonds won’t benefit. Moreover, he adds, “If interest rates increase at a pace that exceeds the step, the bonds lose value.”

    Matthew Tuttle, chief executive of Tuttle Tactical Management, says floating-rate bonds are a better option than step-up bonds when rates rise steadily, though step-ups remain more attractive than fixed-rate bonds.

    “The other problem with step-ups is you can’t access them through an ETF so you would have to buy individual bonds” which can be more challenging to purchase, partly because it can be difficult knowing if an investor is getting the market price, Mr. Tuttle says.

    Dan Heckman, senior fixed-income strategist at U.S. Bank Wealth Management in Kansas City, adds: These bonds sometimes aren’t very liquid, or easy to sell without moving prices, because they’re a small part of the market. Further, the upside appreciation is limited because issuers can call them.

    Step-up bonds can be a good option when interest rates rise slowly and steadily, argues Seok Jo, chief investment officer of Crown Financial Partners in Beverly Hills, Calif. But investors need to calculate the yield-to-call, or the yield they would receive if the bond is called, rather than assume they can hold the bonds to maturity.

    Mr. Zuckerman is a reporter for The Wall Street Journal in New York. He can be reached at

  • Applying Science to Investing

    An introduction to Dimensional for investors, this video underscores how science has transformed every aspect of our lives, including investing.

  • Dimensional Origins

    Chairman and Co-CEO David Booth and others talk about the firm’s founding and its close ties to the academic community.