2021 Year in Review
It is that time of year when we look back at the year in the rearview mirror to celebrate successes and learn from mistakes as well as look through the windshield at what lies ahead.
Markets
The stock markets once again delivered returns above expectations. US Stocks led the charge, but international, real estate, and commodities markets had good years as well, with bonds and emerging markets trailing. We continued to maintain our diversified approach to investing, which has worked well and, based on the early start to 2022, could work even better in the coming years after the strong performance from large US companies over the past decade. Many investors fail to remember that large US Stocks didn’t return much from 2000 to 2009. During that time, value stocks, small companies, international, and emerging markets gave us the bulk of our returns (https://www.dimensional.com/us-en/insights/a-tale-of-two-decades). It is a good reminder to keep your eyes on the road ahead of you, avoid the distractions like short-term market performance, and stay disciplined through a consistent and unemotional investment process.
Team Update
We were fortunate to add two team members to our Flagstone family. Danny Clare joined us in February as an associate wealth advisor. Danny spent much of the year learning our systems and clients, as well as studying for the CERTIFIED FINANCIAL PLANNERTM Board exam. Many view the certification to be the highest standard for financial planners, and the exam is not an easy test to pass. I’m happy and proud to say Danny passed the exam on his first try in November. We look forward to many of you meeting and interacting with Danny more in the future.
The second team member we added this past year is Chantel Koerwitz. Chantel has a varied set of experiences in her past, including being a schoolteacher, marketing creative, copyeditor, paralegal, and office manager. Chantel is a hard-working, focused team member who is already contributing in a meaningful way to serving clients on our client service team. I look forward to watching Chantel’s growth over time.
Business
In 2021 we added more client households and net assets than at any time in my prior 20 years in the investment and financial planning business. We are also managing about 25% more in assets at the beginning of 2022 than we were at the start of last year (also a firm record). We have added meaningful services like a more robust tax review, automated trading to react quickly if required across multiple clients and eliminated a small custodian we were using that caused more complexity and was a challenge from a compliance perspective. We also upgraded our financial planning system and implemented new smaller-account solutions to increase their efficiency by reducing trading costs.
You may not know this, but all our employees, including me, are paid a salary. Our advisors don’t have “their clients and revenue” versus a different advisor. We advisors serve all clients as a team, and our client service team serves all our clients. This is a very different model than most investment firms and we feel like it gives us a competitive advantage and is the best model for serving existing and new clients at a high level. This way, each team member is allowed to do what he or she does best, allowing our team and clients to benefit. It also avoids the destructive “self-serving” type attitude that I have seen in other financial services businesses.
One of the bigger changes we made in 2021 as it relates to our business was the implementation of our team incentive-based compensation plan. Now, each team member receives a bonus based on our total team revenue and our total new client revenue. So, regardless of who serves or brings in a client, all our team members benefit. There are still opportunities to reward individual performance, but it adds to all our team members pulling the rope in the same direction.
The thing that makes me happiest about our team and our business is that we are always working hard to figure out ways to get better while always keeping the client’s interest first in all we do.
Charity
As many of you know, we do a lot of charitable planning with our clients, and it gives us great joy to see the organizations that our clients love benefit from their generosity. Flagstone also believes it is important to give back to our community from our own pocket. It was especially important to do so this past year when so many were struggling with pandemic-related challenges. Accordingly, we made charitable contributions on behalf of our clients by purchasing 18,650 meals from area food banks. We also made contributions to the Arbor Day Foundation, Junior Achievement, Boys and Girls Club, Capital Humane Society, Mourning Hope, Eastmont Foundation, Heartland Cancer Foundation, Friends of Pioneers Park, University of Nebraska, and several other local charitable organizations. We feel honored to share the success of our business with our local community.
Personal
We had an exciting year with our son Sam heading off to college at UNL and our daughter Sophie starting high school at Lincoln Southwest. Sam is studying finance and joined the Delta Tau Delta fraternity. Despite getting every illness possible in his first semester (cold, covid, mono), he had a blast, did well in school, and will be involved in a leadership role with the fraternity starting this semester. Sophie is involved with softball, choir, show choir crew, and tennis. Her softball season and this upcoming tennis season have been hampered by several knee surgeries in the last year or so, but she has a very positive attitude and keeps working hard to recover from her various setbacks while still contributing to her teams and activities in any way she is able to do so. We are hoping her knees are now fixed so she can enjoy more of the activities she loves. Jill, also, had a couple of surgeries in the last few years, so we have had our fill of doctor’s offices, but fortunately the surgeries were all orthopedic in nature and not more serious.
We also added to our family by getting a new Lab puppy. Royal was born in February, and we brought her home in the spring. She is quite active and different than the other two labs we have owned (Rocky is 10 and still in pretty good shape) but wonderful in her own way. We take Royal and Rocky on long walks in our neighborhood, at Wilderness Park, at area dog runs, or in the country where they can run free, which has turned into one of our favorite weekend activities.
Once again, thank you for the relationships with you, our clients and other individuals and professionals who are part of the Flagstone family. Flagstone wouldn’t exist without you all, and for that we are so very thankful.
