speaker-0: Welcome back to another episode of Spread School. I'm your host, Desarte Yarnway, and today you're in for a treat. We've got the man, the myth, the legend, Akiva Glazerson on the show with today. Akiva, how you doing?
speaker-1: I'm doing great, Disarke. Thank you for having me. I'm super excited to be here.
speaker-0: I am so excited to have you join us today. ⁓ one, because the firm just adores you and is a fan of all the work that you're doing. But two, I I just have this sort of compassion and empathy for entrepreneurs because I know how hard it is to build a business. But you are building a business at the speed of light. You're serving a lot of clients and you're changing lives along the way. So, first, I wanna say congratulations to you for taking the leap and doing such a great job. And two, I wanna say that. I'm a fan and I can't wait to just learn more about your story. With that being said, why don't you introduce yourselves to the advisors that might be listening to Spread School today?
speaker-1: Sure. Thank you so much for that intro. And a big part of my early success is, you know, definitely attributable to Synthetic Fi. And you guys are, you know, you guys are amazing. So it's it's definitely a mutually beneficial ⁓ relationship. But yeah, I mean, my my career started ⁓ way back in 2016. I joined ⁓ right out of college, I joined Deutsche Bank. I joined the private private bank where I I spent a few years. ⁓ post Deutsche Bank, I you know, I joined some of the wire houses. I spent ⁓ I spent some time at UBS. I spent some time at RBC, the Royal Bank of Canada. And then ultimately I actually took a hiatus from wealth management for a few years. I actually went down to a Newport Beach. I was working in asset management at Pumco for a number of years in the ⁓ quantitative solutions group, ⁓ particularly for insurance companies. Nothing to do with wealth management whatsoever. But that was obviously a very, very valuable ⁓ you know, experience. You know, I got to obviously dive into the world of fixed income, alternatives, some of the small. you know, smartest and most high caliber people I've ever worked with were ⁓ you know, were down at at Pimco. And that that was incredible. ⁓ but ⁓ ultimately I knew I wanted to come back to wealth management. So post Pimco, I joined a very large RIA in Century City that had about 45 billion dollars of assets under management. ⁓ I actually joined that firm as the head of risk. ⁓ I spent a couple of years there and ultimately I saw a a pretty compelling opportunity to start my own firm and and ultimately went in that direction.
speaker-0: So Akiva, I know that you were never an advisor before this, but you definitely have a breadth of knowledge and sort of breadth of experience across the asset management and wealth management space. Tell me like what made you want to sort of jump out and say, like, hey, I think this is a great opportunity for me to start my own firm.
speaker-1: Yeah, I mean it was to be frank, it was a very scary ⁓ and uncertain time in my life. You know, to your point, I had never been an advisor. I did not start with any book of which to speak whatsoever. And that day one was kind of zero clients, ⁓ zero AUM. But what I did have was a ⁓ you know, I did have a a large breadth of experience ⁓ across these different firms, ⁓ particularly in, you know, very investment heavy roles. So You know, at the RIA I was at, I had learned a lot about options. They were sort of option specialists at Pimco. I'd obviously learned a lot about fixed income and ⁓ alternative investments. So, you know, throughout my career, I definitely built up a very, very strong knowledge base about investments and ultimately saw an opportunity where I could leverage that into a firm of my own. All of this happened alongs, you know, alongside an environment where I saw, you know, firms much like Synthetic Fi, ⁓ offering very, very powerful solutions to RIAs that allow me not to only speak to clients about these solutions, but actually deploy them at scale. So, you know, as I said before, Synthetic Fire has been a very, very valuable partner to me here. And, you know, I I look forward to the continued relationship.
speaker-0: Can you talk about that like first day in your own seat? Because I know that we have a lot of emerging advisors as well as a lot of enterprise advisors that listen to the show and that also use Synthetic. And, you know, for the advisors that are in that like zero to like five hundred million dollar range, they never forget the first day that they took the leap. It's like, okay, I've done it. What do I do now? What were your emotions like? What were you going through at that time? ⁓ to say like, okay, now's the time to get get this ship rolling. Go ahead.
speaker-1: Yeah, I mean it was definitely, definitely an emotional roller coaster, right? I just left my, you know, my very comfortable, ⁓ very good job at a very, very large RIA. There I was sitting on my laptop day one. I'm like, okay, no book, no AUM, what I what do I do? ⁓ and it was just as simple as, you know, sticking to the plan. And the plan was to always, you know, try and do things different and try and and be as differentiated as possible. I knew that there weren't a lot of advisors out there talking about box spreads. And so when I picked up the phone to prospective clients, whether that be friends, whether that be family, whether that be people I met on the street, any prospect, I tried to have a very, very differentiated conversation, whether that be in the realm of box spreads, derivatives, ⁓ tax loss harvesting, ⁓ a lot of the conversations I had were very, very differentiated. And again, Synthetic Fi allowed me to have that differentiated conversation and you know, cause the client to kind of take a step back and say, hmm, this sounds really good. I've never heard about this before from my existing advisor. Let's dig deeper. And as I sort of, you know, as I had those conversations, I was able to cultivate the relationship by bringing forward a solution that was very powerful and unlike anything that I'd ever heard about before.
speaker-0: Amazing. You know, oftentimes advisors start their practices and they just enter a sea of sameness. And that's the same list is like, hey, I'm a financial advisor, I can help you with long-term financial planning. And most of those advisors are just gonna throw their clients into like ETFs, set it and forget it, without any complex or deep planning for that specific client. So across the board, that just makes you one susceptible to like losing clients because an advisor like yourself can come with a differentiated strategy that can really impact the client's life. So as you were having these conversations, what were they like? And how did people take two box spreads as you introduced the content? Yeah.
speaker-1: Yeah, I mean, like you said, I think that sea of sameness concept is very, very applicable. And it's something I've seen, you know, both my ⁓ both across my, you know, prospective client base and conversations that I I continue to have. And, you know, I think one of the challenges people have when you first one one of the challenges I had when I first reached out to people is they're kind of expecting that same sameness, right? ⁓ this is a financial advisor, I'm going to hear the same story over and over. They take the call and they leave with more knowledge. Than with than what they you know walked in with. They may have been expecting me to talk about just ETF model portfolios. ⁓ but you know, ultimately I'm to your point trying to sort of ⁓ turn that sameness on its head and and come out with with solutions that are unlike anything that they've heard before. I mean, box spreads in particular have been a very, very powerful solution. ⁓ you know, many of my clients were before using either securities backline or credit. or ⁓ you know a margin loan and they hadn't even heard of a box spread. As soon as I'm able to come in, explain the concept, explain how it works how it works, some of the tax benefits, ⁓ so on and so forth. Again, I think they're kind of blown away and think that it, you know, it's too good to be true, which again, that's a challenge is in and of itself. ⁓ but ultimately I think ⁓ you know, it's a very, very differentiated solution that allows me to continue to win business.
speaker-0: Amazing. You know. One of the things that I would do as an advisor is like I have to give someone at least two pieces of value to take away from this conversation, regardless or not if they decided to do business with me. Because as you know, when you're prospecting, when you're building your business, sometimes a client that you prospect today may not become a client tomorrow. But when that sort of event happens where they feel like they need financial advice, they remember the value that you imparted on them. And I think largely you can do that with box spreads because it is so differentiated and not the status quo for advisors. Let's get into box spreads. I mean, how has box spreads made an impact on your business?
speaker-1: Yeah. So I think, you know, obviously the obvious answer is that it allows me to offer a differentiated approach to lending, to compete with some of the bigger banks on securities back line of credits. You know, all of that is true. ⁓ and we can get into that ⁓ you know, in a bit. But I think one of the interesting angles that that box spreads have allowed me to do is actually whether or not I I use them at the beginning of a client relationship or not, what it does allow me to do is aggregate client assets. What do I mean by that? Many of my clients when they came on board ⁓ had five, six, seven, or even eight different accounts at different financial institutions. And they would have one account here for investments and one account here for this, and another account here for that. And then they would have their big bank relationship for lending. What box spreads have allowed me to do is bring all of a client's assets under one roof, which is you know very important from a ⁓ investment management efficiency standpoint. So even if a client no may not have a a box need, ⁓ a box spread need today or tomorrow, ultimately if they ever do, I'm able to offer them that solution and at the same time ⁓ able to sort of consolidate all of their assets at one place.
speaker-0: It's amazing. ⁓ I think consolidation is important for advisors because it also allows you to like really get a full picture of the person's financial plan. Some advisors might say, Well, I don't need to consolidate, I just need the data. But it's often difficult to like see what may be happening on the other side of the table and if that's the best decision making process for the client.
speaker-1: That's it, yeah, that's exactly right. And you know, not only does col consolidation allow you, you know, a full view into all of a client's assets and and allow you to build a a a full and comprehensive financial plan in house with view into those assets, but ultimately if they ever do want to box spread, it allows them more capacity to do so as they have more assets to borrow against in one place.
speaker-0: Absolutely. Absolutely. Take me through that conversation, right? When you've gathered all of the assets, you've gathered all the financial information, and more so you've you've got a feel for the client's objective because I think that's the one part that advisors really gotta get a hold of because all these clients wanna use their money to improve their lives. Like when you introduce that concept of box spreads, does it go over their heads or is it something that they're their their eyes light up and say, Wow, I didn't know I can do this? Can can you talk about like benefits and also talk about like any resistance you we've received from clients as well.
speaker-1: Yeah, absolutely. So my client base in terms of the client type is is really quite quite wide, right? I have clients in tech, I have clients in private equity, I have clients that work at hedge funds, I have clients who are in medicine, right? So the level of investment knowledge and sophistication that a client comes to me with varies, you know, really widely. ⁓ you know, so some of the more sophisticated, for example, I have a client that works at a hedge fund. ⁓ he had obviously, you know. He was familiar with box spreads and understood how they worked and was actually running them himself. The reason he came to me was because he simply did not have the time to implement them into his own portfolio on a day-to-day basis. So obviously, somebody like that, you know, it's it's kind of an easy sell. He knows what he's doing and he knows how it works. But then I have some of my clients in tech or medicine who are far less familiar with investment products and investment strategies. And I sort of have to start from scratch in explaining how a box spread. works and why it's so powerful. And that's exactly what I do. You know, oftentimes, especially at first, it kind of completely goes over the client's head. And it may take three, four, five, or even six conversations to get them to the point where they fully understand what the benefits are, what the risks are, what the tax, you know, what the power in the realm of tax efficiency is. ⁓ And I'll spend as much time as possible with the client to get them to the, you know, the place that they need to be to understand how these work. You know, I'm often met with, you know, This is too good to be true. Something doesn't sound right. I have a a number of clients with whom I actually set up a sort of test case box spread, a very small, ⁓ a very small, you know, maybe $10,000 loan size, just so they could get a taste of how it works, how it appears in their their account, and just to kind of show them that it's not as, you know, intimidating or as scary as it may sound when when you know when I explain it. But ultimately, I do think ironically, one of the biggest ⁓ ⁓ challenges with box spreads is simply explaining what it is, how it works, and why it's not to be too good to be true.
speaker-0: Yeah. Can you run us through that test case? Because I think advisors sometimes come into it and say like it's an all or nothing thing. But I think, you know, I had another ⁓ advisor on this call and he was saying if you have any purchases, you should probably do a box spread, right? Because of the benefits, because of ⁓ the simplicity by using synthetic fi, et cetera. But I think advisors sometimes think they have to go in with a six figure or seven figure amount, which just isn't true. Talk to us about using a test case and how that goes over with your clients.
speaker-1: Yeah, I mean the test case actually led to a case that was ultimately the largest box spread ⁓ I've done to date, which was, you know, many, you know, multi-million dollar box spread. ⁓ but it started with, like you said, a very, very small test case because the client simply did not believe that something's, you know, a solution so powerful could really exist. And, you know, w the the client brought over a a pretty negligible ⁓ amount of assets. I think it was something like fifty thousand dollars ⁓ just to start off with. And we ran, I believe it was a $20,000 box spread, you know, and he got to see step by step how it works money into the account, set up the synthetic pipes, run the box spread, send the money out of the account. And it's kind of as simple as that, right? Obviously, there are other considerations. ⁓ but ultimately the the sort of the step-by-step process of a of a box spread is very, very easy because it is facilitated by SyntheticFi. ⁓ ultimately this I we can get into the story if you'd like. This led to one of the most ⁓ interesting and powerful and creative client cases that I've I've worked on ⁓ to date. ⁓ and you know, a a a very, very successful ⁓ and happy client in the end.
speaker-0: Yeah, I I think just before we go to that interesting case, a lot of advisors think that they have to set up the mechanics, they have to do the trading, they have to manage all the risk, right? And I think one of the powerful things is like you don't have to do that anymore. You don't have to necessarily facilitate anything for yourself anymore. And that alleviates a lot of pressure and a burden off the advisor's shoulders. Go ahead.
speaker-1: Yeah, I was gonna say that's exactly right. I mean, obviously one of the first questions I get from clients when I talk to them about box spreads are what are the risks? And you know, you and I know that one of the one of the main risks of box spreads is execution risk. But knowing that I'm working with a partner like Synthetic, who I believe at this point has billions and billions of dollars in box spread loans outstanding. I mean, you guys have you guys have kind of mastered your craft. And so I'm able to sleep easy. The client is able to sleep easy knowing. that the mechanics and and the the really sophisticated nitty-gritty aspects of the loans are behand are are being handled by the expert.
speaker-0: Yeah, that's amazing. Now tell me about that case. I wanna I wanna hear about
speaker-1: So I I I really have, I mean, I've done at this point ⁓ you know, quite a high number of box spreads. I have three cases ⁓ that I I, you know, really stand out to me as as as you know, as ones that I was able to really add real value to the client. ⁓ we can get into the other two, but I'm going to start off with with with the first one. And this was a client who came to me. He had about four million dollars of publicly traded stock at a company he had worked at. And he no longer worked at the company. He was you know, somewhat I guess you could say semi-retired. He had some liquid liquidity. He came to me with three, three problems, really. He came to me with a volatility problem, right? Number one was this was a very, very volatile stock. And every day, you know, he was kind of scared about, you know, would it be up 20%, would it be down 20% the following day? He was very, very concerned about the stock's volatility. ⁓ he then, you know, his secondary concern was as it pertained to liquidity. Right, which is where the box spread came in. Right. He ⁓ he needed money for, you know, for lifestyle factors and you know, all of this stock was kind of tied up at a very, very low ba basis. And selling it meant a very, very large ⁓ capital gain event. And lastly, he had a tax issue, right? Which kind of ties into this first one where selling down the stock would lead to a capital gain event. So what I did was I think synthetic fi called this the ⁓ synthetic variable prepaid forward. And And that's exactly and that's exactly what I ended up implementing for this client with synthetic fire. So step number one and issue number one was the volatility issue. And how did we how did we deal with that? We implemented a collar on the stock, right? So we set a floor that he was comfortable with, with a long put, and then we sold a short call, which you know, yes, it set a ceiling on the stock, but it also provided premium with which we could then buy the long put and protect the stock. Most importantly though. For him was liquidity. Once the stock was collared and protected from this volatility, we could then borrow against it, you know, and and have the ability to sleep well knowing that we're borrowing against the stock that is ultimately protected. Once we had borrowed against it with a box spread, he took half of the proceeds of the box spread to fund the lifestyle factors that he, you know, that he was he came to me with in the first place. And the other half of the proceeds we actually put into a direct indexing account where he's been accruing capital losses and ultimately been able to sell down over time slowly that initial position in a tax neutral fashion. And, you know, he's been very about very happy about that. So ultimately each of the three issues that he came to me with, number one being volatility, number two being liquidity, and number three being sort of tax a tax neutral exit, we were able to solve for him. And you know, a very, very successful case in my eyes, and you know, obviously couldn't have been possible without SyntheticFi, the box spreads, the collar, so on and so forth.
speaker-0: Absolutely. I love hearing cases like that and the synthetic VPF is something that we're really excited about and more advisors are starting to adopt. I wanted to touch on like the collar aspect, right? ⁓ for the growth sort of oriented investor that you might work with, have you ever got any pushback about limiting the upside or is this like a perfect time in their eyes to do it? Like what what are you
speaker-1: Yeah. Yeah, absolutely. I mean, you know, different clients have different, you know, flavors and and different risk tolerances. ⁓ you know, I've had clients that I, you know, have done, like you said, just the collar and they've had to or are comfortable with limiting the upside of the stock. ⁓ I've had other clients who want no upside limit and actually wanted to pay for the long put just to protect the downside out of pocket. And you know, that's you know, a very, very valid and legitimate solution. And even still, we can then box spread against the position which is protected to the downside. So the beauty of a collar and options in general is that we can really customize them to whatever comfort level a client has around how much upside and down side downside participation they want.
speaker-0: Amazing. I think you had three cases, but let's just do one more.
speaker-1: Yeah, yeah. ⁓ wow, how do I choose? ⁓ I know which one I'll choose. I this one was actually quite a recent case. It was in the last week or so. A client, a tech client, ⁓ came to me with a a very large portfolio, and he owns two ⁓ pieces of property. He owns his primary residence and he owns a vacation home. ⁓ what we ended up doing was actually refinancing his vacation home using a box spread. The reason that this was particularly powerful was for a number of reasons. Obviously, the main one is that he simply gets a lower rate, right? The box spread ⁓ I think lowered his his ⁓ rate by about 50 or 60 basis points. So that in and of itself was very, very powerful. However, why this made ⁓ you know, particular sense for this particular client is because his primary residence was eating up all of his $750,000 mortgage interest deduction. And so his secondary mortgage was not getting any sort of tax benefits. By doing the box spread, now all of a sudden there's a lot of tax benefits to that quote unquote second mortgage ⁓ that he would not have otherwise ⁓ benefited from or realized. ⁓ because he's a a tech employee, he has a a lot of concentrated stock in the tech company for which he works. And so, you know, some of the capital losses that a box spread can produce would end up being a very, very powerful. tax benefit for him as he looks to unwind some of his concentrated stock. So a very, very ⁓ you know, powerful use case for box spreads, not only as it pertains to a lower rate, but also some of the tax benefits and flexibility around term and structure.
speaker-0: Amazing. Amazing. I mean I have nothing to say because I feel like every advisor here will see the benefit in using a box spread, right? And what it could do for your business. ⁓ why don't you share with us what it's done for your business since you've become an independent ⁓ registered advisor
speaker-1: Yeah, I mean it it's really it's been a very, very powerful tool in my toolbox, right? As I said before, I like to offer differentiated solutions. I like to, you know, speak about things that other advisors maybe aren't speaking about. And, you know, again, the the box spread of offers the obvious, you know, let's you know, let's get you a lower rate versus your securities back line of credit or your margin loan. But as I said before, it allows you to have a conversations about around asset aggregation, ⁓ and and simply you know, allows you to come ac you know, to be a a solution to your client that you otherwise, you know, could not have been as an RIA. What
speaker-0: What would you tell the advisor that is on the fence about using box spreads? Because you know, you've had sort of an interesting path in getting to being an RIA. But many advisors are more classically trained, right? They have like warehouse experience, they're trying to go for production, ⁓ they're trying to keep assets in-house, they're trying to do things that allow them to make as much money with a scalable sort of system ⁓ for work, right? What do you tell them ⁓ in terms of like differentiating?
speaker-1: Yeah, I I think I think the reason I was comfortable with box box spreads so quickly is because you know my experience leading up to my firm was really more investment heavy, right? I was in the nitty-gritty of of options and derivatives for much of my career, and I hadn't been an advisor. So when it came, you know, when it came down to it and and when I launched my business, when I launched my business, speaking about box spreads was, you know, it was just kind of another day at the office for me. One thing I would encourage advisors who are, you know, on the fence about box spreads to do is just dive in, learn how they work, learn, you know, the intricacies around using European style options versus American style options. Why do we use SPX options? You know, what are the legs of a box spread? How do they work? What does it mean? And as you get more comfortable with the actual structure of the options, I think advisors will realize that you know it's not. as complicated as it may sound.
speaker-0: Yeah. So I th I guess the first thing is like education and that's what spread school is for, to help advisors learn about box spreads and feel comfortable enough to use them on client cases to provide value. Give me two more things.
speaker-1: That's exactly right. Yeah. ⁓ sor sorry not to interrupt you, but I think that's exactly right. ⁓ you know, it's very hard to speak about something that you don't deeply understand yourself. Yeah.
speaker-0: Give me two more things, because I feel like you have a wealth of knowledge. If Visor wants to get started or implement this, what's the two and three that they need to probably focus on to be not only comfortable but be impactful to their clients?
speaker-1: I mean, I would say get in touch with Synthetic directly, right? You guys across the board, every single, you know, every single person at Synthetic that I've I've ever dealt with, right? I've I've dealt with sales, I've dealt with operations, I've, you know, I've kind of dealt with everybody. I drive you guys a little bit crazy. ⁓ but every but every person that I've spoken to has has been immensely helpful. ⁓ you know, I always leave a call or I I always leave a meeting knowing more than when I walked in. And, you know, I just wouldn't hesitate to reach out. out to synthetic directly, right? Everybody is, you know, obviously an expert in box spreads. And, you know, if you feel like you're lacking the education, reach out. I mean, you guys have been incredible.
speaker-0: Kiva, that's amazing. And thanks for your ⁓ vote of confidence and the work that we do here. It's really to help you and your clients at the end of the day ⁓ be better off, ⁓ have the tools that you need to reach your goals as an advisor and their goals as clients. So we appreciate you and the relationship we have with you. And we can't wait to see what you do with your business in terms of growth and other client lives that you'll impact. I I am betting that after advisors listen to this episode, they're gonna want to reach out to you to learn from you. So where can they connect with you or just follow along with your journey?
speaker-1: Yeah, I mean, ⁓ I think another, you know, big big part of the early success of my business has been, you know, how active I've been on LinkedIn. So feel free to reach out on LinkedIn. ⁓ stqcap.com, my website, reach out, let's grab a coffee if you're local to the LA area. You know, we'll set up a call, drop me an email. Happy to connect with advisors and anybody who may be interested in either building a practice, box spreads, or really just wants to hang out.
speaker-0: Amazing. Well, thanks, Akiva. And thank you all for listening to another episode of Spread School. You know where to find us on wherever you listen to podcasts and on YouTube. Visit Spread School to learn more about box spreads and how to use them for your clients. Until next time, we'll see you.
speaker-1: I'm doing great, Disarke. Thank you for having me. I'm super excited to be here.
speaker-0: I am so excited to have you join us today. ⁓ one, because the firm just adores you and is a fan of all the work that you're doing. But two, I I just have this sort of compassion and empathy for entrepreneurs because I know how hard it is to build a business. But you are building a business at the speed of light. You're serving a lot of clients and you're changing lives along the way. So, first, I wanna say congratulations to you for taking the leap and doing such a great job. And two, I wanna say that. I'm a fan and I can't wait to just learn more about your story. With that being said, why don't you introduce yourselves to the advisors that might be listening to Spread School today?
speaker-1: Sure. Thank you so much for that intro. And a big part of my early success is, you know, definitely attributable to Synthetic Fi. And you guys are, you know, you guys are amazing. So it's it's definitely a mutually beneficial ⁓ relationship. But yeah, I mean, my my career started ⁓ way back in 2016. I joined ⁓ right out of college, I joined Deutsche Bank. I joined the private private bank where I I spent a few years. ⁓ post Deutsche Bank, I you know, I joined some of the wire houses. I spent ⁓ I spent some time at UBS. I spent some time at RBC, the Royal Bank of Canada. And then ultimately I actually took a hiatus from wealth management for a few years. I actually went down to a Newport Beach. I was working in asset management at Pumco for a number of years in the ⁓ quantitative solutions group, ⁓ particularly for insurance companies. Nothing to do with wealth management whatsoever. But that was obviously a very, very valuable ⁓ you know, experience. You know, I got to obviously dive into the world of fixed income, alternatives, some of the small. you know, smartest and most high caliber people I've ever worked with were ⁓ you know, were down at at Pimco. And that that was incredible. ⁓ but ⁓ ultimately I knew I wanted to come back to wealth management. So post Pimco, I joined a very large RIA in Century City that had about 45 billion dollars of assets under management. ⁓ I actually joined that firm as the head of risk. ⁓ I spent a couple of years there and ultimately I saw a a pretty compelling opportunity to start my own firm and and ultimately went in that direction.
speaker-0: So Akiva, I know that you were never an advisor before this, but you definitely have a breadth of knowledge and sort of breadth of experience across the asset management and wealth management space. Tell me like what made you want to sort of jump out and say, like, hey, I think this is a great opportunity for me to start my own firm.
speaker-1: Yeah, I mean it was to be frank, it was a very scary ⁓ and uncertain time in my life. You know, to your point, I had never been an advisor. I did not start with any book of which to speak whatsoever. And that day one was kind of zero clients, ⁓ zero AUM. But what I did have was a ⁓ you know, I did have a a large breadth of experience ⁓ across these different firms, ⁓ particularly in, you know, very investment heavy roles. So You know, at the RIA I was at, I had learned a lot about options. They were sort of option specialists at Pimco. I'd obviously learned a lot about fixed income and ⁓ alternative investments. So, you know, throughout my career, I definitely built up a very, very strong knowledge base about investments and ultimately saw an opportunity where I could leverage that into a firm of my own. All of this happened alongs, you know, alongside an environment where I saw, you know, firms much like Synthetic Fi, ⁓ offering very, very powerful solutions to RIAs that allow me not to only speak to clients about these solutions, but actually deploy them at scale. So, you know, as I said before, Synthetic Fire has been a very, very valuable partner to me here. And, you know, I I look forward to the continued relationship.
speaker-0: Can you talk about that like first day in your own seat? Because I know that we have a lot of emerging advisors as well as a lot of enterprise advisors that listen to the show and that also use Synthetic. And, you know, for the advisors that are in that like zero to like five hundred million dollar range, they never forget the first day that they took the leap. It's like, okay, I've done it. What do I do now? What were your emotions like? What were you going through at that time? ⁓ to say like, okay, now's the time to get get this ship rolling. Go ahead.
speaker-1: Yeah, I mean it was definitely, definitely an emotional roller coaster, right? I just left my, you know, my very comfortable, ⁓ very good job at a very, very large RIA. There I was sitting on my laptop day one. I'm like, okay, no book, no AUM, what I what do I do? ⁓ and it was just as simple as, you know, sticking to the plan. And the plan was to always, you know, try and do things different and try and and be as differentiated as possible. I knew that there weren't a lot of advisors out there talking about box spreads. And so when I picked up the phone to prospective clients, whether that be friends, whether that be family, whether that be people I met on the street, any prospect, I tried to have a very, very differentiated conversation, whether that be in the realm of box spreads, derivatives, ⁓ tax loss harvesting, ⁓ a lot of the conversations I had were very, very differentiated. And again, Synthetic Fi allowed me to have that differentiated conversation and you know, cause the client to kind of take a step back and say, hmm, this sounds really good. I've never heard about this before from my existing advisor. Let's dig deeper. And as I sort of, you know, as I had those conversations, I was able to cultivate the relationship by bringing forward a solution that was very powerful and unlike anything that I'd ever heard about before.
speaker-0: Amazing. You know, oftentimes advisors start their practices and they just enter a sea of sameness. And that's the same list is like, hey, I'm a financial advisor, I can help you with long-term financial planning. And most of those advisors are just gonna throw their clients into like ETFs, set it and forget it, without any complex or deep planning for that specific client. So across the board, that just makes you one susceptible to like losing clients because an advisor like yourself can come with a differentiated strategy that can really impact the client's life. So as you were having these conversations, what were they like? And how did people take two box spreads as you introduced the content? Yeah.
speaker-1: Yeah, I mean, like you said, I think that sea of sameness concept is very, very applicable. And it's something I've seen, you know, both my ⁓ both across my, you know, prospective client base and conversations that I I continue to have. And, you know, I think one of the challenges people have when you first one one of the challenges I had when I first reached out to people is they're kind of expecting that same sameness, right? ⁓ this is a financial advisor, I'm going to hear the same story over and over. They take the call and they leave with more knowledge. Than with than what they you know walked in with. They may have been expecting me to talk about just ETF model portfolios. ⁓ but you know, ultimately I'm to your point trying to sort of ⁓ turn that sameness on its head and and come out with with solutions that are unlike anything that they've heard before. I mean, box spreads in particular have been a very, very powerful solution. ⁓ you know, many of my clients were before using either securities backline or credit. or ⁓ you know a margin loan and they hadn't even heard of a box spread. As soon as I'm able to come in, explain the concept, explain how it works how it works, some of the tax benefits, ⁓ so on and so forth. Again, I think they're kind of blown away and think that it, you know, it's too good to be true, which again, that's a challenge is in and of itself. ⁓ but ultimately I think ⁓ you know, it's a very, very differentiated solution that allows me to continue to win business.
speaker-0: Amazing. You know. One of the things that I would do as an advisor is like I have to give someone at least two pieces of value to take away from this conversation, regardless or not if they decided to do business with me. Because as you know, when you're prospecting, when you're building your business, sometimes a client that you prospect today may not become a client tomorrow. But when that sort of event happens where they feel like they need financial advice, they remember the value that you imparted on them. And I think largely you can do that with box spreads because it is so differentiated and not the status quo for advisors. Let's get into box spreads. I mean, how has box spreads made an impact on your business?
speaker-1: Yeah. So I think, you know, obviously the obvious answer is that it allows me to offer a differentiated approach to lending, to compete with some of the bigger banks on securities back line of credits. You know, all of that is true. ⁓ and we can get into that ⁓ you know, in a bit. But I think one of the interesting angles that that box spreads have allowed me to do is actually whether or not I I use them at the beginning of a client relationship or not, what it does allow me to do is aggregate client assets. What do I mean by that? Many of my clients when they came on board ⁓ had five, six, seven, or even eight different accounts at different financial institutions. And they would have one account here for investments and one account here for this, and another account here for that. And then they would have their big bank relationship for lending. What box spreads have allowed me to do is bring all of a client's assets under one roof, which is you know very important from a ⁓ investment management efficiency standpoint. So even if a client no may not have a a box need, ⁓ a box spread need today or tomorrow, ultimately if they ever do, I'm able to offer them that solution and at the same time ⁓ able to sort of consolidate all of their assets at one place.
speaker-0: It's amazing. ⁓ I think consolidation is important for advisors because it also allows you to like really get a full picture of the person's financial plan. Some advisors might say, Well, I don't need to consolidate, I just need the data. But it's often difficult to like see what may be happening on the other side of the table and if that's the best decision making process for the client.
speaker-1: That's it, yeah, that's exactly right. And you know, not only does col consolidation allow you, you know, a full view into all of a client's assets and and allow you to build a a a full and comprehensive financial plan in house with view into those assets, but ultimately if they ever do want to box spread, it allows them more capacity to do so as they have more assets to borrow against in one place.
speaker-0: Absolutely. Absolutely. Take me through that conversation, right? When you've gathered all of the assets, you've gathered all the financial information, and more so you've you've got a feel for the client's objective because I think that's the one part that advisors really gotta get a hold of because all these clients wanna use their money to improve their lives. Like when you introduce that concept of box spreads, does it go over their heads or is it something that they're their their eyes light up and say, Wow, I didn't know I can do this? Can can you talk about like benefits and also talk about like any resistance you we've received from clients as well.
speaker-1: Yeah, absolutely. So my client base in terms of the client type is is really quite quite wide, right? I have clients in tech, I have clients in private equity, I have clients that work at hedge funds, I have clients who are in medicine, right? So the level of investment knowledge and sophistication that a client comes to me with varies, you know, really widely. ⁓ you know, so some of the more sophisticated, for example, I have a client that works at a hedge fund. ⁓ he had obviously, you know. He was familiar with box spreads and understood how they worked and was actually running them himself. The reason he came to me was because he simply did not have the time to implement them into his own portfolio on a day-to-day basis. So obviously, somebody like that, you know, it's it's kind of an easy sell. He knows what he's doing and he knows how it works. But then I have some of my clients in tech or medicine who are far less familiar with investment products and investment strategies. And I sort of have to start from scratch in explaining how a box spread. works and why it's so powerful. And that's exactly what I do. You know, oftentimes, especially at first, it kind of completely goes over the client's head. And it may take three, four, five, or even six conversations to get them to the point where they fully understand what the benefits are, what the risks are, what the tax, you know, what the power in the realm of tax efficiency is. ⁓ And I'll spend as much time as possible with the client to get them to the, you know, the place that they need to be to understand how these work. You know, I'm often met with, you know, This is too good to be true. Something doesn't sound right. I have a a number of clients with whom I actually set up a sort of test case box spread, a very small, ⁓ a very small, you know, maybe $10,000 loan size, just so they could get a taste of how it works, how it appears in their their account, and just to kind of show them that it's not as, you know, intimidating or as scary as it may sound when when you know when I explain it. But ultimately, I do think ironically, one of the biggest ⁓ ⁓ challenges with box spreads is simply explaining what it is, how it works, and why it's not to be too good to be true.
speaker-0: Yeah. Can you run us through that test case? Because I think advisors sometimes come into it and say like it's an all or nothing thing. But I think, you know, I had another ⁓ advisor on this call and he was saying if you have any purchases, you should probably do a box spread, right? Because of the benefits, because of ⁓ the simplicity by using synthetic fi, et cetera. But I think advisors sometimes think they have to go in with a six figure or seven figure amount, which just isn't true. Talk to us about using a test case and how that goes over with your clients.
speaker-1: Yeah, I mean the test case actually led to a case that was ultimately the largest box spread ⁓ I've done to date, which was, you know, many, you know, multi-million dollar box spread. ⁓ but it started with, like you said, a very, very small test case because the client simply did not believe that something's, you know, a solution so powerful could really exist. And, you know, w the the client brought over a a pretty negligible ⁓ amount of assets. I think it was something like fifty thousand dollars ⁓ just to start off with. And we ran, I believe it was a $20,000 box spread, you know, and he got to see step by step how it works money into the account, set up the synthetic pipes, run the box spread, send the money out of the account. And it's kind of as simple as that, right? Obviously, there are other considerations. ⁓ but ultimately the the sort of the step-by-step process of a of a box spread is very, very easy because it is facilitated by SyntheticFi. ⁓ ultimately this I we can get into the story if you'd like. This led to one of the most ⁓ interesting and powerful and creative client cases that I've I've worked on ⁓ to date. ⁓ and you know, a a a very, very successful ⁓ and happy client in the end.
speaker-0: Yeah, I I think just before we go to that interesting case, a lot of advisors think that they have to set up the mechanics, they have to do the trading, they have to manage all the risk, right? And I think one of the powerful things is like you don't have to do that anymore. You don't have to necessarily facilitate anything for yourself anymore. And that alleviates a lot of pressure and a burden off the advisor's shoulders. Go ahead.
speaker-1: Yeah, I was gonna say that's exactly right. I mean, obviously one of the first questions I get from clients when I talk to them about box spreads are what are the risks? And you know, you and I know that one of the one of the main risks of box spreads is execution risk. But knowing that I'm working with a partner like Synthetic, who I believe at this point has billions and billions of dollars in box spread loans outstanding. I mean, you guys have you guys have kind of mastered your craft. And so I'm able to sleep easy. The client is able to sleep easy knowing. that the mechanics and and the the really sophisticated nitty-gritty aspects of the loans are behand are are being handled by the expert.
speaker-0: Yeah, that's amazing. Now tell me about that case. I wanna I wanna hear about
speaker-1: So I I I really have, I mean, I've done at this point ⁓ you know, quite a high number of box spreads. I have three cases ⁓ that I I, you know, really stand out to me as as as you know, as ones that I was able to really add real value to the client. ⁓ we can get into the other two, but I'm going to start off with with with the first one. And this was a client who came to me. He had about four million dollars of publicly traded stock at a company he had worked at. And he no longer worked at the company. He was you know, somewhat I guess you could say semi-retired. He had some liquid liquidity. He came to me with three, three problems, really. He came to me with a volatility problem, right? Number one was this was a very, very volatile stock. And every day, you know, he was kind of scared about, you know, would it be up 20%, would it be down 20% the following day? He was very, very concerned about the stock's volatility. ⁓ he then, you know, his secondary concern was as it pertained to liquidity. Right, which is where the box spread came in. Right. He ⁓ he needed money for, you know, for lifestyle factors and you know, all of this stock was kind of tied up at a very, very low ba basis. And selling it meant a very, very large ⁓ capital gain event. And lastly, he had a tax issue, right? Which kind of ties into this first one where selling down the stock would lead to a capital gain event. So what I did was I think synthetic fi called this the ⁓ synthetic variable prepaid forward. And And that's exactly and that's exactly what I ended up implementing for this client with synthetic fire. So step number one and issue number one was the volatility issue. And how did we how did we deal with that? We implemented a collar on the stock, right? So we set a floor that he was comfortable with, with a long put, and then we sold a short call, which you know, yes, it set a ceiling on the stock, but it also provided premium with which we could then buy the long put and protect the stock. Most importantly though. For him was liquidity. Once the stock was collared and protected from this volatility, we could then borrow against it, you know, and and have the ability to sleep well knowing that we're borrowing against the stock that is ultimately protected. Once we had borrowed against it with a box spread, he took half of the proceeds of the box spread to fund the lifestyle factors that he, you know, that he was he came to me with in the first place. And the other half of the proceeds we actually put into a direct indexing account where he's been accruing capital losses and ultimately been able to sell down over time slowly that initial position in a tax neutral fashion. And, you know, he's been very about very happy about that. So ultimately each of the three issues that he came to me with, number one being volatility, number two being liquidity, and number three being sort of tax a tax neutral exit, we were able to solve for him. And you know, a very, very successful case in my eyes, and you know, obviously couldn't have been possible without SyntheticFi, the box spreads, the collar, so on and so forth.
speaker-0: Absolutely. I love hearing cases like that and the synthetic VPF is something that we're really excited about and more advisors are starting to adopt. I wanted to touch on like the collar aspect, right? ⁓ for the growth sort of oriented investor that you might work with, have you ever got any pushback about limiting the upside or is this like a perfect time in their eyes to do it? Like what what are you
speaker-1: Yeah. Yeah, absolutely. I mean, you know, different clients have different, you know, flavors and and different risk tolerances. ⁓ you know, I've had clients that I, you know, have done, like you said, just the collar and they've had to or are comfortable with limiting the upside of the stock. ⁓ I've had other clients who want no upside limit and actually wanted to pay for the long put just to protect the downside out of pocket. And you know, that's you know, a very, very valid and legitimate solution. And even still, we can then box spread against the position which is protected to the downside. So the beauty of a collar and options in general is that we can really customize them to whatever comfort level a client has around how much upside and down side downside participation they want.
speaker-0: Amazing. I think you had three cases, but let's just do one more.
speaker-1: Yeah, yeah. ⁓ wow, how do I choose? ⁓ I know which one I'll choose. I this one was actually quite a recent case. It was in the last week or so. A client, a tech client, ⁓ came to me with a a very large portfolio, and he owns two ⁓ pieces of property. He owns his primary residence and he owns a vacation home. ⁓ what we ended up doing was actually refinancing his vacation home using a box spread. The reason that this was particularly powerful was for a number of reasons. Obviously, the main one is that he simply gets a lower rate, right? The box spread ⁓ I think lowered his his ⁓ rate by about 50 or 60 basis points. So that in and of itself was very, very powerful. However, why this made ⁓ you know, particular sense for this particular client is because his primary residence was eating up all of his $750,000 mortgage interest deduction. And so his secondary mortgage was not getting any sort of tax benefits. By doing the box spread, now all of a sudden there's a lot of tax benefits to that quote unquote second mortgage ⁓ that he would not have otherwise ⁓ benefited from or realized. ⁓ because he's a a tech employee, he has a a lot of concentrated stock in the tech company for which he works. And so, you know, some of the capital losses that a box spread can produce would end up being a very, very powerful. tax benefit for him as he looks to unwind some of his concentrated stock. So a very, very ⁓ you know, powerful use case for box spreads, not only as it pertains to a lower rate, but also some of the tax benefits and flexibility around term and structure.
speaker-0: Amazing. Amazing. I mean I have nothing to say because I feel like every advisor here will see the benefit in using a box spread, right? And what it could do for your business. ⁓ why don't you share with us what it's done for your business since you've become an independent ⁓ registered advisor
speaker-1: Yeah, I mean it it's really it's been a very, very powerful tool in my toolbox, right? As I said before, I like to offer differentiated solutions. I like to, you know, speak about things that other advisors maybe aren't speaking about. And, you know, again, the the box spread of offers the obvious, you know, let's you know, let's get you a lower rate versus your securities back line of credit or your margin loan. But as I said before, it allows you to have a conversations about around asset aggregation, ⁓ and and simply you know, allows you to come ac you know, to be a a solution to your client that you otherwise, you know, could not have been as an RIA. What
speaker-0: What would you tell the advisor that is on the fence about using box spreads? Because you know, you've had sort of an interesting path in getting to being an RIA. But many advisors are more classically trained, right? They have like warehouse experience, they're trying to go for production, ⁓ they're trying to keep assets in-house, they're trying to do things that allow them to make as much money with a scalable sort of system ⁓ for work, right? What do you tell them ⁓ in terms of like differentiating?
speaker-1: Yeah, I I think I think the reason I was comfortable with box box spreads so quickly is because you know my experience leading up to my firm was really more investment heavy, right? I was in the nitty-gritty of of options and derivatives for much of my career, and I hadn't been an advisor. So when it came, you know, when it came down to it and and when I launched my business, when I launched my business, speaking about box spreads was, you know, it was just kind of another day at the office for me. One thing I would encourage advisors who are, you know, on the fence about box spreads to do is just dive in, learn how they work, learn, you know, the intricacies around using European style options versus American style options. Why do we use SPX options? You know, what are the legs of a box spread? How do they work? What does it mean? And as you get more comfortable with the actual structure of the options, I think advisors will realize that you know it's not. as complicated as it may sound.
speaker-0: Yeah. So I th I guess the first thing is like education and that's what spread school is for, to help advisors learn about box spreads and feel comfortable enough to use them on client cases to provide value. Give me two more things.
speaker-1: That's exactly right. Yeah. ⁓ sor sorry not to interrupt you, but I think that's exactly right. ⁓ you know, it's very hard to speak about something that you don't deeply understand yourself. Yeah.
speaker-0: Give me two more things, because I feel like you have a wealth of knowledge. If Visor wants to get started or implement this, what's the two and three that they need to probably focus on to be not only comfortable but be impactful to their clients?
speaker-1: I mean, I would say get in touch with Synthetic directly, right? You guys across the board, every single, you know, every single person at Synthetic that I've I've ever dealt with, right? I've I've dealt with sales, I've dealt with operations, I've, you know, I've kind of dealt with everybody. I drive you guys a little bit crazy. ⁓ but every but every person that I've spoken to has has been immensely helpful. ⁓ you know, I always leave a call or I I always leave a meeting knowing more than when I walked in. And, you know, I just wouldn't hesitate to reach out. out to synthetic directly, right? Everybody is, you know, obviously an expert in box spreads. And, you know, if you feel like you're lacking the education, reach out. I mean, you guys have been incredible.
speaker-0: Kiva, that's amazing. And thanks for your ⁓ vote of confidence and the work that we do here. It's really to help you and your clients at the end of the day ⁓ be better off, ⁓ have the tools that you need to reach your goals as an advisor and their goals as clients. So we appreciate you and the relationship we have with you. And we can't wait to see what you do with your business in terms of growth and other client lives that you'll impact. I I am betting that after advisors listen to this episode, they're gonna want to reach out to you to learn from you. So where can they connect with you or just follow along with your journey?
speaker-1: Yeah, I mean, ⁓ I think another, you know, big big part of the early success of my business has been, you know, how active I've been on LinkedIn. So feel free to reach out on LinkedIn. ⁓ stqcap.com, my website, reach out, let's grab a coffee if you're local to the LA area. You know, we'll set up a call, drop me an email. Happy to connect with advisors and anybody who may be interested in either building a practice, box spreads, or really just wants to hang out.
speaker-0: Amazing. Well, thanks, Akiva. And thank you all for listening to another episode of Spread School. You know where to find us on wherever you listen to podcasts and on YouTube. Visit Spread School to learn more about box spreads and how to use them for your clients. Until next time, we'll see you.
