Porter L. “Buddy” Ozanne, III With Probity Advisors, Inc.

Intro: [00:00:05] Broadcasting live from the Business RadioX studios in Dallas, Texas. It’s time for Dallas Business Radio. Now, here’s your host.

Lee Kantor: [00:00:17] Lee Kantor here, another episode of Dallas Business Radio. And this is going to be a good one. Today on the show, we have Buddy Ozanne with Probity Advisors. Welcome, Buddy.

Porter L. “Buddy” Ozanne, III: [00:00:28] Oh, thank you, Liddy. It’s good to be here.

Lee Kantor: [00:00:30] Well, before we get too far into things, tell us about probity advisors. How are you serving folks?

Porter L. “Buddy” Ozanne, III: [00:00:36] Okay. So property advisors, we help people create and conserve wealth. We’re an independent registered investment advisory firm registered with the SEC and independent. We offer our clients financial planning, estate planning, business succession planning, retirement planning services, and we follow that up with excellent asset management services to fill the clients needs on a fee only basis, by the way.

Lee Kantor: [00:01:15] Now, I think in today’s world, especially with the turbulent times that we’re dealing with right now, to have somebody like you on the team is a must have. It’s not a nice to have. I think that when things are going well, then everybody is kind of quote unquote system is working great. But when things are kind of going through a rough patch, this is where you need a steady hand of an advisor. How do you help your clients, you know, through this kind of what are some of the conversations you’re having with the clients now as opposed to if I was there on my own and I’m seeing headlines and woe is me stories left and right, and I’m just going to have to sort through this on my own without any help. Like, I think that what you’re doing is critically important.

Porter L. “Buddy” Ozanne, III: [00:02:03] You know, that’s a great question. First of all, you know, I’ve been in this business now for over 50 years, 50, 52nd year. And the entire my entire career, I have focused on helping people plan, plan for retirement, plan their estates. You know, we do a lot of estate settlement work. We help people, you know, take people to attorneys that do a great job of of setting up trusts and so on and so forth and so and, you know, my dad actually started our business back in in the 1950s. And and so we’re serving in a few cases, fourth generation clients of our family, of our business family. But it’s all been focused on on planning. And so when times get tough, we’re able to take our clients back to the plan and show them where. Yes, you know, we’ve planned for downtimes. You know, we we expect during your retirement, we expect, you know, after someone’s passed away and we’re and we’re managing money for, you know, widows and orphans, we expect we expect these times and we show them where we’ve we’ve gone through the process of planning and and, you know, so. We expected these times. This is what we’re doing about it. And and, you know, according to the plan, you’re still on track.

Lee Kantor: [00:03:48] Now, how do you help people with the mindset? Because as people age, it’s one thing like you’re going through your working years and you and you have a plan and you’re like, I’m going to invest. And so when there’s a downturn, you’re like, Good, I’m buying things on sale because I know I feel good about all this and everything’s, you know, going to be better down the road and you keep investing in a downturn. And then it goes, you know, the market goes up and then you’re investing and maybe you’re not getting as many shares, but you still feel good about the system because you’re betting on some better future. But what if you had to retire? You know, last year and you were going through the downturn at the time where you’re no longer accumulating wealth, you’re accumulating and spending down your nest egg. How do you help people through that time? Because that’s a mental shift. You know, it’s one thing when you know that I’m always refilling that bucket. But now when I’ve stopped filling the bucket and I’ve got to live with what’s in the bucket, that’s a different kind of mentality.

Porter L. “Buddy” Ozanne, III: [00:04:52] You’re absolutely right. And and I will say this, that my observation has been over almost 52 years in this business, that our happiest clients are clients that can afford to live on dividends, primarily those clients when they retire. Honestly, it just doesn’t matter. As long as we have them broadly diversified, we have, you know, some in fixed income. But but on the equity side, focused on dividends. That’s that’s not where the problem is. The problem is where people haven’t been. Doing their financial planning long enough to to have a portfolio that’s focused primarily on generating income from dividends and interest. And so they they kind of have to create we have to create dividends for them in in the form of, you know, capital gains, selling off some capital gains. And you’re right, you know, somebody if they begin this process just as they retire and and their assets are invested. You know as well as we can along, according to modern portfolio theory, which is is the system that we use in determining what kind of asset allocation that we provide for clients. If we’re having to depend on that, then then the client has to go through we have to take them through a planning process that shows them what’s going to happen if if indeed they wind up retiring and the market goes through a downturn like we’re experiencing. Once again, we want to make sure that that plan stands up and it becomes a spending policy issue. We help our clients figure out what their spending policy should be. Planning for a potential downturn. You know, once they once they hit retirement, it’s not it’s it’s it’s more comforting than just saying, well, this happens. But it’s, you know, it’s problematical for people. But what we find is if we’re doing the planning right, the the the the asset allocation will hold and, and our clients portfolio survives.

Lee Kantor: [00:07:47] Yeah. And I think it goes back to again, you have to have somebody on the team doing the work that you’re doing to play out scenarios and what ifs. And, and could you live with this kind of a budget or what would be the most you would need? What would be the least you would need? What are you willing to, you know, sacrifice? What are you not willing to sacrifice? You know, when it comes to lifestyle or choices or vacations or future, you know, giving grandkids stuff like all of these questions should be asked and answered well before you’re retired.

Porter L. “Buddy” Ozanne, III: [00:08:21] Oh, absolutely. And you mentioned someone has to be able to help people figure that out. And one of the things that we’re really blessed with here at Probity Advisors is although I’m in my seventies, we have five experts who do a great job on the planning side, and we have three wonderful analysts, two of whom are CFOs who who do the portfolio construction to meet the goals that are that our planners set. And, you know, one of my policies has been ever since we you know, created probity advisors was to hire. People that are smarter, smarter than I am. And so that makes life pretty easy for me right now. I mean, you know, we’ve we have our own analysts that are, you know, that are paying attention on every day to what’s going on in the economy and and doing, you know, company specific research, portfolio construction. And once again, to meet the goals that the our CFP, our planners set with our clients, it’s a great marriage. And we, like I say, we’ve just been blessed with wonderfully. Smart people and wonderful clients that have a tendency to stick to us. Stick with us, and. But. Does that answer your question? Yeah.

Lee Kantor: [00:10:00] And where do you fit when you have a portfolio or you’re managing someone’s portfolio or any of your clients portfolios where is you know, obviously a portfolio is investing a lot of times in other businesses and other organizations. How much of a portfolio should you invest in yourself, in your own entrepreneurial venture? Is there a place for that in a in your clients portfolios?

Porter L. “Buddy” Ozanne, III: [00:10:28] Oh, absolutely. We have a lot of entrepreneurial clients. And honestly, the best thing in the world for people to do if if they have a good business idea, is to invest in themselves. But once that once that business begins to make money and it’s throwing off. You know profits that that are not. Immediately needed. That that business needs to be looked at. We do actually, we manage for entrepreneurs a number of portfolios for businesses we refer to as sinking funds. But but they’re just portfolios of investable cash that the business has. You know, we counsel people on setting up retirement plans for tax efficiency and ways to save for their employees and themselves. And so, yeah, we really encourage people to to invest in themselves if they have a good business idea. Once that business idea starts bearing fruit, then we encourage those entrepreneurs to begin to diversify and and move. So much so that so that they’re not wiped out if if their particular industry gets hit by a recession or or something worse.

Lee Kantor: [00:12:10] Now, it sounds like your firm is kind of holistic in the sense that you’re trying to watch your clients back from a variety of places, whether it’s from wealth management. It sounds like there’s some insurance in there as well, and a variety of ways to really be that trusted advisor that a person needs if they really want to have that kind of good retirement they dream about.

Porter L. “Buddy” Ozanne, III: [00:12:38] Yeah. That’s a that’s a great point. My father started our business or the incubation of our business back in the 1950s when he went into the life insurance business. And he opened a an agency for the Guardian Life Insurance Company in Dallas in 1960. I went to work for him January the second of 1971. Guardian created the very first insurance. To my knowledge, the insurance company owned mutual fund, which I think is still there. And when I went to work for my dad, the first thing he had me doing was killing people on paper, filling out the estate tax return for small business owners as if the owner died as the spouse died. And back then, the estate tax rate was 70% the top. A state tax bracket back then was 70%. There was no unlimited marital deduction back then. So in a community property state like Texas, if the business owner or spouse died or if the business owner died, half the value of the business was exposed to a state tax with a $30,000 exemption. And like I say, up to a 70% tax. Well, we we we would run these numbers or I would run these numbers and we would have the business owner, you know, show.

Porter L. “Buddy” Ozanne, III: [00:14:26] Show them what what the cost was going to be of of the business owner dying, the spouse dying. And then we would try to help figure out, okay, so how do you reduce the cost? How do you and one of the ways of doing that, of course, is to get life insurance out of the estate and available for the family to use either to pay estate tax or to live on. And, you know, that evolved into financial planning, which evolved into providing financial solutions for retirement planning and other other areas of financial planning. And then that evolved into a fee only basis of serving clients. We still hold we still actually own the insurance agency, but that’s not really a part of probity advisors. And so, you know, we we make available to our clients the ability to acquire life insurance to solve that part of the financial plan and estate plan. And we fully disclose what the costs of doing that are and what and what individuals that are in that agency get paid. But but probity advisors is a fee only institution and totally separate from that agency.

Lee Kantor: [00:15:59] Now do you think that the role of Financial Advisor, obviously some of the job requirements have changed over the years and what they may do in a day to day basis. But at the heart of what they’re doing is helping people navigate a successful retirement and have more, I guess, predictable income as they age. As has that part change? Is it still a relationship business where you really have to care about people? It can’t. It seems like a lot of folks are moving to this robo advisor world where they think they can just put in, you know, pay a fee every month that just comes out of your account. You don’t have to talk to a human. And it all just happens like magic.

Porter L. “Buddy” Ozanne, III: [00:16:41] Yeah, that’s a good point. You know, in some people, we’re going to do just fine with robo advisor. But but, but they’re going to have to if they want financial planning, they’re going to have to do that themselves, too. If they want a state planning, they’re going to have to either do that themselves or go find, you know, somebody that’ll do the estate plan for them, an attorney CPA, a CFP. We find that our clients are very comforted with the holistic approach that we take. We we provide the planning and then we find the solutions for them. And. And of course, you know, we provide some of those solutions. But, you know, not every client is going to. You know, you’re absolutely right in our business model. Care for the client? Integrity. Really, really good people. Providing service is really the key to success.

Lee Kantor: [00:17:54] Well, I think that, as you mentioned earlier, you have clients that span multiple generations, which I think is pretty unusual in your in your industry, that most financial advisors, their kids don’t don’t take up the same financial advisor they are. They’re kind of go their own way. So if you’ve been able to crack the code to have multiple generations still under your umbrella, you must be doing something right.

Porter L. “Buddy” Ozanne, III: [00:18:22] Yeah, that’s exactly right. As a matter of fact, honestly, then this big key to my success is honestly has been prayer. You know, I’ve prayed for guidance. I pray every day for the ability to help somebody. And and a long time ago, when I first went to work for my dad, that that estate planning focus that that that we began with and we still continue with his actually, that’s the key to the code. The the fact is if we do the estate planning, we get a really good estate planning attorney involved to draft the documents when mom or dad passes away. The family seeks out our help. In doing the estate settlement work. And during that process, we get to we get to kind of shine in front of the family. Okay. Well, so we do. This is the next step. This is the next step. We get a tax ID number for the trust. Whatever it is that we know that we’re doing, we we allocate assets between trusts. We help hold their hands through that, that making that decision process. We then do financial planning for the beneficiaries to figure out how much income they need. And what happens is when someone dies, instead of the kids taking assets to their relationships more frequently, we wind up with additional assets because they see the competency of the work that we’ve done for their parents.

Lee Kantor: [00:20:12] Well, I think it’s super wise to invest in the next generation. Like, why try to find brand new clients when you have a pile of them just sitting there with your existing clients?

Porter L. “Buddy” Ozanne, III: [00:20:23] Right. That’s exactly right. In the estate planning and estate settlement process is is key to to to hang on to those clients.

Lee Kantor: [00:20:34] But most, at least in my work, I’ve seen a lot of financial advisors don’t want to invest in the children because they don’t have the assets yet. And, you know, if you wait till the last second, you know, they’ve already they might already make a decision. So at least show them some value prior so that they think of you when the moment comes.

Porter L. “Buddy” Ozanne, III: [00:20:58] That’s exactly right. And as a matter of fact, you know, to to that end, we’re not snobs. You know, a lot of our competitors will say, you know, we don’t want to deal with you unless you have $1,000,000,000 portfolio or a half million dollar portfolio. There’s TV advertisements. I won’t mention the name. You know, if you have a half million dollars or more, come to us. We’re not snobs like that. We we have actually created, you know, a small account service for kids and grandkids, you know, where, you know, grandparents, parents, you know, they want to set up a five9 account for the. You know, for their kids or grandkids. We’re going to help them do that. And. And so, you know, we do invest in. You know, generations to come. But we also in the estate planning process, we get our clients to bring their families in before anyone dies to to help the family, the kids understand what their responsibilities are in the estate plan. You know what? The way their parents have set up their estate, you know what their ultimate goal is for their family and what the kids responsibilities are with regards to, you know, what if what do we do if dad passes away and mom, you know, needs mental care assistance, for example? You know, we have those frank discussions with the family. We get to know the family. We get to know the kids. And the kids have needs. We’re going to figure out a way to fill those needs, too.

Lee Kantor: [00:22:55] Yeah. And what better way to teach them the the proper way to save and to get, you know, the power of compounding working in their favor early, earlier, the better.

Porter L. “Buddy” Ozanne, III: [00:23:06] Absolutely. Absolutely.

Lee Kantor: [00:23:09] So what do you need more of now? How can we help? Do you need more advisors? You need more clients. What do you. What do you need?

Porter L. “Buddy” Ozanne, III: [00:23:18] Well, of course, you know, we need good, experienced advisors, actually. We have, like I mentioned, three analysts. We have a a an SME football player is interning with us this summer. But our newest our most recent employee, HA, has been with us eight years. He’s a young CFP. We have five scopes and they’re all, of course, younger than I am. And, you know, we have great tenure. The youngest, like I say, employee, has been with us eight years. And it goes all the way to two of our CFOs have been with us 20 years. You know, we would love to find an advisor that likes the kind of of client centric. The only client loving, planning focused service. You know, if that appeals to people, the idea of being independent of of of the big company, you know, we’re looking for those advisors and of course, you know, we we would love to add clients. We we, you know, work solely by referral. You know, we don’t none of our people do code calls and such. So we’re sure we’re we’re still looking to grow.

Lee Kantor: [00:25:00] So if somebody wants to learn more about property advisors, what’s the website?

Porter L. “Buddy” Ozanne, III: [00:25:06] W w w probity advisors dot com.

Lee Kantor: [00:25:10] Well, buddy, thank you so much for sharing your story today. You’re doing important work and we appreciate you.

Porter L. “Buddy” Ozanne, III: [00:25:16] Lee. Thank you for having me. This is this has been a fun experience.

Lee Kantor: [00:25:20] All right. This is Lee Kantor. We’ll see you next time on Dallas Business Radio.