About This Episode
Next Mile Episode 123: How Planning Drives Better Investment Decisions with Tim Thomas. A conversation about wealth management, fintech, and the future of financial advisory firms.
with Tim Thomas · December 16, 2025
Next Mile Episode 123: How Planning Drives Better Investment Decisions with Tim Thomas. A conversation about wealth management, fintech, and the future of financial advisory firms.
The financial plan kind of sets the strategy. It is the road map for how we will invest money. The first thing we do when we do a financial plan is we build out a cash flow model. And that tells us what kind of lifestyle the client can have, what their success rates are for achieving different goals and that ultimately gives us a hurdle rate that we need to meet when we invest.
Hey everybody, welcome back to Next Mile. I'm your host Kyle Vampelt, co-founder at Milemarker. And today I have Tim Thomas. Tim is the CIO of Badgely and Phelps Wealth Managers.
And contrary to popular belief, and even though most people get it confused, this is not the Vzna winning goalie of the Boston Bruins, Tim Thomas, but he is equally as impressive. Tim, thanks so much for joining the show. >> Thanks for having me. >> Of course, I'm happy to have you.
And I'm also happy to kick this off with the same first question that I ask everybody to get us started. So, I've had over a hundred of these conversations on air and off air, and I've found, Tim, that everybody has their own unique path to this industry. Some people it's a very traditional path. Some people it's an untraditional path.
They didn't even know this industry or career existed. But whether their path was traditional or untraditional, I found everybody has what we call a money moment. And that's that moment in your life where the light bulb clicks on and you say, "This is it. This is what I want to do for my career.
" So for you, what was that money moment that led you to having this conversation with me today? I have always been fascinated by the financial markets and been very interested in doing research and what have you from frankly from a very young age. But in college, I got this idea that I would go to law school and become a lawyer and I was a history major and I went to work in a law firm one summer and I just found it wasn't for me. It was great, great firm and all that, but I just found that wasn't for me.
And that really cemented what was for me is being in this industry and doing what I do today. And ever since then, I've been passionate about just pursuing that goal. And it led me into the industry. It led me to UDub to get an MBA and led me through the CFA program and led me here.
>> Well, that's awesome. I love that. All right. I want to ask you about this because I know at Badgely Phelps you all have really prided yourself in an expertise on both the advisory and planning side and the investment management side, but you're the CIO and this is a something I've been wanting to talk to people about for a while, but I feel like there's this emergence of goals-based investing strategy, for example.
So it used to just be hey we're going to build portfolios that we think are going to perform well and then people would do some sort of asset allocation but it seems like now more and more there is a marriage of the investment strategy with what the plan itself says. How are you thinking about that and how are you building strategies and investment allocations based off of clients goals that come from their financial plan. >> The financial plan is the kind of sets the strategy. It is the road map for how we will invest their money.
The first thing we do when we do a financial plan is we build out a cash flow model and that tells us what kind of lifestyle the client can have, what their success rates are for achieving different goals and that ultimately gives us a hurdle rate that we need to meet when we invest. The financial plan really gives us kind of the strategy and the key piece there is the asset allocation target we need to have and then the investments are really the implementation of that. So, we really break it down into those two pieces of setting strategy, which culminates into setting an asset allocation target, getting that hurdle rate, and then implementing the investments that are going to get you that return that we need to get without going over your risk tolerance. >> I love it.
I feel like when it comes to investing, there's sort of a some things are always changing and some things never change. But what are some of the big things that you think have been shifting when it comes to markets, asset allocation, and building out portfolios as they pertain to a client's financial plan? >> I would say one of the biggest things that's changed is one the acceptance of planning. It's become years ago was a thing that some firms did or was occasionally done and now it's something where the planning there are firms that do you know that specialize in planning where the investments are kind of an afterthought or the investments are all kind of indexed what have you.
So we've seen this kind of flip-flop I think where the planning has really come to the forefront and the investments are critically important because that is the implementation of the plan but the planning has definitely risen in prominence and it has a much bigger role than it used to which it should. I've got to ask you this. I'm just curious your thoughts. Right.
There's you mentioned indexing. You mentioned what's going on with that. Obviously, a huge rise over the past 10, 12, 15 years of lowcost index funds, whether it's from Vanguard or from Black Rockck or whatever else. But at the same token, it's not like everybody just wholesale went to the three fund portfolio that you find on like a bogoheads forum or something like that.
So, when does it make sense to just go with lowcost index funds and make it really simple and when does it make sense to stray from that and kind of have a little bit more of an elaborate strategy? We use um index funds to get exposure to asset classes essentially in cases where we're really looking to just get the client that part of the allocation at a low cost where we can be a lot more tactical. We do specialize in investing in individual stocks and bonds. But we do use index funds around certain parts of the equity spectrum like small cap, midcap, international.
And then we also have a tactical strategy where we adjust the allocation to have a higher equity waiting or a higher fixed income waiting depending on our outlook for the future. So that's a case of kind of using the passive strategies in an active way. We're implementing with passive strategies but we're active in how we trade them. >> Yeah, that's super interesting.
What are your thoughts on alts? It seems like alts are making a huge not rise but more and more allocation is going to them. I think that's probably because there's a little bit of a democratization with platforms like I Capital and Case and things like that, but also it just seems like because of all of the lowcost index funds where there's a lot of people just kind of tracking to the market, people are looking for maybe some more alpha in the private markets, especially with people not going public nearly as often as they used to. So, how is that actually Phelps thinking about alts and adding them to the allocation?
Yeah, alts have I mean it's just incredible to see how fast they've grown in prominence and how big of an allocation they're getting in portfolios these days. We have recently rolled out our alts platform for years. We were liquid only if you want to think of it that way. We're looking at this as we're just seeing in if you look at private equity for example, companies are staying private for much longer than they ever would have 20, 30 years ago.
And you're seeing companies that are worth hundreds of billions of dollars. And companies that the goal would have been to go public, but now there's sufficient capital for them to stay private. they don't have some of the filing requirements and compliance and some of the regulatory issues that a public company is going to have and they'd rather have a smaller base of investors and and stay private. So, we felt like we're missing out on some opportunities if we're not participating.
That's part of it. The other part of it is there is a democratization. I mean, there definitely are these strategies have developed over the years and there's been some trials and tribulations along the way and there will be more to come. That's for sure.
But I think the investments themselves, they've gotten more refined. We've learned from our mistakes. And I think it's an environment where people are employing them in more, they're getting smarter and smarter and kind of figuring out more and more clever ways to do these things, to build the investments themselves, to structure them in ways to avoid some of the pitfalls. So I think, you know, for us, we felt like we're missing out on some opportunities by not having them.
And I do think there as to your point there is a democratization there that these are becoming more widely available and frankly easier to invest in. So those are all reasons here that we think this is a trend that is well on its way but it's we don't think it's anywhere near an end. >> Yeah. All right.
I'm going to try and tie some of these things we've talked about so far together. So stick with me as I do this. So I'm thinking about if I'm an adviser and we're being very planled, right? And then the plan is calling for some allocation to alts, you know, whatever it is.
Hey, we've got some money that it's okay for it to be a liquid for a period of time or something along those lines. And and they come to you and they say, "All right, Tim, the plan calls for a 15 20% allocation to alts or something along those lines. " >> Yeah. >> The thing I want to ask you about is as you sit in the CIO seat is how do you guys go about educating, right?
because alts are are not created equal, right? You're talking about, hey, maybe there's a a private technology company that you got allocation to that's really just a riskadjusted equity, right? That it could so that that looks like equity, but then you've got private debt funds and you've got interval funds and you've got credit funds and you've got real estate stuff and you got all of these things. So, somebody just comes and they say, "We want to allocate 15 to 20% to illquid alts.
" Well, now you've kind of opened a bag. So, how do you think about the strategy there? And what kind of questions would you ask to say, okay, well, why 20%? What does this look like?
What are we trying to do with that money, etc. , etc. Cuz not all alts are the same, I guess, but everybody sort of talks about them like it's just an asset class. Oh, we're going to put 20% towards alts.
You know, how do we actually uncover that and dig through it, >> right? Yeah, it's a great question. I I think we want to be asking all those questions. why you know if they come to us with a percentage or they come to us asking for a specific strategy I'm always very interested to find out why such a specific request which frankly is unusual right that a client would come to you we have clients that come to us and say I really like this stock but it's different to come and say I really want to be in this strategy in the alts world it's such a specific request and we do get those so I always want to learn as much as I can about why are you thinking along those lines what led you to that conclusion and how did you get there and do they really understand the risks?
I think the bigger thing for us is in terms of when we start breaking this kind of peeling back the layers of the onion because it is a very different world once you get into the alts world. Real estate is very different from private equity and private credit and you know on down the line hedge funds there's so many different strategies for us. We try to be very thoughtful in how we approach the asset allocation recommendations there. So we're really trying to get at if for example we like private equity on a long-term basis and that's not a market call specific to today.
That's just on a long-term basis. We like the asset class. That's a thing where if we have clients who are just fine with the lack of liquidity and want that higher return and are willing to put up with the fact that there's going to be some higher risk associated with this asset class, then that's something we're going to talk to them about for sure. You can look at the same in real estate.
Real estate is a great way to get kind of consistent income. It's a nice inflation hedge, all those kinds of things. So, we really try to break down what's the right asset for the client and their situation. We don't really have like a cookie cutter.
This is what we're recommending to our clients today. There is a a bit of that from a strategic standpoint in terms of what we think is attractive and where we think the risks are, but really the asset allocation is very customized to each client based on are they more looking for income and safety? Are they more looking for higher risk and higher return? What is the client specific there?
So that's always what drives us is is the client need and then their risk tolerance and then how we can best achieve their goals and hit that return hurdle. >> Yeah, that's really well stated and I appreciate you kind of bearing with me as I was like wanting to talk through that because you hear the whole industry just talking about ults this that you know everything but it really should be and like you said probably 99% of the time the client's not driving that. It's more the adviser saying hey we think there's an opportunity here to go for this. It's a tool in the toolbox, right?
Hey, this this situation calls for a Phillips head screwdriver as opposed to a hammer. >> Right. Right. And you're like you're seeing that right now with a lot of the 1031 exchange funds.
That's become a a thing that has become popular. A lot of people who are kind of the mom and pop landlord, if you will, versus the the big professional firms, the mom and pops are saying, "Look, you know, there's just a lot more red tape. We're having to deal with a lot more regulations. this is a a big headache.
We're getting older. We don't want to deal with being a landlord. And you can look at the 1031 exchange funds and you have a solution to get into something where you typically those people would do a 1031 exchange if they wanted to sell their property, but they would still be a landlord. And that that gives you a way to kind of move on from that posture, continue to get income off of your real estate, but move into more of a passive role rather than being the one who's getting the calls about whatever's broken in the building or what have you.
So, >> yeah, >> I love that. >> This podcast is brought to you by Turncast. We make gamechanging content for fintech and financial services companies. Learn more at turncast.
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Don't let outdated processes keep you from reaching that next mile in your firm's growth. Visit milemarker. co co and mention the next mile podcast and I'll personally make sure to get the insights you need to take control of your data and scale your practice because your time should be spent building your business not buried in spreadsheets. All right, I want to ask you one more thing and then and then we'll start bringing it all back to how this then rolls up into serving clients well from an advisory side.
But as you sit in the CIO chair and maybe all of this rolls up to you, but there's just so many ideas, so many new funds, so many different like it feels like there's a lot of noise and there's a lot of stuff happening. You said you guys recently launched an alt platform there. How did you go through your own education process for everything that was out there to kind of sift through what's noise, what's signal, what should we be actually paying attention to and approaching versus, you know, we're just not going to give any attention to this. like how do you actually go through the process of deciding what is good for your clients and what you all should offer?
>> We work with a couple of key partners there that help us. We do have a team internally that does a lot of work and we have a lot of meetings with a lot of managers and we're doing a lot of due diligence on our own. But we have a couple of key partners there. One, we are part of the focus financial network and we worked with some of our partners there to help us help guide us if you will and help with kind of steering us in certain directions and asking questions about what are the pitfalls that you know what are the things you didn't think you would be dealing with that you are you know what are the what are the questions we're not asking you know those are always the ones we want to really focus on you know kind of the blind spots if you will um and then there's these really great uh technology platforms like case, you know, where that simplifies things quite a bit um in terms of aggregating capital calls and making the paperwork electronic and creating a profile for the client where you can they can reup for different alternatives and and use the same profile over and over.
Just some of the mechanics, a lot of the operational aspects are frankly are some of the toughest things to deal with with alts. In some ways the investments are easier because the operational hurdles are significant. So a lot of the technology platforms really help with that. That's been instrumental.
It's a lot of kind of grassroots research and time spent in meetings and time spent reading lots of offering documents, but it's also just kind of being out there and talking with people in the industry and talking with some of our partners at Focus, frankly, who have really helped kind of steer us and that's been instrumental. >> That's awesome. That's awesome. All right, let's talk a little bit about you guys recently acquired Marshall and Sullivan.
with your unique team structure, how do you all think about acquisitions and folding them into the firm? >> Yeah, so we prior to joining the focus network, we did not really pursue M&A. We got calls about being part of a deal, but we never made calls. That just was not in our culture.
We actually grew to 6. 4 billion by just getting doing everything organically. It's just all organic growth, which is pretty incredible. you know, you have an amazing team here.
But I think going forward now that we were part of the focus network, Focus actually was the one who kind of did the initial matchmaking with Marshall and Sullivan. And once we met with them and got together with them, it just made sense. They managed money in a very similar way. We're two old Seattle firms with very similar cultures.
And there was just so many similarities. Does it just fit? In terms of integrating them because there are a lot of similarities, you know, I think it'll be pretty straightforward. We manage money in the same way using primarily individual stocks and bonds.
In fact, we have many of the same holdings across the portfolios and a lot of the technology platforms we use are the same. So, it's a pretty simple. We've got three people at Marshall and Sullivan that'll be coming to Badgely. So, it's not a huge number of people.
it the technology is in most cases the same and then the investment management is a very similar style. So it's a really from that standpoint when you start looking at there's no easy merger but when you look at this one this is probably easier than most. So yeah that's great and you know I mentioned the the unique team structure as I said that but I realize we haven't talked enough about that. So, one of the things you all do is you take this >> team approach to serving households at uh Badgely Phelps where if I understand it, and correct me if I'm wrong, there's kind of a quarterback of the adviser or relationship manager and then you've got sort of a planning lead and then an investments lead and everybody works collectively on the household.
Is that a fair way of describing that? >> We have a a investment lead and a and a planning lead. Absolutely. And those two people are your team along with a client service representative and then what we call an associate wealth manager which is basically someone to be there to help on either the planning side or investment side as needed.
So that's the team structure. The goal is to put the expert right in front of the client. We don't want a barrier there with someone who's not as knowledgeable that has to kind of run back and forth and exchange information. So, if I'm your wealth manager, I'm the one who's actually doing the trades on your portfolio.
I'm the one who's working with the client to set their target allocations. The same with planning. The planner is front and center in the meetings and we're working through cash flow models or looking at gifting ideas or different trust structures or whatever the case may be. But the idea is that with one phone call, the client can call right to the expert and get the answers they need.
and it's a very efficient and smooth process. >> That's awesome. So, one of the other big trends that I hear about in the space and that we're talking to folks about is this desire for more holistic planning services at the RAA. Right?
So, it used to maybe be you could do planning and you could do investment allocation and that would make up a fee only planner. Now there's kind of an expectation for estate planning or tax planning or all like more services from one shop. We want to just make that one phone call you were talking about and not have to go to a bunch of different places, >> right? >> With your team approach, are you guys doing that at Badgely Phelps?
Are you trying to put that in place and implement that or do you still think about it a little differently? >> We still think about it a little differently. I think the industry is going that way. I think that'll continue.
We still look at it differently though. What we've we have a hard time believing that there's a one-sizefits-all. If we bring in an estate planning attorney or what have you, a team, same with tax, a group of people that are preparing returns, how do we know that that group of people is going to be the right ones for every single client and every single need? So, we've spent a lot of time thinking about this and what we've, you know, kind of landed on here is what we've done historically is we find the best partners out there.
So, we have contacts at the law firms here in town, the same with the the CPAs in town, and we'll look at the client situation and then say, "Here's two or three firms that we think you should work with where you have a need because they specialize in your specific situation. " and we try to make a marriage there and then form a team around them. So that's how we're approaching it. I know a lot of the industry is going a different way, but I prefer the more custom and bespoke model of let's find the best people to put on your team rather than try to be everything to everybody.
>> That's great. All right. You talked about where the industry is going. So I want to actually zoom up and talk about that more as a whole.
So Tim, I'd love you to get out your crystal ball, look a couple of years into the future, and predict for me some of the things you see coming down the road that you're trying to prepare the firm for. >> Yeah, I think one thing we'll see is just more use of technology. Technology will be a bigger and bigger theme. We're all trying to get more efficient.
We all have huge numbers of unread emails in our inbox. So we're all trying to figure out how do we get more efficient in just daily routines. And then how do we get more efficient in terms of delivering value added services to clients. So I think technology will be a big theme and there's a ton of fintech firms that have developed and grown to be huge in the last few years and we expect that trend to continue because there is a real need because people like me get pulled in a lot of directions.
That being said, when you think about technology, technology in computers in particular are really good at crunching a lot of data, solving for a lot of different things at the same time, what have you. What they can't replace is that conversation with a client, the meaningful conversation with a client, calming them down if there's a an issue in their life, talking them through a difficult situation in the markets that they're concerned about, whatever the case may be. There is no computer that does that. That's where you need that human element.
So I think the technology will continue to evolve and get better and that will be play an increasing role. But I think that the other side of that is it's going to allow us as advisors to spend more time with our clients doing more meaningful things rather than just hey I I did this thing that we could have done automatically like we transferred money from one account to the other or we have this process that used to be manual and now it's automated and so I think that we'll see more and more automation but the benefit there is that we get to spend more time with clients doing more value added work and less time just doing things that are kind of lowhanging fruit on the IT uh stack of solutions. So >> that's awesome. Just an opportunity for you to shout out a couple of people if you want them.
Is there any pieces of technology right now that you're just loving that when you open them up they're really making your life better? >> The one I would say for sure is the note-taking software. So we use that with like Zoom calls and that is incredible. that saves you a ton of time.
It's integrated right with our our CRM and puts in the notes, puts in tasks, and you do have to make a few changes here and there because it doesn't get everything exactly right, but you spend 5 10 minutes instead of 30 minutes updating the file and you have all the tasks loaded into the CRM. So, that's been transformational. And then the other one is just AI in general as you're looking at things like the the co-pilot and what have you. You know, I do a fair amount of writing in my job, and that is a big-time lifesaver.
Just having that resource there. You do have to fact check and what have you, but it is a great way of helping to do the research. I don't use it to write the pieces. I guess you could use it to write for you.
I don't do that, but I do use it to kind of gather and assimilate a ton of data so that I can be a lot more efficient when I'm writing and just have all the data right at my fingertips. And then I can then the writing becomes very very easy and just flows from there. So those are two key pieces of technology that frankly just a few years ago didn't really exist and I use those every day. I love it.
I love it. Awesome. All right Tim, let's move into the final segment of the show. We call this the milemarker minute.
It's a series of lightning round questions aimed to get to know you a little bit better outside of your role as CIO at Badgely Phelps. Are you ready for the mile marker minute? Let's do it. All right.
If you could travel anywhere in the world you've never been to before, where would you go? >> I would say Italy. Never been to Italy. >> I love it.
What is the one thing people will find you doing when you are outside of the office and you're trying to take your mind off work a little bit? >> Skiing. >> I love it. All right.
Are you a Well, I'm probably going to know the answer to this based off what you just said, but are you a mountains person or a beach person? >> Definitely mountains. >> Yep. >> Probably could have answered that one for you based off the skiing hobby.
Yeah. >> What is the best flavor of ice cream? >> Chocolate. >> Oh, wow.
All right. Classic. That's awesome. What is the best book you've read or listened to in the past year?
>> Oh, boy. There's a lot of good ones out there. I'll give you a couple actually. There's there's a lot of good books out there right now.
It's not exactly a new book, but new in the last couple years. Chip wars is a great book about the history of the semiconductor industry. I've been reading a lot of Ray Dio. I am a big fan of his work and it a book I just actually started reading which has just been phenomenal.
I'm not all the way through it but it's been great is Bubbles and the End of Stagnation. So that's another good one. Yeah, >> I love it. I love it.
That's awesome. All right, just I want you to answer this with the first thing that comes to your mind. Progress is blank. >> Progress is transformational, right?
And and a non-negotiable. I love it. I love it. Progress is non-negotiable.
That's amazing. What is the best road trip you've ever been on? >> Oh boy. Best road trip.
This got to go back a ways, but probably a spring break in college where me and a bunch of buddies drove out to Vale and skied for a week. That's awesome. That's awesome. I love it.
All right, final question for you. There is an alternate universe. And in this alternate universe, Tim Thomas has a career that has nothing to do with financial services or the markets. in that alternate universe.
What is your career? >> In a heartbeat, I would do anything to mentor like college kids, people just starting out in their careers. It's a huge passion of mine. I I love to do it.
I love to see people who are super interested, super passionate about doing something and I get excite as excited to talk to them as as they are to talk to me. So, that's something I would do without hesitation. >> I love it, man. You made it through the mile marker minute.
Congratulations and thank you for the jam-packed conversation full of insights here on Next Mile. >> Thank you. It's been great. >> Absolutely.
All right, everybody. That has been another episode of Next Mile. Please make sure you click follow or subscribe wherever you're paying attention to this. And if you'd be so kind, leave us a review so people who've never heard of this show before can find great conversations like the one I just had with Tim.
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