Frank Byskov of Forty4 Financial: Investing During The Pandemic; What Should I Do With My Money Considering All of the Volatility and Uncertainty Today

Life is short and should be lived with purpose. Seeing the pure joy of a child when they find their favorite toy or a squirrel in the yard, is what life is all about. No worries about tomorrow, and holding no grudges. That is what I am trying to bring with me in my work — obviously I have to help my clients plan for tomorrow but I hope to remove the stress often associated with it so they can enjoy life both now and later. A lot of it comes down to having reasonable expectations and living within your means. Once you get to a point where you feel like you have control of your finances, you can stop worrying about them and get on with enjoying your life. In my opinion, the journey is at least as important as the destination, and you should allow yourself to enjoy the ride.

As a part of my series about “Investing During The Pandemic”, I had the pleasure of interviewing Frank Byskov.

Frank Byskov, CFA®, CFP®, is a financial planner and wealth manager with Forty4 Financial, a Member of Advisory Services Network, an independent financial planning firm. He manages investments screened for their Environmental, Social and Governance factors (ESG) — and tries to align them with the personal values of his clients. He has worked in finance since his graduation from American University, acquiring a broad background from real estate, structured finance, portfolio management and financial planning. You can read more about Frank and Forty4 Financial at www.Forty4Financial.com.

Thank you for doing this with us! Before we dig in, our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?

Jason, thank you very much for having me.

Looking back, I always wanted to work with financial planning and wealth management — I just didn’t know it yet.

My first venture into the world of finance was when I was around 12 or 13 years old. I delivered the local newspaper every afternoon after school, and invested some of that money in a few bonds, which back then offered a 10% interest rate for a high quality bond. The regular interest payments made reading the bank book a bit more interesting, and directed my attention towards the power of finance.

Several years later, the money from the bonds had been spent, and I had made it to American University on a swimming scholarship. The original intent was to pursue Economics and a career either in the government or the World Bank. One of my elective courses was a financial analysis course, which really opened my eyes to the power of compound interest and investing in general. So, I made a tilt in my studies towards Financial Economics, and later attained the Chartered Financial Analyst (CFA®) and CERTIFIED FINANCIAL PLANNERTM certifications.

After working in several different aspects of commercial real estate, I landed a job in a wealth management firm, which is when I knew that was the industry I want to be in for the rest of my career. First working more in the back office with investments and reporting, I moved towards a more client facing role, which is what I love. The interaction with my clients is what makes my day.

To be able to fully do things the way I think they should be done, I started Forty4 Financial. I have a focus on holistic financial planning, working with each client and their specific situation. I believe in sustainable investing, that it simply is a better way to invest. You can create a portfolio that has a market like return, while can have more attractive features when it comes to such things as carbon footprint or gender equality. What I have found, is that it also can make it easier to stick to your investments even during rough times, as there is a greater purpose behind them.

Can you share with our readers the most interesting or amusing story that occured to you in your career so far? Can you share the lesson or take away you took out of that story?

Well, the one that comes to mind is actually from college. My swim coach LOVES word puns and would pester us foreigners with them, as an introduction to American culture. I found them quite entertaining, although I definitely did not get all of them at first. It was a great way to learn more about the culture and the language. Some of my teammates were also great at coming up with these, and it could get pretty bizarre — but definitely entertaining.

One of the things that these jokes and puns taught me, was the power of language and how you can word the same idea in many different ways. People hear and react differently to various articulations, so I strive to be able to phrase things in different ways, to be sure my clients understand the narrative. It is easy to make a simple thing more complicated than it needs to be but it can be hard to explain a complicated thing in simple terms — but that is what I attempt to do.

Are you working on any exciting new projects now? How do you think that will help people?

Yes, I am working on different ways to measure and show the impact your investment choices have on various metrics, such as carbon footprint, gender diversity, water scarcity, etc. There are many tools available, so I am looking for ways to relay the message in a concise and easy to understand fashion.

Many everyday investors and savers are not aware of sustainable investing, and what sort of impact they can have. When I tell them that by adjusting their portfolio, they can reduce their carbon footprint equal to the energy usage of, for example, 5 homes, or something else tangible they can relate to, it becomes real and attainable.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

I would have to say that it is my daughter, as cheesy as it may sound. When we learned she was coming, it brought a sense of purpose and calm (well, maybe not literally) along with it. I was in the process of getting ready to start Forty4 Financial, and all of a sudden it just made much more sense to go ahead with it. I felt like it was time to make a difference in both my own life and try to make an impact on the world around us, to leave it a better place for future generations — and I haven’t regretted it for a single day.

Life is short and should be lived with purpose. Seeing the pure joy of a child when they find their favorite toy or a squirrel in the yard, is what life is all about. No worries about tomorrow, and holding no grudges. That is what I am trying to bring with me in my work — obviously I have to help my clients plan for tomorrow but I hope to remove the stress often associated with it so they can enjoy life both now and later. A lot of it comes down to having reasonable expectations and living within your means. Once you get to a point where you feel like you have control of your finances, you can stop worrying about them and get on with enjoying your life. In my opinion, the journey is at least as important as the destination, and you should allow yourself to enjoy the ride.

Let’s shift a bit to what is happening today in the broader world. Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?

Talk to someone. Many people have a tendency to make a situation into a bigger obstacle than it needs to be. Sometimes it is enough just to say it out loud to another person, or even a pet, and that helps alleviate some of the pressure. Family, friends or trained professionals can all be good outlets.

During this time, there can be a lot of financial stress, maybe from loss of income or a threat to your livelihood. If you have a trusted financial advisor, this is the time to grab a hold of them and talk through your situation. The sooner you face an issue, the easier and cheaper it is to make the necessary adjustments to overcome it.

Ok. Thanks for all that. Let’s now jump to the main core of our interview. As you know the stock market and the economy in general have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?

Stick to the plan, and keep contributing as you have been doing up to this point. Unless your situation has changed dramatically, such as loss of a job, it is usually the best to continue dollar cost averaging — it can be a great way to buy low in the midst of the turbulence. After “the dust settles” it may be a good idea to review the plan to see if it still makes sense. After all, some goals are time sensitive (e.g. a home purchase) and may require some finetuning as you get closer. Doing the review at a time when emotions are not running high often creates the better long term outcome.

Eventually the economy will recover and rebound. Certain sectors, like travel and hospitality might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?

Now is a great time to re-evaluate your investment strategy. Personally, I believe that Sustainable Investing, or ESG, can create a stronger overall portfolio. It is a way to screen your investments for their exposure to Environmental, Social and Governance factors. In my opinion, the resulting portfolio consists of more forward thinking companies that are at the forefront of the political and demographic trends, and therefore will be better positioned to take advantage of changes in demand and customer taste, as well as changes in the regulatory environment.

The recovery and long term impact from the Corona virus will likely not be linear, and will affect different regions in different ways. So, be sure to have a globally diversified portfolio, and rebalance it on a regular basis to get the benefits of varying growth in different regions at different times.

Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?

The green energy transformation is very interesting, and has been receiving a lot of attention lately. There is a global shift away from fossil fuels and towards renewable energy. Given the rapid development in this area, having a diversified exposure will be key to long term success, as it is far from given that all will thrive in the long term. I believe that investing in a fashion that has a low carbon footprint and limited fossil fuel exposure will be beneficial going forward.

Are there alternative investments that you think more people should look more deeply at?

Yes, although they are not specifically as a result of the current climate, there are several community notes out there aiming to create an impact in the local community along with providing a decent financial return. It could be to create more affordable housing or support a local green transformation. These notes mostly have a role in the bond portion of your portfolio, while potentially supporting your local economy. Since a part of the return is non-financial (i.e. supporting a cause), the interest rate they pay may be less than what is available in the broader market. So, you have to weigh the rate of return vs. the impact you can create through the note.

If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long term investment what would you advise them to do with it?

I would say that they should consider putting together a portfolio of diversified, low cost investment options, including some exposure to global and emerging markets. In a best-case scenario, they would add to that on a regular basis (maybe each paycheck or month) — even a little bit counts — and re-balance the portfolio on a regular basis. The real benefit comes from having a plan and sticking to it, even when the markets are ugly.

Ok, thank you! Here is a more general finance question. You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?

The first thing would be the Rule of 72, and the power of compound interest. The way the rule works, is you divide the rate of return, for example 8%, into 72, and the result of 9 would then be the number of years before you have doubled your money. It also works in reverse, so if you want your investment to double in 10 years, you divide 72 by 10 and the 7.2% would be the rate of return you need to average over the 10 year period.

Part two, is to have a plan and stick to it — which I have mentioned several times, as I think it is the base for long term success. Compounding only works if you stay invested for a longer period of time, sometimes even through a market cycle.

The third would be that “price is what you pay, value is what you get”. The lowest price is not always the best deal, unless the product is identical. Obviously, if you are buying a commodity (e.g. a certain brand of canned tuna) getting it on sale at a lower price is better. However, when it comes to other things, such as professional services (e.g. plumber or a CPA), the price is still an important aspect, but so is the level of customer service and professionalism you receive. Sometimes the lowest price is the best value, but not always.

Fourth, your time has value. The number one question I get from clients, is if they have the option to retire before the “normal” retirement age. When you are young, time seems unlimited, but as you age you start to appreciate the limited resource that it is. So, I would say to enjoy your time, while being sensible about saving for your future as well.

Lastly, be charitable. There are many people and causes that have a need for support, and which serve a demand in society. You can donate time, money or your expertise, and find something that you really care about. By helping those that have less, you may also be able to improve your own quality of life — it is better to give than to receive — and create a greater purpose for yourself.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

I don’t know where the quote is from — it may have been Mark Twain — and it goes something like; “If you meet a man searching for the truth, walk along with him. Once he has found it, run away as fast as you can”. I do not believe in the ultimate truth, dark vs light. Most things are somewhere on the spectrum between them. There is so much out there, that you can always learn more, always experience new things. I think it is important to keep an open mind and be open to the possibility that you are not always right — maybe even questioning some of your core beliefs. As long as you keep learning and searching, you will keep evolving as a person.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)

Pay it forward, be kind and smile. Helping other people without expecting anything in return, is not only greatly rewarding, it also builds a tremendous amount of goodwill over time. It can be a referral to someone in need, lending some expertise to a friend, or as simple as being kind to strangers you meet while out walking. People will remember how you made them feel, and if you made someone feel good, they will often go out of their way to return the favor.

Next time you are out for a walk, try to smile to everyone you see. They may not immediately return the favor, but if you see them on the way back, there is a good chance they will be smiling…

Thank you for the interview. We wish you only continued success!