Kendall Jones (00:08)
Hello everyone. Welcome to Whitley Penn Talks, where we give you valuable insights to make confident, informed decisions and move your business forward. My name is Kendall Jones and today we are talking tariffs, market trends and the works as we are a little more than four months into the new administration. Today we’re joined by WP Wealth, a wealth management division of Whitley Penn.

They focus on financial strategies, financial planning, qualified retirement plans, insurance, and estate planning. And chatting with me today are two WP Wealth partners. We have Shane Miller and Bill Weston. Welcome, you guys. Yeah. Awesome. We’ll all let Shane and Bill introduce themselves. So Shane, go first. Tell the audience a little bit about what you focus on, what kind of clients you work with, and ⁓ just more of your background today.

Shane Miller (00:43)
Hey, thanks for having us.

Bill Weston (00:44)
Yeah, thank you.

Shane Miller (00:57)
Yeah, so Shane Miller, I’ve been with the firm since 2013. I’m a partner here. We’re based in Fort Worth, but we serve clients in all of our markets. We have clients all over the country. We have international clients. So really anybody that’s going to gain value from…

to be spear financial planning, tax advice, estate, business transaction, you name it. If it has to do with money or running a business, we can probably help you or we’ll put you in touch with somebody at Willie Penn who can. But yeah, I had the good fortune to be here for a long stretch of my career and ⁓ really enjoyed the coordinated approach that we have in serving clients.

Kendall Jones (01:42)
Awesome. And where’d you go to school? 

Shane Miller (01:44)
TCU, go frogs. 

Kendall Jones 

Well, we’re really happy to have you. Bill, tell us a little bit more about your background as well.

Bill Weston (02:01)
Yeah, so I am going on my ninth year here at WP Wealth. Prior to that, I was an institutional money manager for about six years. ⁓ I realized at that point in time that investments really could only take you so far. And I had a client that was an investment firm or financial advisory firm that was affiliated with a CPA firm. And so I wanted to learn more about that. And one, because I felt it would serve myself better, having a broader range of information and knowledge base to help make decisions. But also, I just felt like it was a great way to consult with folks. so I work on a lot of the same and work on and with a lot of the same clients that Shane works with, ⁓ high net worth business owners, folks that are just getting started out or are deep into their accumulation phase or have since already retired ⁓ out in number of different areas.

Kendall Jones (03:06)
Awesome. Awesome. And school? Where’d you go to school?

Bill Weston (03:10)
University of Texas. I’m actually headed down there tomorrow for an event, so pretty excited.

Kendall Jones (03:13)
Awesome. Is it a recruiting event or an alumni event?

Bill Weston (03:19)
So I was actually there for a recruiting event last week. This week it is an alumni event. We’re celebrating the fastest growing Longhorn run businesses. So it’s a good time. It’s a good time.

Kendall Jones (03:31)
Awesome. Yeah, that’ll be great. I’m sure it’s awesome getting back to Austin and just hanging out with friends, old and new for sure.

Bill Weston (03:37)
It is.

Kendall Jones (03:40)
Awesome. Well, we’re really happy that you’re both here. Thanks again for the time. I know that the conversation today will kind of go all over, talking tariffs, talking administration, talking consumer spending and markets and how all of that’s been changing. So let’s get into it. That being said, we’ll get started. So as I just mentioned, it’s that time of year where we’re getting into the travel season. The summer’s coming up. People will be spending time domestically traveling, traveling abroad, people coming to the US for vacations and things like that. I was just reading the Wall Street Journal article that we shared with you while we were prepping and ⁓ it talked about how major airlines are now withdrawing their financial projections for the year and ⁓ looking at the industry, kind of trying to figure out are there signs of a decline? Are we gonna start seeing that through the summer and ⁓ are Americans truly going to spend less this summer? So,  just wanted to get your initial thoughts on that article and then we can dive into the content from there. But Bill, what are your thoughts on that from what you’ve seen?

Bill Weston (04:45)
Yeah, so I think really it’s more indicative of a broader picture that consumers are starting to think about what they’re spending money on and how much they’re spending. I think both domestically, but internationally as well. I know that that particular article didn’t necessarily single out Canada itself, but in another piece, it talked about ⁓ bookings from Canada or Canadian travelers to the US are down 70%.

There’s other information that border crossings from Canada. So even those folks that are not flying, they’re just driving across the border. That’s down significantly. and then if you look historically on what how Canadians consume or really import US goods, it’s not necessarily an import. They they absorb through travel and tourism. And so I think not only domestically, consumers are watching how much is in their bank account and making tighter decisions on that, but international travelers are making the decision to not come into the US.

Kendall Jones (05:56)
Yeah, definitely. Shane, what do you think? What’s your perspective there as well?

Shane Miller (06:01)
Yeah, and so I guess the question is, are folks pulling their guidance because of the impact of tariffs? And ⁓ I would think so. And it’s a similar industry, I mean, different, but similar in the auto space. And so I think that ⁓ Trump has at least indicated that he’s going to give some relief to those areas, but ⁓ it’s…

It’s a very big puzzle to put together on where you’re sourcing parts, where the actual manufacturing is taking place, the supply chain of delivering automobiles and planes. And so until there’s more certainty around that, you would anticipate that these companies have to respond and that shows up in different ways, whether it’s pricing or lack of availability of certain routes, things like that. And I do think that there’s a level of uncertainty just for your average consumer that they’re kind of in wait and see mode. Because, you know, ⁓ since April 2nd, we’ve been in this absolutely wicked news cycle that, ⁓ I mean, in a day, you can have a headline that changes sentiment. so ⁓ that’s my two cents. I think in general, there’s a whole lot of wait and see going.

Bill Weston (07:40)
You want to know the rules and then they’ll start making decisions. And I want to add on to the forward guidance being withheld or no longer being issued by these airlines. Yeah, that’s not great. I mean, that’s like coming home with your first six week report card and just saying, I’m not going to show my parents that. Well, why are you not going to show your parents that? Because it’s not going to be great. But at the same time, that information gets priced in the market every day. Everybody knows that now. And so if they know that, that’s priced into what you see today, at least with the airline component of it. ⁓ Because I do think there are segments of the market that aren’t pricing in a recession or slow

Kendall Jones (08:10)
Okay.

Shane Miller (08:21)
Yeah, you’re not normally withholding the report card if it’s all A’s.

Kendall Jones (08:25)
Right. You’re probably flaunting it. He want everybody to see.

Bill Weston (08:25)
Yes, yes.

Mm-hmm.

Yep, you’re going for that fridge.

Kendall Jones (08:31)
Right. Gold star. ⁓ For sure. Well, that kind of takes us naturally into topic one that we’ll talk a little bit more about is the fluctuation and some of the news and how that’s changed sentiment pretty significantly over the last few months. So can you explain the market’s reaction to some of these reports in the news and how that’s changed the sentiment of the market in general and consumers and how people are reacting. So tell us a little bit more about some of those false reports and the false reports on April 7th and then the pause again on April 16th and how did these events turn out to manipulate the market?

Shane Miller (09:16)
Yeah, I mean, it’s ever since the start of this tariff craze in April 2nd, I think that ⁓ people were really, really concerned. Then there was of course that ⁓ errant headline that ran on CNBC. We saw the material market reaction to that. Then when it was found out to be an error, the market corrected even deeper. Then you go through a period of time where we actually do make a tariff pause announcement. We have the single best day since 2008. And then it’s the next topic. Well, Jerome Powell’s not doing what I want him to do, ⁓ according to Trump. That starts a frenzy of ⁓ what kind of influence is he having over Jerome Powell’s policies.

Well, let’s be nice to him. Let’s work this out. He’s not going anywhere. And so it’s that ever-changing narrative that, we’re going to double and triple down on China. OK, now we’re going to make an amicable deal. And so it’s really, really hard for companies to make decisions around where they’re going to go because the rules are ever-changing. So a perfect example, I work with a client that they make a food product and they’re packaging part is sourced in Canada and part of it is sourced in Mexico. And so they’re wondering is the supplier going to pass on the tariff to me? Are they going to try to retain me and split it with me? They’re certainly not just going to eat it. And then do I explore getting supplies elsewhere? And in their case, they looked in Egypt. ⁓

Well, now you’ve got a timing issue, you’ve got risk of it being lost in transport, you’ve got all these other factors that you have to consider, and by the time you make a supply chain or you make a supplier decision, maybe the tariffs are off. And so that’s what’s really tough about this is we’re making decisions on pricing very, very quickly without the real fundamentals or the real decisions taking hold in the company’s financials.

Kendall Jones (11:44)
Mm-hmm.

Bill Weston (11:45)
Now, again, people just want to know the rules and then they can adapt and start making educated decisions about those rules. And a lot of those decisions are, they’re big, big decisions. They’re about developing and building plants, factories. You know, there’s a lot of talk about bringing manufacturing back to the United States. Well, those don’t, they don’t just pop up overnight. It’s a big investment and it takes a lot of time to put those buildings and find the right workers and put all that into place. so again, they just, folks just want to know the rules. ⁓ And if you look at the timeline for the current administration and what they wanted to accomplish through these different tariff talks, they set a lot of it up front, but nobody really knew to the degree that they would actually try to negotiate and implement a lot of these. At first it was, I want more help at the border from both Mexico and Canada,  I want to stop the flow of illegal drugs that are coming in. Then it turned into, I want reciprocation on tariffs. I want fair trade deals, not just between Mexico and Canada, but everywhere. We feel like we’ve been taken advantage and we want a fair deal. Then it turned into, okay, well, now you guys need to spend more on defense. The US is no longer going to run a deficit on your behalf because you guys aren’t willing to run a deficit and spend on your own defense and protect yourselves.

Then it escalated even further. Y’all actually need to buy more US goods from us and close that deficit. Y’all need to honor our intellectual property agreements, quit stealing our information and our patents. And so we ran through just about all of that, took a few steps back and maybe a few steps forward. And so there’s really no wonder, I mean, it makes sense why the market’s been all over the place. ⁓

And I think what we’ve gotten within the past week or so is folks are feeling a little bit more comfortable with the direction of this, but there’s still a lot of uncertainty.

Kendall Jones (13:51)
Yeah, for sure. And especially, mean, Shane, in your client example, you can’t just change your entire supply chain across the world overnight. those are really big decisions that folks are having to make very quickly ⁓ without kind of knowing what’s the long term rules. What are the long term rules going to look like? And how do I stay within those?

Shane Miller (14:00)
Mm-hmm.

Exactly. In the interest rate environment, it’s the same way. I mean, we went through some really aggressive rate hikes in 22. And I think that, I don’t have a crystal ball here, but I think most folks anticipate we’re going to get some sort of rate cut this year. And so that…access to ⁓ lower cost of capital is really important too. So let’s say we were going to move a plant and we were going to borrow, what we pay in interest expense matters. So how quickly do we move? How much do we take in debt versus ⁓ using cash reserves?

Kendall Jones (14:43)
Mm-hmm.

Right.

Shane Miller (14:58)
It’s all intertwined and it’s a tough environment to navigate when they keep moving the goalpost.

Kendall Jones (15:05)
Mm-hmm, for sure. I mean, what would you say, Shane? What would your advice be taking kind of business owners into account, but then also just everyday investors, everyday professionals? What would your advice be to navigate some of this uncertainty?

Shane Miller (15:22)
So for investors, it’s all relative to your timeline and your goals. And if you’re clear on that, then you’re better equipped to make those decisions.

Now if you’re very, very dependent on the assets that you’ve built over your working career, you’re probably de-risked ⁓ to a degree at that stage of life anyways. ⁓ But for younger folks or people that have a lot of cash on the sidelines, I know that we called every single client and we talked to them, how are you feeling? Here’s what we talked about in your financial plan. And then, you know, a lot of the conversations were around, well, what should we do? And the answer is different for every person because it’s so situational. And so that’s, ⁓ you know, there’s not a blanket answer. It’s ⁓ if you have prior proper planning, you won’t have a pitiful performance. 

Kendall Jones (16:06)
Mm-hmm.

Right.

For sure.

So agreed, Shane. It’s always good to have a plan. ⁓ In my shoes, I’m kind of starting my career, younger professional, hearing a little bit in the news about a weaker dollar and how that will impact things as I grow in my career and invest and grow my kind financial status there. Bill, what would you say and what advice would you give people that are curious about the dollar growing stronger or weaker with time? And what do you think there?

Bill Weston (16:59)
Yeah, so first I would preface that with the dollar has been on a tear since COVID. It’s even been, it is the world’s preferred method of a medium of exchange. Business transactions primarily operate with the US dollar. So yes, we’re starting to see some weakness as of late, ⁓ but I don’t think that’s anything in the short term to be concerned about as the dollar is definitely dominant in world trade. And it’s because we’ve run a substantial deficit for a very long time. If you think of the way that whenever you’re running a deficit, importing more goods and exporting less, but whenever we import all that, we send, we pay for that in dollars. So we’re putting dollars in the hands of all these international individuals that most likely what they’re going to do with that dollar, the easiest thing for them to do is to go invest in US based assets. So we’ve had that running that deficit for a long, long time, but that’s also strengthened the dollar on the global stage because we’re putting those dollars in the hands of of international individuals and businesses. So now that with the new policy that may or may not take place, if we do cut that deficit deficit and we import less, we will be putting less dollars in the hands of internationals and individuals. so part of what Shane alluded to earlier was being prepared on the front end. We’ve always had an allocation towards international opportunities that’s ebbed and flowed depending on where we are in the market cycle. But it has always been a present piece of our investment strategy and makes sense for most folks, if not all, to have as a part of their portfolio.

Bill Weston (18:52)
I would say that if you’re looking at your portfolio and you don’t have any sort of international exposure, whether it be through stocks or fixed income, that’s definitely something that you’d want to consider adding.

Kendall Jones (19:04)
Awesome. Thank you for breaking that down. Shane, anything to add there?

Shane Miller (19:10)
No, was just, the whole time Bill was talking about that, you I just kept thinking about the relationship between the Fed and the presidency. And specifically, ⁓ you saw that breakdown with Japan. And when you get that level of influence over the Federal Reserve, that’s not good.

So ⁓ what we want to tread lightly on here is making sure that we have the Fed following their mandate, keep an inflation in check without any incentive to prop up the broader markets ⁓ by way of ⁓ policy. So ⁓ that’s a little bit of a gap from what Bill was saying, but just in general when you think about globally what steps have been made that prove to not be good, that’s one that came to mind.

Kendall Jones (20:16)
Yeah, awesome, thank you for sharing.

So lots of US business owners, again, stepping into the shoes of folks that may be curious during this time and trying to make the right decisions for themselves and the business that they represent. We talked a little bit, Shane, about your example with a recent client trying to adjust during this time. ⁓ What would be y’all’s advice kind of at large for business owners looking to make the right decisions ⁓ and guide their business going forward during the remainder of this administration and even looking past that.

Shane Miller (20:52)
I mean, we we kind of have a mini case study in how supply train disruption works. It was called COVID.

And so we worked with a lot of business owners that they, you know, they’d price something based on what their cost of goods was and what their normal margin was. Well, all of a sudden they’ve got these contracts and their cost is three X. mean, they have to fulfill the work. They can’t move the price. They’re going to really get impacted by that. So then they, you know, when they’re rebidding, maybe they’re bidding materially higher, then the price comes back down and they’re making it back up. Then the time value of money component that’s lost there as well but I guess in general not getting maybe too over committed which is why I think we’re in wait and see is yeah but it’s it’s it’s really tough if you’re if you’re a business owner you got to keep the lights on you got to keep payroll going and so it’s it’s easy to say well let’s just wait and see but life life keeps going.

And so that’s the thing is just being really careful in pricing, be really in communication with all of your suppliers, be in lockstep with them, with your lenders. And then the other thing I would say is, if you’re planning to exit your business, we saw prior to…

Well, let’s call it 2019. Interest rates are crazy low, right? I mean, the multiple that somebody could get on a business was really, really high because it didn’t cost them that much to borrow it. Now your expectations are going to be more tamped down, but still getting a calculation of value and doing that homework year to year, having nice, clean financials and getting a business that’s in a position to sell when interest rates do become more favorable. That’s something you got to keep your eye on.

Kendall Jones (22:55)
Yeah. For sure. Bill, anything to add there? Thinking in the shoes of business owners?

Bill Weston (23:03)
I think echoing all of those different sentiments, but to wrap that up, if you have a plan, don’t be too quick to change. This situation is so fluid right now. So going with the certainties that you do know, which there maybe aren’t that many at this point in time, but be very cautious to make a change. ⁓ As Shane alluded to the long-term commitments. If you get wrapped up in one of those, could be significantly detrimental to your longer term outlook for your business. And if you didn’t have a plan before, you should just come talk to us. We can help you out.

Kendall Jones (23:39)
Right. That leads us right to our wrap up. ⁓ if people do have questions and want to get in touch with you, what’s the best way to do that for both of you?

Shane Miller (23:51)
Well, I think we’re getting a new website pretty soon. Maybe it’s already out by the time this airs, but yes. So wwelt.com is a great place to go and learn a little bit more about our team. ⁓ LinkedIn, we’re both active on LinkedIn. ⁓ Or just get in touch with Kendall. Kendall knows everybody.

Kendall Jones (23:53)
Yeah. I can get anyone connected, anyone out there. ⁓ I’ll get you connected with Shane and Bill for sure. So I will wrap us up today. Again, WPWealth.com can give you at least a contact contact info for for both of Shane and Bill and and the rest of the team and We’d love to get to know you if we don’t already, but thank you both for your time I appreciated this discussion kind of at that high level talking about what’s happening in markets what’s happening ⁓ with the dollar for just a second we got to talk about that and ⁓ Looking really at what what do business owners and individual investors need to do during this time and and how can we we make plans that that work for those unique scenarios. So again, thank you very much and we’ll wrap up, but thanks for your time.

Shane Miller (25:07)
Thank you.

Bill Weston (25:07)
Thank you, Kendall.

Kendall Jones (25:09)
Cue the outro music.