Welcome to the first blog of Flight Line Financial. Some visitors to this blog will already know me, while many others will not. As a brief introduction to those unfamiliar with me, I am a commercial airline captain with United Airlines. I started my flying career approximately 28 years ago with People Express then merged with Continental and, most recently, with United. I also operated my own real estate company for about 12 years ending in 2009 and ran the financial aspects of the business. We conducted over 300 closings during that timeframe. I’m also a financial advisor with my series 7 and 66 licenses. I recently worked with Morgan Stanley in NYC as a financial advisor with a team that oversees approximately $1.5B in assets. I formed Flight Line Financial with multiple purposes and goals in mind; one is to help both younger pilots and other clients with 401(k) strategies and management. The other goal is to help older clients, over age 59 1/2 and those where retirement is imminent, to procure a prudent financial plan for the retirement phase of their life. This will incorporate, among many other aspects, taking into account trust and estate planning, developing multiple income streams, possible annuity strategies, transitioning from the asset accumulation phase of life to the asset distribution phase. This will create an opportunity for a lifestyle one desires and deserves in retirement.

Living in both worlds, flying and finance, provides me with a unique perspective to help pilots, flight attendants, and gate agents, among other clients, with a level of advice and expertise tailored to our unique profession and retirement plans. The team at Morgan Stanley and I conducted many retirement planning seminars at Newark International Airport and were able to educate quite a number of pilots that were able to attend. In that, we are anticipating continuing those in the future. In the near future, I am anticipating conducting webinars together with major national financial services firms that will touch on the topics we covered in the seminars. Pilots have a dynamic schedule and attending seminars sometimes isn’t always feasible, so the webinars should work much better to complement the seminars. Approximately every month, sometimes more often if interesting topics present themselves in the marketplace, I will choose a financial topic to discuss on this blog. Some will be generic in nature and others will be more specific to the group I work with at the airline. This month I’m discussing diversification.

Asset Allocation & Diversification Benefits

The importance of diversification can’t be overstated. With clients I discuss this to a high degree for one of their long-term strategies. Being properly diversified and not putting all your eggs in a few baskets is extremely important in overall portfolio risk tolerance. This is a strategy to make sure your investments aren’t concentrated in a certain area, type, class, etc. If you are properly diversified, you lower your overall risk to the portfolio. If a certain event or fundamental affects a given asset class negatively, lets say small cap companies, that asset class in your portfolio will trend down possibly – meanwhile, the other asset classes you’re invested in may not be affected at all or minimally. You are taking advantage of multiple classes, countries, companies, sectors, etc., and factors that affect those over time, both negatively and positively. Over a long period of time, assuming you are re-balancing, dollar cost averaging and allocating properly (these will be discussed in my next blog) back to a given asset allocation diversification model, this will allow for minimal risk and, hopefully, maximum gains. The tech bubble in the early 2000’s is a perfect example of the drawbacks on concentrating too much in one class. Many investors jumped on the bandwagon during that time and many suffered severe consequences.

Another benefit of diversification is the concept of correlations. In simple terms, you don’t necessarily want all your investments to move together. The less correlated the assets are in your portfolio, the more efficient the trade off is between risk and return. Every investor has individual needs, time horizon, risk tolerances, goals, and objectives. It’s important to tailor one’s diversification to one’s own situation.

Upcoming blog topics will include asset allocation, dollar cost averaging, rebalancing, mortgage amortization acceleration strategies, Medicare payroll taxes, bond duration and effects of raising interest rates, UAL B Plan advantages, recent addition of UAL’s, RHA (retirement health account), emerging markets, importance of financial and life-planning in one’s retirement phase, and many other topics. I hope you enjoy and get something out of these blogs. Please feel free to contact me with any questions or if I can be of assistance to you.