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Barry Glassman is joining us. He’s founder and president of Glassman Wealth Services. Barry’s company manages over 1 billion dollars in investments for local families and wealthy entrepreneurs. Barry’s company’s been recognized as having a lot of investment acumen, but he’s most proud of how his company is recognized as best place to work, achieving what he calls a trifecta of being identified as the best place to work by Washingtonian, the Washington Business Journal, and Inc Magazine. And yet, Barry, you’re willing to spent some time with us, going down market talking about. What’s going on with the economy. Thanks for taking the time.

GLASSMAN: For you? Yeah, I’ll do that.

ABERMAN: I appreciate that, and for everybody listening! You’ve got your finger on the pulse, let’s start broad. What’s going on in the national economy right now? I know people are looking at things like Bitcoin and the stock market. It looks like it’s a very prosperous time. Should people be optimistic?

GLASSMAN: They should that’s you. It’s been a really tough time for the news cycle and all kinds of craziness, and really, unpredictability. We don’t know we’re getting out of Washington. We don’t know what we’re getting out of a lot of places. But the place that has been consistent: company earnings. They’ve been consistent in spite of not knowing whether this tax cut was going to happen, in spite of not knowing whether we can bring immigrants in for visas and to work for us. So the earnings have been consistent. And we’ll talk more about the tax code, but what the tax cut does, or–what’d you call it?

ABERMAN: The oligarch protection act of 2017!

GLASSMAN: I call it the accountant full employment tax bill of 2017! No one would doubt that it extends the time between now and our next recession. So I think it extends whatever steady growth that we’ve seen.

ABERMAN: So they’re fundamentals, and that’s really important, because I think the people often say oh, is a bubble? What you’re telling me is that they’re economic fundamentals, supporting the stock market.

GLASSMAN: Well and people ask, is the stock market to go up? Well, I look at valuation as, the valuation came down because of the tax cut, so whether the next year, is it up or down, I wish I knew, and if I did, I’d probably wouldn’t be here. But here’s the key. It definitely lessens the valuation of the stock market because the earnings will be better regardless of growth just because of the tax code.

ABERMAN: Okay. So now, let’s turn our attention. Because of your perspective, I know you work with a lot of wealthy and successful business owners here in town, a lot family businesses. What are you seeing locally? How is the economy looking for folks that are doing business here and are still in the game?

GLASSMAN: I think they’re living the same thing that’s going on across the country. And in spite of the lack of predictability—I think you had someone on recently, who made a comment that this is no way to run a government, meaning we don’t know what the funding will look like. We don’t know, we didn’t know what the tax code would look like. We don’t know what this administration is going to do next, and that’s a really hard environment to do business whether you’re in technology, government contracting, finance, almost doesn’t matter. It’s a really big challenge for leaders to understand and navigate the lack of predictability as far as what’s next.

ABERMAN: So what are people doing? Are businesses just ignoring politics in a way they haven’t ever done?

GLASSMAN: A lot of businesses is doing–and you’ll tell me if this is true for you and the people you’re with–I think they’re doing business as usual, and they’re ready to pounce. I feel like people are waiting for opportunity to pounce and take advantage of whatever’s there, and
people are being patient.

ABERMAN: So you talk with a lot of your clients. I certainly talk with a lot of my friends. The way that the tax reform is being played out is pretty interesting. I think it’s going to have a particular effect on our region. What are you seeing?

GLASSMAN: Less effect here, than other places across the country. We happen to, in D.C., Maryland, and Virginia, two of those jurisdictions–D.C. and Maryland–are of the highest taxed states, and in the region, we have of the most expensive real estate. So when you combine those things, and I’ve done the math over and over, at least the math that I can do, so far for my clients. Most of them in this area–they don’t benefit. Including the ones making millions of dollars, they likely don’t benefit from this and if they owe a bit more in taxes or they’re getting tax break, it’s a couple thousand dollars. On a couple million dollars of income, it’s not that big of a deal. And if they live in D.C. and own a home or two elsewhere, or have a mortgage or two on a home elsewhere, then it’s a big negative for them.

ABERMAN: So those are individuals. What about businesses? My fear is that when I look at the business community here, a lot of our most successful businesses are operated as partnerships or sole proprietorships, where the owners are the ones generating the income. My understanding is that the way the tax laws have changed, if you’re a past investor it’s great, but if you’re an owner who’s working, it’s not.

GLASSMAN: Well, if you’re making over 300-something thousand dollars as a married couple, then then no, you likely don’t benefit from that. That’s the way it’s written. So you’re right in that
the businesses that are run as partnerships, especially if they make over 300-something thousand dollars a year, and they work there–they’re not going to benefit, and you have to back up from the partnership, government contracting firms. Look at all the law firms. These are lawyers who are making hundreds of thousands or millions of dollars a year, and I view most of this, for them, if you live in D.C., as a big negative.

ABERMAN: So if I’m listening to this I’m going to say, well, cry in your soup, who cares about these rich guys and gals. This is going to have a spillover effect on the overall growth of the region, right? It’s not just a problem of, oh, some people are going to pay higher taxes, this is going to slow growth.

GLASSMAN: Well, it is–and it’ll happen upon the turnover. So it’s not going to happen in 2018. it’s going to happen when the three million dollar home in McLean or the the people who own property in Ocean City, when they go to sell that, the next person who buys that property, if they can’t deduct the property taxes and are limited on the mortgage and so forth, yes, they may still buy, but it changes the overall cost of that property.

ABERMAN: So it sounds to me, Barry, that the world has become very complicated. Are you seeing people deal with this in a different way? You know, it used to be I had a lawyer or I had an accountant, or a financial advisor. I talked with them in a vacuum. What are you seeing now?

GLASSMAN: I’m seeing coordinated advice. It’s something that had started years ago where, before the internet, before you could email all the documents and things, it was, well, let’s
all meet together and discuss this. And I think this is going to be huge. Before AI comes, before artificial intelligence solves all of this stuff in the next few decades, I see us taking a step back. I have a client who’s a very successful business owner and he’s looking at signing a ten year lease for half a building. He doesn’t just have his accountant and COO. He has his climate advisory board there. He is this attorney there, and I attended as well as his personal financial advisor, to think through the ramifications for him and his wife as it goes through this. Having those different perspectives is going to be key.

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What’s amazing is, sometimes this happens in the medical world, that some of these executive health places where all of the doctors work together in a room. In the financial world, it’s rare, and it should happen more often–and this is where the wealthiest people are able to get their team together to act without ego, in a productive way, without conflicts of interest. I see more and more people getting their advisors together to help make these really tough decisions, especially when it comes to tax, especially when it comes to the next investment for their company.

ABERMAN: So the net is that tax reform made business–it’s made it more complicated to do business in this region, not less.

GLASSMAN: The whole bill has made it more complicated across the country. Now, if you are somebody who has simple itemized deductions or simple deductions, yes, it becomes more simple, but that’s only in one year. You may in fact benefit from bunching up some of your deductions in one year and then doing a standard deduction, the simplified form the next year, and complicated every other year. So you still need some advice as to, what are the next steps, and how do we play this game over the next few years? Also, a lot of these things, for the businesses, the provisions are permanent. For individuals, they slowly disappear over the next ten years, so even if it’s simplified—it’s temporary.

ABERMAN: A conclusive example yet again of something my granddad used to tell me, which was: money doesn’t come with an instruction manual. Barry Glassman, as always it’s great to speak with you, and we look forward to having you back on the show again soon.

GLASSMAN: Thank you.

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