I was disappointed after reading an article in The Financial Times that discussed how much of investment managers’ own money is invested in their own products.

According to a 2016 study by The Financial Times of data provided by Morningstar, “half of the 15,000 mutual funds in the US are run by portfolio managers who do not invest a single dollar of their own money in their products.” In this list, some of the worst offenders include some of the biggest names in investment management—Vanguard, State Street, BlackRock and more.

I wrote about this phenomena in a blog post earlier this year, while addressing how the owners and employees of Potomac are invested. However, since I am the lead portfolio manager, I feel it’s important to be an open book with exactly how my personal assets are invested.

As a third party money manager for advisors across the country, our clients trust us with the single entity that matters most to their business – their clients. So, this isn’t something we take lightly. Truth be told we take it to heart – intentionally and personally.

While it may not matter to many, but it matters to us. Talk is cheap, money talks and bullshit walks.

Getting Personal

The bulk of my assets are distributed between my ownership in Potomac Fund Management and taxable investments. The rest of my assets are between real estate and retirement accounts.  Yes, I realize this is back-asswards to a typical personal balance sheet, but it should tell a lot about my priorities.

As a family we value time over money, experiences over possessions and flexibility over stability.

How so? I didn’t buy my first property until the age of 38 because I valued the flexibility of rent. I delayed contributing to my IRA and 401k in order to save as much taxable money as I could, knowing I would eventually be purchasing a business of some sort.

It’s called a personal balance sheet for a reason: it’s all very personal to each individual’s situation. Don’t forget this when seeking financial advice!

Potomac Ownership Shares

I am a Potomac lifer as this was my first job out of college in 2002. The plan was to only work here for a year since law school was waiting for me. My entire life was an audition to become a sports agent as it combined my love of analytics and sports. I wanted to be Jerry McGuire!

As anyone with experience will tell you, your plans and reality often take vastly different paths. I fell in love with the business and the process of programming trading systems, so I was full steam ahead.

I never looked back with any regret.

I purchased my first 10% of Potomac at the age of 27, which is incredibly young in this industry. I had a great mentor and business partner who believed in me, and allowed me to “buy in”. I barely had enough money for the down payment and ultimately utilized credit card balance transfers for the rest.

At one point, I ran out of balance transfers and a payment was coming due. Shit! I debated asking friends and family, but I was too proud to ever ask for a handout. I eventually made it work by finding a new credit card that was able to give me the balance transfer funds in addition to a timely K1 payment due to me.

I purchased the next 10% in 2014 but this time I was fortunate enough to pay cash. Since 2007 I was in savings mode trying to accumulate as much free cash as possible for what I figured would be an eventual buyout.

The buyout eventually occurred in 2017 which allowed me to purchase 100% of the company.

I immediately sold 10% to my current business partner, and I plan to continue selling shares to any employee that wants to participate in the growth of the company and have skin in the game.

Taxable Accounts

My taxable accounts are 100% invested in the strategies we offer to our financial advisors. A portion of that is also allocated to a handful of “test strategies”.

Not only do we “eat our own cooking” we also don’t believe in the “Hypothetical Hogwash” that is pervasive in our industry. Before a trading system or strategy is even introduced to clients, I first test it with my own money – preferably for at least a three-year period. 

It’s not ideal to be the “guinea pig” for investing R&D but as a fiduciary it’s our duty to put our client’s best interest in front of our own.

It may not matter to many, but it matters to me. Talk is cheap, money talks and bullshit walks.

Retirement Accounts

As I mentioned before, I spent my early years purposefully shunning retirement contributions. The financial planning experts likely won’t recommend this strategy but who cares – it’s was what I thought needed to be done for my personal finances at the time.

I also didn’t have many rollovers from prior jobs because I have only worked for one company my entire adult life.

With that being said, my retirement assets are almost entirely made up of my Potomac 401k. This corporate 401k plan is solely invested across (multiple) Potomac strategies. Each employee can use a combination of Potomac strategies that fit their own personal investing risk tolerance.

Bottom line: if you work at Potomac, your retirement assets will be managed in the same strategies that we offer to our clients.

Real Estate

It’s my personal belief that real estate is a horrible investment and, more notably, one of the greatest scams pulled on the American public. I realize this isn’t a popular opinion but it’s still the one I have, and one for a future blog post. Side note: The “American dream” marketing slogan of owning your own home was created by Fannie Mae to encourage home ownership and thusly more mortgages. 

To be fair, I did purchase my first condo last year and did so for the only real benefit of real estate, IMO, which is stability. With three kids roughly under three years of age it was getting harder to drag them around the country on our adventures, and since it wasn’t ideal to keep moving – we bought a condo.  However, even with the down payment and renovation expenses combined, it is still a very small percentage of our families overall net worth.

The rest of it…

I also have three 529 plan accounts that I have opened in the last couple of years. I have my doubts about these vehicles but wanted to make sure the kids were covered. All three are invested 100% in an Emerging Markets ETFs. Why? Because I am not allowed to trade the accounts, or I would, and I must make a bet on the next 18 years of “future” market performance and based my decision on current market valuations.  (This is not financial advice as your situation is different from mine.)

I own ZERO individual stocks with all the assets invested in mutual funds and ETF’s.  Why? I don’t know the slightest thing about individual companies, nor do I care. I stay in my lane which is tactical, unconstrained management of mutual funds and ETF’s.

I own ZERO shares of private companies outside of my own. Why? I am always willing to look but to date have never been presented with an opportunity that I’m excited about.


I do recognize the other side of this argument.  If you own an investment business, you are already dependent on the underlying strategies for income. By also using your investable assets in the same strategies you are essentially doubling down on your ability to manage money. Yes, that is correct!

It’s important for me to be an open book because I manage other people’s money. This is not something to be taken lightly or with disregard.

That being said, just because my personal and employee assets are dedicated to Potomac doesn’t make the product any better or worse. 

However, it hopefully adds a level of comfort knowing that every business and investment decision has wide ranging implications to every adult and child associated with the firm. Judge away, but all my cards are on the table.

A picture is worth a thousand words:

My decision of what strategies to use is personal and NOT financial advice. Before making any investment decisions you should read all the necessary disclosures –I shouldn’t have to say this, but you know the drill.

Happy Investing.

Disclosure: This information is prepared for general information only and should not be considered as individual investment advice nor as a solicitation to buy or offer to sell any securities. This material does not constitute any representation as to the suitability or appropriateness of any investment advisory program or security. Please visit our FULL DISCLOSURE page.