dsmWealth: August 7, 2025

For new roads to profitable returns, veer off Wall Street
BY STEVE DINNEN

The stock market has had a decent run for the past 20 years. Share prices, as measured by the S&P 500 Index, have risen more than 640% over the past 20 years — an average annual return of 10.3%, not adjusted for inflation. The Dow Jones Industrial average index lagged a bit, by comparison, at 7.43% annually.

These returns have come despite a fair amount of nail biting, as the markets swung up or down during the last two decades. Who can forget the spectacular collapse of the market in 2020 due to the pandemic, for instance, or even the tariff slump from this past April? Stocks recovered from both shocks, but still, who needs or wants that volatility?

There are ways around this up-and-down cycle. More options for alternative investments are becoming available to qualifying investors, with profit rates that compare nicely against the rocky stock indexes.

Ares Wealth Management Solutions first came to town a few months back to lay out its strategy. It’s a non-bank lender, providing money to businesses globally by way of first-lien senior recorded loans, second-lien loans, equity and structured credit. It likes to loan money in software and services sectors, then health care equipment and services. A list of its top 10 holdings includes an insurer, a Miami-based spice company and at least three firms that specialize in pharmaceuticals and life sciences.

Its Strategic Income Fund is structured as a perpetually non-issued, non-traded business development company, or BDC. (Whew, that’s a mouthful.) It’s a type of investment fund that lends to private companies but isn’t listed on public exchanges. There are three share classes — S, D and I — and annual returns over the life of the fund have ranged between 7.6% and 11.13%, depending on the share class.

While Ares busies itself with credit facilities, Pantheon Private Wealth is in the business ownership space. Tens of thousands of businesses are for sale at any moment, and Pantheon’s private equity business focuses on buying them, focusing on recession-resistant middle market firms that deal in essential services.

“We like mission-critical businesses,” Pantheon manager Nicole Parker said.

Consider furnace repair shops, for instance. It’s a business that does not ebb and flow with the economy and is highly fragmented. There are dozens of such businesses just in greater Des Moines. So Pantheon (and its competitors) are tending to what are called “HVAC rollups,” buying heating, ventilation and air conditioning contractors and bundling them together — basically, creating a chain to drive efficiencies and increase value. Waste management, dental practices, and law and accounting firms scattered across the nation are also being “rolled up” as private equity explodes and investors search for new opportunities.

Brandon Grimm, chief investment officer at Gilbert & Cook, said clients are open to these kinds of opportunities and now account for nearly a quarter of the assets under his firm’s management. Other wealth managers offer these and similar alternative investments, which have been tailored to fit them since private investors need an intermediary to manage the transactions.

Behind the velvet rope of private investing
BY STEVE DINNEN

Alternative investments like those described in today’s first story usually aren’t available to just anyone. That’s because most of them require buyers to meet certain financial thresholds, starting with “accredited investor” status.

This term comes from the Securities Act of 1933, and it essentially means you have enough financial cushion to take on more investment risk. To qualify, you must either:

Have a net worth of at least $1 million (not counting your primary home), or
Earn at least $200,000 a year on your own (or $300,000 with a spouse or partner), for at least the past two years.

The theory here is that people with more wealth can better afford the potential losses and are more likely to understand the risks.

There are some exceptions. For example, early-stage startups can raise money from a small group of “friends and family,” even if they aren’t accredited. Under SEC Rule 506, up to 35 unaccredited investors can legally participate in these private fundraising rounds.

Beyond accreditation, there are two other tiers that open even more doors:

Qualified client: Someone who has at least $1.1 million in assets under management with an adviser, or a net worth of $2.2 million or more. Only qualified clients can be charged performance-based fees (like a percentage of profits earned).

Qualified purchaser: This is a higher threshold still, for someone who has at least $5 million in investments (not necessarily net worth). Qualified purchasers can access exclusive investment opportunities, such as certain hedge funds or private real estate projects that aren’t available to lower-tier investors.

Each level comes with both more risk and more access. The higher the bar, the more complex (and often illiquid) the investment options tend to be, based on the assumption that investors at these levels are more sophisticated and financially prepared.

How to guard against a new generation of fraud and ID theft
BY KIMBERLY LANKFORD FOR KIPLINGER

These days, even the most astute consumers can fall victim to identity theft schemes and financial scams.

No longer can you count on obvious red flags to spot a scam, such as a misspelled email from a Nigerian prince or a call from a robotic voice.

Now, many fraudulent websites and emails look legitimate, and scammers use personal information they've collected about you to persuade you they're the real deal — and to prompt you to act quickly, without questioning the interaction.

Artificial intelligence has contributed to the rise of these more sophisticated and realistic schemes.

"AI has made it much easier for the bad actors to put together absolutely picture-perfect emails, texts and scripts for phone calls. We used to teach people how to detect a phishing text or email, but we don't do that anymore because it’s too hard to tell," says Eva Velasquez, CEO of the Identity Theft Resource Center.

Read the full story to learn how scammers are using new deepfake and voice-cloning technologies to rip off even savvy consumers.

Government data is under fire but makes the world go 'round
BY JOE PINSKER, HEATHER GILLERS AND ASHLEA EBELING FOR THE WALL STREET JOURNAL

The Bureau of Labor Statistics’ data does more than capture monthly job growth and inflation pressures. It plays a crucial role in Americans’ financial lives.

The data influences how much people pay in taxes, receive in retirement benefits and even how much they earn on some investments. The consumer-price index, published each month, is used to update everything from 401(k) contribution limits to pension payments to income cutoffs for Medicare costs.

President Trump’s firing of the bureau head Friday has suddenly sparked worries among economists about the reliability of this data. The BLS had already raised alarms earlier this year after cutting back its data collection for the CPI.

Policy analysts say it appears unlikely at the moment that inflation data would deviate wildly from actual price changes. But under-measuring inflation would hit the pocketbooks of millions of people.

Read the full story to understand how data influences taxes, retirement benefits, Medicare premiums and more.