Welcome to another episode of First off, let's kill all the lawyers. I'm David Heffernan, I've been practicing personal injury law in South Florida for nearly three decades, actually over three decades now, which is sort of scary. The intent behind these podcasts is quite simple. There was a Shakespearean line back in the 15th century. It's been interpreted in a lot of different ways. But we know one thing, it drew a lot of laughter at the time when it was said, and a lot of people chuckle when you say it today. So the goal today, and in all these shows, is to bring in lawyers, and we're going to divert a little bit on that, and get to know him a little bit, find out what they do, and then kind of maybe one by one, take them off the kill list. The good thing is my guest this morning isn't directly on the kill list, because he's not a lawyer. But a lot of what he does is intricately tied with lawyers. And so, we're going to explore that today and have some fun talking about some really interesting things that are a byproduct of what happens in law. And my guest this morning is Felipe Blanco. Felipe, how are you?
Good morning, David. It's great to be here with you. The title is definitely very attractive.
Well, you know, it gets the people's attention. You know, there was I had some alternative titles that I'll go with you before. Felipe and I are actually also then going to do an endorsement for hair product for men, as an aside just to generate a little cash flow and on the broadcast, but, but we'll keep that minimal. Felipe, let's talk a little bit. Before we get into what you do, let's talk about you a little bit. Born in Cuba, you come to Miami when you're how old?
I came, right before I turned five years old. Okay. Yeah, I grew up in Miami, went to a small private school. up basically, in those times, you went from basic kindergarten through eighth through 12th grade. And so I did that. And then I, I was at Florida International, when it was six buildings in a very small space.
Clearly, something that's changed over the years…without a doubt my three children who actually work on my team as well, also went to Florida International. And when I visited the campus 20 years later, I was shocked by the amount of growth that the institution had.
Yeah, I hadn't been out there in a while. And I went out for a memorial service. And I mean, it's, it's no, it used to be this sort of tiny, little commuter campus. And they've really, really done a nice job, of building that and building the reputation of that school.
Let's talk a little bit you get into financial planning, you're the managing director and a financial advisor with RBC. Tell me sort of what gravitated to that what's, what's the appeal to finance. And then we'll talk a little bit about what you do there. And then we're going to merge that into what you do with lawyers.
Sure. So I was always from a very young age, interested in finance, investments, mathematics, so on and so forth. So it was, you know, I was fortunate enough to have an incredible teacher during high school, that was that there was a was my math teacher, and she inspired me to really focus on numbers and that aspect of it. And then when I got to, when I got to FIU, I had decided that I want to be a finance major, but I also was blessed with meeting a professor that taught a number of investment courses and financial courses. And he befriended me and became a mentor for lack of a better term. And that created the passion around this business. So, I initially started in traditional banking, where I was doing consumer lending, corporate lending, so on and so forth. And then in the year 2000, when a lot of my clients that I had developed a relationship on the banking side, said, Look, we're at an age where we're monetizing our business and we're selling, you know, we trust you, why don't you? Why don't you help us on the financial side, so I transitioned to more of a wealth management role. Okay, let me apologize, my all my computer, and I have no idea how to link it from my phone, I turned my phone to silent, but I can't manage my computer.
So, we're good. We know you're good with numbers, but maybe not on the technology side of things, right? Without a doubt. That's why you hire, hire people to do that. We're not going to talk about financial investments now, particularly given what's going on and makes things a little chaotic. And that's a whole different show. But years ago, and this is how you and I have met and everything else, but years ago, you started to sort of carve out a niche to start working with lawyers on cases where there are settlements for minors or settlements for people with special needs. And that money's got to get set aside and taken care of so how did that start to evolve
it by Chance. When I joined, when I joined Mellon, they had they own a local bank called United National which was known as the lawyer's bank. But within that, within that space, they were a big lender, to personal injury attorneys. They were lending to the attorneys to finance their cases through pre-lit and lit until they monetize. As a result of that relationship, I started getting introduced to personal injury attorneys. And as a result, helping them initially just post-settlement on the, you know, post settlement or verdict on the management of the funds. And then subsequently, the role expanded to where I was working with them, even in the pre-litigation and litigation stage, and then helping them with financial analysis, and other factors. So, what started as an opportunity, then started developing more and more that for the last 20 years, that's been growing. And I can say right now, probably about 90 to 95% of my time is spent working with personal injury attorneys throughout the country, in one way, shape, or form, to help them and their clients during the different stages of their case. And then along the way. And my wife always tells me that I hit the jackpot in the sense that it's a business I'm very passionate about because I help families that have gone through tragedy. But also, I get to work with folks that have become my friends. So, I know that title is to kill lawyers, but it happenstance that I'd say that probably 95% of my friends are folks that I do business with, then at five o'clock change jacket, and then socialize with so I get to work with my friends in addition to helping families with, with, with that have suffered through a tragedy.
So, you know, at least some of the ones we can take off the list, which is good to know. Right? Correct. All right. So, let's walk through that process. So and because I don't know that the general public understands that. But a lawyer, Pei lawyer, and we've worked on cases with this, but has somebody who suffers a devastating injury, okay. In order to then determine I mean, what people have to understand is, you got to get some kind of number to take care of those people. And so, lawyers work with life care planners who will put together a plan to say, these are the things because they're only going to get one day in court, these are the things this person is going to need to be able to be taken care of adequately and completely for the rest of their life. Here's where you sort of come in now. So okay, we figure out what that number is, you try to resolve the case, best you can or the verdict or settlement, then what happens to that money and what measures you're taking to protect to make sure that this person is protected, not only so that they've got funds, but also protected that those funds are adequate to take care of them.
Yeah, I the first, the first step that you have to recognize, as a financial advisor that works with these types of cases as that this is one-time money. Unlike traditional wealth management, where you're dealing with high net worth individuals or professionals that have recurring income, you have to start with the premise is, hey, this is their one at-bat, and they're not going to get another at-bat, this money has to really be there for their ongoing care. So understanding that component, and then to really spending the time and working with their professionals, care managers, nursing staff, so on and so forth. So you understand, as best you can, what medical needs are unique to this person and their injury going forward. So that those are the first two steps that you initially take to understand where you are and where you're going. And then once you have an understanding around that is to build, you know, try to put together a portfolio that today is invested in such a way based on historical performance and, and, and, and, and, and other factors where you can invest it in the right way, in order to try to ensure that that money is there for when they need it on a going-forward basis. Understanding that trying to guess the medical needs of that person for the next 25 years is was a moving target. Because things can get worse things can get better new technologies, new procedures. So, you have to build enough flexibility within that within that structure to allow that. And then
I think and I think that's where the whole team comes in. Because you've got to work with physicians, you've got to work with life care planners, you've got to, you know, best you can sort of take that crystal ball and say, Okay, this 19-year-old who has a devastating injury, brain injury, whatever it is, but they're going to live you know another 60 years. So how do we make sure that's all taken care of? And then I guess, you know, you've got to intertwine with that to say, Okay. And sometimes it's not 100% recovery, because you've got liability issues or there's, there are limits. So how do we maximize this money? And, and I think one of the things that are changed, and we'll talk about the court guardianship aspect, but where people like you have come in and made a difference. For the longest time, it was, well, let's just buy him an annuity. Okay. And that'll pay him out for 20 years. And, and, and courts like that, because courts are protecting this money. But you've been able to see that change and been very successful in showing courts. Wait a minute, that annuity, it's going to hurt him this amount over that, but there are much better ways to do it. So, talk about that kind of change in the practice?
Yeah, I think a lot of it has to do less about the product of an annuity and a structure. And, and the old adage, wave, like you said, that the courts would think we want to create an annuity stream around this is that, hey, this is safe money, we can't we want to limit volatility, which is, it's the right concept of, of perceived risk. But the risk is more than that. Because with an annuity product, you're a victim, not so much of the product of where when the case settles, for example, since 2008, interest rates have been extremely low. So as a result, those annuities haven't created the kind of growth, that that would allow that money to grow substantially. And in the end, medical inflation during the last 20 years, for example, has gone up a little bit under 5%. So, there's an inflection point there. So, I think what's changed is the definition of risk where it used to be, hey, I want to make sure I limit volatility as that was the only risk factor. I think the courts, the attorneys, and even the structure settlement brokers have realized there are other risks, outliving your money is, is a huge risk. So low returns do affect the fact that with a fixed annuity payment if medical costs increase by that amount, the annuity payment isn't structured to grow at the same pace. So even if the means are stagnant, or mean or linear, then it gets to a point where the expense creates a problem in the future. So as a result of that, I think judges attorneys, and, and clients have said, maybe the right approach is to have not one solution to the problem is more of a combined strategy on what to deliver. So as a result, I work a lot with structure settlement brokers, right, right, where we analyze the situation, client per client, and we come together and say, given the particulars of this client, a combined approach in this way is the best approach. And I think that that works out well for all sides.
And it really does. And you and I have done that in cases and you know, fortunate nice recovers, and now, you look at how well, the client is, is doing under the circumstances with that protection, and it affords you know, the family, the protection and everything else. I think one of the other things that people don't understand is, is the critical role. The courts play in this because somebody's got to safeguard this to say, no offense, but to financial planners or lawyers or, or families, which oftentimes, you see it's not money for them, you know, and so things have to be approved by the court. guardianships have to be opened annual filings. So, you've got I'm sure be involved in that. Make sure, hey, every year this is filed. So, some judges looking at this going. Okay, you know, this is good. We haven't seen a chunk of money disappear that wasn't supposed to, you know, disappear. So talk about your role than with the courts, sort of on the guardianship end of things.
Yeah. So on the guardianship, exactly what you just mentioned, the courts are saying, I understand the need to have this money be protected, but at the same time grow for this either incapacitated person or this minor. So within that, and the statutes that govern guardianships, that, you know, it's although they don't tell you how to invest, it's governed by something called the prudent investor rule. So they leave it up to the fiduciary, but it should limit you to what you got to what we do. In other words, even if I like a certain stock, even if I like Apple, it's not that I would put 100% in one company, right? So you have to have a diversified type of portfolio. And, and, and, and have a disciplined approach to that. So they take care of the investment side of it, but they also, you know, engage institutions that are familiar with not only the court system and their obligations but that have the infrastructure to make sure that no distributions are done. without a court order, and that the accountings are done on time, and that there's a, a level of understanding and knowledge around how those instruments work and, and the limitations and restrictions that a guardianship provides.
Alright, so we talked about setting up these Guardianships. And you, you bring up an interesting point, because one of the things I people may not understand, we talked about incapacitated people that have significant needs, but this system also in place, for any minor, that by law, just by being under the age of 18, is declared incapacitated, that if they get a case, and let's say automobile accident, they break their leg, there's a recovery, there may not be this long string of future medical needs, but that money has to be protected for that minor till they reach the age of majority. And, and then, you know, again, different products sometimes, because you don't necessarily want to work with parents, we don't want to give an 18-year-old chunk of money, so we can do things that say, okay, here for the first four years, sort of this, this could be designated as college money, and then maybe at 25, or 30, when they hit that age, so talk about how you deal with minors and the families on that, that isn't incapacity, but they have an injury, they're going to recover, but they're going to have some money.
And, and that happens a lot. That happens a lot when even if minors that aren't incapacitated, they just received the funds because you know, their father or mother are no longer there through whatever, that still has to go into a restricted account. So, in, there's When, when, when dealing with that with those types of issues, there's a lot of consultation with the parents with the attorneys and the judges, because there's always a fine line, whereas, you know, it is money is awarded to the child, right. Now, if it was if that money is awarded, because of the loss of a parent, right then during their, their childhood up until they turn 18, you have to understand that that money also has to complement their living needs, because now there's only one parent to support and this money is there because to substitute the second parent from a financial point of view. So if that's the case, you have to make sure that during from age, whatever the settlement is to age 18, it's flexible enough that they get that kind of help. And then we get into the conversation around what happens at age 18. The guardianship typically will say that at age 18, the guardianship ceases and the child will receive the money. Right? That's obviously concerning to some parents and judges and some attorneys, right. And there's also and is also, you know, something to talk about, but at the same time, some judges also recognize, hey, He is an adult, he's capacitated. It's his money. So there has to be some balance around it. Right. So a lot of discussions have to go around, okay, how to structure it the right way that you meet both sides. So maybe you do guardianship for part of the funds that you know, he's going to get the funds, he or she gets the funds at age 18. But then, with a structured settlement, you can say, well, in addition, since we know he's getting a lump sum at 18, maybe we do the structured settlement where they pay another lump sum at 22 at 26 at 30. So that way, it allows him liquidity at age 18. But also, some protection if some bad financial decisions are made when they're young. So a lot of consultation again with attorneys, judges, The Guardian Ad Litem, and then the family.
Okay, and you throw out guardian ad, litem and judges. So, let's talk about that role. Because again, I think it's interesting, the oversight that the judges have, because we as lawyers, will put this together, we'll get a settlement, we'll get people like you, we'll put a plan together. And then the courts going to say, Okay, we're going to appoint a lawyer that has nothing to do with this case. He's going to review or she's going to review everything. And then she's going to give a report and recommendation to me as the court, which I'll look at, and then I'm going to bring the lawyers in. And oftentimes people like you to say, Okay, what's the plan? And why is this in the best interest of this minor child or this incapacitated person?
Yeah, and they play a critical role. Because, as you know, as we know, that we went when the cases are going on, and pre-settlement or verdict, there's a relationship that's built with the parents, and so on and so forth, or with the child. So you go into it, knowing the players, the fact that the court comes in and says, I want someone that doesn't have those relationships and potential biases, and look at it only as a representative of either the minor or the incapacitated person and say I want a second pair of eyes independent, to make sure that the proposed plan is the right thing. For, for that individual. So they play an integral part, they do also a great job of speaking to the family speaking to the financial advisor, speaking to the attorneys to make sure that what was your thinking when you propose this plan? And then there's a lot of dialogue on whether, hey, this makes sense. This doesn't make sense. Maybe we should tweak it here or not change it at all. And I think that that dialogue, and for all of our sakes, the attorneys, the family, and the financial advisor, I think it's a, it's a, it's a good way to have a fresh pair of eyes come in and say, Hey, I concur with your thinking, or maybe you forgot this. And I think I think they played a critical job of critical role in the process.
Well, and it's an important role. And I mean, I'm fortunate enough, you know, I frequently will get that call from certain judges to say, Hey, I'm going to appoint you as a guardian ad litem on this, you know, and that's a critical role because you're looking at that. And now you're another member of this team, to say, how are we making sure that everything is monetized, maximized? And protected? For the best interest of this child? And again, you know, yeah, you could lock it in a savings account, then give it to them, you know, but that's not to the best benefit of the minor or the incapacitated person. So it's, it's an interesting, dynamic with a lot of moving parts involved. Yes. Alright. So talk about these, where they get monies and everything else, but now there's an intricate balance of wanting to maximize to make sure they retain benefits that they're entitled to. So what's done then to make sure, you know, if they're on Medicaid, because of this incapacitated, or getting other governmental benefits, what can be done to say, Well, wait a minute, now they have money, are they going to lose this benefit? And how do you balance those two?
Yeah, and part of the role of my team and the advisors at the time is to that in the analysis of how much money do we need to take care of this person going forward, we try as much as possible to analyze not only what they have, but what they could have if they don't have it yet. And we look at what's called collateral sources. Collateral sources could be Medicare, could be Medicaid, or any of those, those programs. So we, we look at them, and we say, okay if they don't have it, this is what we're going to do. And if they do have it, this is how we're going to protect it. Some, collateral, I mean, collateral benefits do not affect the settlement or are affected by the settlement somewhere. For example, in the case of giving us an example, that's typically the one that comes up the most is Medicaid, Medicaid, or section eight, or any government housing that's needs-based, right? Well, typically, you know, those programs are exactly what they are needs-based. So if you would take and they have income limits and asset limits, if you take a certain amount of assets, it might be a disqualifying event, where it might be, you know, given that their medical conditions might be a severe change to what they have. So we tried to incorporate a strategy to say, let's try to maintain these collateral benefits, and still manage the money because it makes the money last longer. And there are certain vehicles that we can do that with, for example, one of the ones you mentioned early, what's it with special needs trust, right? In a special needs trust is a widely used mechanism that allows the settlement recipient, even though they're receiving a large number of assets, that would normally be a disqualifying event, it, it allows it to be not considered a countable asset, against their, against the needs-based program, and allow that person to continue with their nursing care and their and their medical care. And the vehicle then allows them to maintain that and upon God forbid, they're, they're passing the trust at that point would have to pay Medicaid back first, whatever they paid, and then the remainder goes to the to their heirs.
Okay, which is hugely important, because, again, if you lose those benefits, I mean, most settlements are going to have enough money to cover all of that when you get into some of those things, some of the nursing care, home health care, things like that, you want to maximize. And so, again, it takes this sort of entire team approach to you know, hard enough to get the money and litigate that everything else. But when you do that team approach, and I think it's so important, you know, when you talk to lawyers who do this type of work, like myself, and my partner is not only the quality of the lawyer, who are the people they surround themselves with, who are the people that they use, if it's going to be this case of this nature, because it's not just getting the money's one thing, but if that's for the remainder of somebody's life, there's a lot of work to be done to get there.
Right. Right. And, and, and, again, those are all moving parts and things that have to be considered, you know, and then once that is established, The then the monitoring, that's why the institution or whoever the team is, is important because how you distribute can also be a disqualifying event. So if you're going to pay for some expenses or distribute monies, you have to make sure that whatever you're giving doesn't trigger,, an increase in income, that might just be a disqualifying event, or that might let money accumulate outside of the trust, that would also be a disqualifying event. So there's a lot of ongoing dialogue and analysis after the settlement. And after that, the account is established, where we have to take into account to make sure we do it right.
Well, and it also you get into other cases, now with older people and Medicare, and now you've got to do what is called Medicare set-asides. Because of your recovering future medical benefits, you want to make sure you're not jeopardizing that person's ability to receive Medicare. So and that's probably a whole other topic for a whole other show.
It's becoming, it's becoming more and more prevalent in the analysis, because, you know, more as more people as we have an elderly population, and they get older, Medicare stuff starts coming to the analysis as well.
So, what makes you passionate about all this, I mean, you've carved this niche out, you, you've gotten into this community of lawyers, again, how you and I met and have had success on that and others, but what, what makes you passionate about it?
You know, and I thought long and hard. And I know this is a kill the lawyer show, I'm going to, I'm going to give props to, to the attorneys in two ways, and then I'll get it to answer your question. One is, you know, the respect I have, that, that you, the attorneys, like, you stand up for those that can't stand up for themselves, you know, and, and you, you give everyone an opportunity within the civil justice system to have their day in court. So that's something that I admire all the time. So, the fact that I can be a part of that process is, is extremely rewarding. But the bigger part is, is that I because I manage these clients going forward, I get to determine two things. Alright, see two things, one, the change in their lives, that we can do, that we're there, you know, in their most difficult times going forward, you know, my team and I will get phone calls, at 10 o'clock on a Sunday or nine o'clock, hey, my air conditioning broke, my, this isn't working. And we have a team of people that we can talk to, to go immediately to fix air conditioning, and then fix appliances and stuff like that. So that kind of instant feedback of getting some getting a thank you from somebody that was at a very tough place that you helped them out during its constant affirmation that we're doing the right thing. And I also get the ability to think through unfortunately, my children in my other team members get to see is how would they be if the settlement wasn't there? How would their life be if that wasn't there, the fact that I can be a part of that process, right is hugely rewarding. You get sometimes, you know when you're dealing in traditional wealth management, where you're dealing with CEOs, or you know, you don't get that that instant gratification, it's about returns, and about maximizing returns in this at the other here. It's real-life differences. It's someone that needs a generator that needs things like that. So you get it's basically a thank you that is deep-felt on their end, and I can't think of a more rewarding part of my job. So that's what makes me passionate about it. The more I do it, the more I want to do.
Well, well, well stated my friend, always a pleasure. I enjoy working with you and look forward to many more years of that. And while he's not a lawyer, we'll keep him off the list. Even though it's closely associated with lawyers. I think we can take you off the kill list. I stayed on Holiday Inn Express, I stayed. Alright, my friend, I really appreciate it. Felipe Blanco has great insight on some interesting stuff.
I appreciate the opportunity.
You got it. All right. That's going to wrap this one up. We'll see you next week.