What's in My Model Portfolio: SGH Wealth's Sam Huszczo

Sam Huszczo, founder and CIO of SGH Wealth Management, outlines the strategic approach his $617 million RIA takes to manage the transition from wealth accumulation to income distribution for high-net-worth retirees. The firm targets sophisticated investors with $3 million to $10 million in assets, prioritizing tax planning and behavioral discipline to mitigate the risks associated with market volatility. By preparing portfolios to withstand a 30-month bear market cycle without forced equity liquidations, SGH seeks to provide long-term stability and opportunistic growth for its clients.

SGH Wealth Management, a Lathrup Village, Michigan-based RIA, manages $617 million in assets for a clientele primarily consisting of individuals aged 60 and older who are transitioning into retirement. Founder Sam Huszczo explains that many clients are former self-directed investors who realize the stakes are higher once they require an income-producing portfolio and can no longer rely on contributions to offset market downturns. The firm specializes in serving business owners and executives from the automotive and private equity sectors, typically managing net worths between $3 million and $10 million.

Huszczo’s investment philosophy centers on behavioral discipline and customization, arguing that investor adaptability during market extremes is the most effective way to outperform. He critiques the industry's tendency to chase "shiny object" products, instead favoring factor-based investing and pre-planned trades to avoid emotional decision-making. To illustrate the importance of behavior, Huszczo points to Peter Lynch’s tenure at the Magellan Fund, where the average investor lost money despite high fund returns because they entered and exited positions at the wrong times.

To safeguard clients against market volatility, SGH structures portfolios to weather a recovery cycle of 21 to 30 months without selling stocks at a loss. For a client with a 5% spending requirement, the firm may allocate 40% to 50% of the portfolio to bond-type positions to fund distributions during a downturn. This strategy allows the firm to remain opportunistic during bear markets, enabling them to buy sought-after stocks at discounted prices while ensuring the client's lifestyle remains funded through the recovery period.