BUILDING DEPLOYED

170 pages. 4 signups. 13 days. Let me tell you about the two letters advisors are most likely to procrastinate writing.

Page 169: The Private Credit Client Letter

Private credit has ballooned into a $1.5 trillion asset class. Advisors are allocating to BDCs and interval funds at record rates. And yet, when a fund invokes a redemption gate2014limiting quarterly withdrawals because too many investors tried to leave at once2014the clients who didn2019t have a prior explanation letter feel blindsided. The phone calls that follow are the ones that end relationships.

This page covers four letter types: the introduction letter (sent before any investment, to establish informed consent about illiquidity), the allocation letter (documents the specific fund, the rationale, and your due diligence), the quarterly update (translates fund NAV reports into plain-language summaries covering yield, non-accruals, and portfolio developments), and the liquidity event letter (the one you desperately hope to never send, but absolutely need if a gate is invoked). The key insight: clients who received the introduction letter before a gate is triggered feel informed. Clients who didn2019t feel deceived. Same event, opposite outcome, depending on communication sequencing.

Page 170: The Sequence of Returns Risk Letter

Here is the thing about sequence of returns risk: it is completely invisible until it happens, and then it is too late to do anything about it. An investor retires into a 30% market decline in year one, withdraws $80,000 for living expenses, and enters year two with $1.3 million instead of $2 million. Even if markets fully recover, the compounding base is permanently impaired. The same average annual return produces dramatically less terminal wealth when the bad years come early rather than late.

What makes this particularly insidious is that during the accumulation phase, return sequence doesn2019t matter at all2014only the average matters. The shift from saving to spending changes the mathematics completely. Advisors who explain this before retirement, and implement an income floor that covers 220135 years of expenses in stable assets, give clients the gift of not having to sell equities at depressed prices to pay January2019s bills. The early-retirement market decline response letter is the payoff: 201cYour income floor is intact. You don2019t need to sell anything. The strategy is working exactly as designed.201d That letter, sent proactively when markets are down, is worth more than a hundred positive market commentary letters.