Within a couple of years, he had developed his own options strategy, investing in blue chip stocks and developing put and call collars. “I’m by nature a very risk-averse sort of person,” Mason says. “And I gravitated toward options because they sort of were analogous in my mind to insurance. … I was drawn to the idea of why can’t we use insurance in the financial services industry to prevent what had happened during this market crash of 2000?”
By 2005, he had begun talking with his college friend Shaff, who had a finance background and also a law practice in Dallas, Texas (Shaff is married to Mason’s cousin). The two decided to launch a hedge fund, knowing little about the subject, and they each put in $10,000 and used it to trade Iron Condor option strategies.
Mason says that despite his background in law, there were certain continuities between his law practice and the new financial services mission, and he saw the opportunity to create a soup-to-nuts practice.
“I had spent my life representing average people or even middle-class workers, blue-collar people who had been injured,” says Mason. “I would get them a verdict or settlement of $200,000, $300,000 and that was more money than that person or their family had ever seen at one time in a generation. And those kind of people had no access to help. They would get the money and they would be back in my office a year and a half later, two years later because they had carpal tunnel or cut a finger off on a poultry line or whatever and the money was gone. And I wasn’t in a position to help them. … That demographic had been excluded completely from that access [to financial help].”
Accountants have never liked watching somebody run off with money they could be investing, and neither did Mason and Shaff, who were used to getting clients big liquidity events for divorces, settlements and inheritances.
Shaff, who met Mason at the University of Denver and whose own law practice in the 1990s was focused mainly on individual bankruptcies and tax controversy, says a lot of times people would come to him in his practice with some money and ask for a referral. After he sent them away, he didn’t like what happened to them.
“I represented a guy in a car accident,” Shaff says. “He had been a passenger in a car involved in a two-car accident. He was horribly injured. I settled the case for him. … I wrote this guy a check for $500,000. This guy had an education maybe 9th grade. I remember saying to him, ‘Are you sure you don’t want to put this into some kind of structured settlement? I could put this into an annuity for you, some type of insurance product. Something that when you turn 50 will pay you X amount of dollars for the rest of your life.’ He goes, ‘Look man, you’re crazy. I’m really good with money.’ A few years go by … he calls me and he goes, ‘I wanna sue somebody. … I wanna sue somebody because I had sudden wealth syndrome. And I don’t have any of my money left over.’ And I said, ‘Well who are you going to sue for sudden wealth syndrome?’ He goes, ‘I don’t know, you’re the lawyer, you figure it out.’”
Cabana, says Mason, was created with those people in mind and can conceivably offer everything—the firm can fight your divorce for you, get you a settlement and then invest the money and come up with an estate plan.
When working with retail clients, Cabana now works with their legal, tax, estate planning, business succession planning (including funding) and asset protection. The firm looks at clients’ current investments, assets, liabilities, risk tolerance (with Riskalyze), income needs and retirement goals. But the firm doesn’t work out specific day-to-day spending and saving schedules for clients.
“In my experience this type of planning is rarely accomplished by the advisor because it is tedious and difficult for the client to engage,” says Mason. “The end result is often that you have an expensive plan that is not ever implemented. I don’t want to devalue this type of planning because in a perfect world it would be great. Unfortunately, we are far from a perfect world.”