Presidential Portfolio Makeover: Al Gore

Oct. 26, 2000 -- Next month, Americans (those who vote, in any event) will head to the polls to choose a new chief executive. The major candidates and their running mates are pledging to steward the nation through continued prosperity and fiscal health. To determine which candidate is best suited to run the nation’s fiscal engine, we examined how the candidates handle their own financial house, and huddled with professional financial planners to hear their thoughts. The planners had some advice for the candidates on how to improve their portfolios. And if it doesn’t help you decide who you’re voting for, it may help you adjust your own portfolio.

First of all, let’s consider the astonishing fact that Al Gore, silver hoe and all, doesn’t even have enough of his own investible assets to qualify for a session with a wealth manager (though he may be able to tap into inherited funds — more on that later).

To hear a financial planner talk, Gore’s not so far removed from the po’ folks he’s trying to win over. (Drink twice next time you hear a reference to “the people, not the powerful.”).

“To give you an idea of his savings, his total taxable interest in 1999 was $1,267,” says Benjamin Tobias, a certified financial planner and certified public accountant at Tobias Financial Advisors in Fort Lauderdale, Fla. “He has got virtually nothing in the form of stocks. And virtually nothing in the form of savings.”

Of course, this may mean that Gore has been doing a lot of planning to minimize his tax burden-a top priority of most wealthy Americans. If so, he’s doing a bang-up job.

Ever feel bad about your not-so-large retirement savings? Well, chew on this: The vice president’s IRA is worth somewhere in the neighborhood of $8,000. You read those zeroes right. “That’s less of an IRA than most Americans. This is terrible!” says Tobias. Granted, after a lifetime in public service, Gore’s probably in line for a very respectable pension. But given his own minuscule savings, his passion for preserving Social Security comes across as a tad less righteous.

In Debt, But Not Hurting

More bad news on the solvency front: Gore appears to owe somewhere between $100,000 and $250,000 on a line of credit from a bank. “That’s significantly higher than the funds he has in his bank accounts,” says Tobias, “and it’s due on demand. So this means if the bank ever needs the money, technically they have the right to ask for it at any time.”

Not that Gore’s hurting, exactly, because his papa appears to have left him a very large sum of money. Gore has a remainder interest (Tobias assumes that means he’s the beneficiary, though it’s not exactly clear.) in a trust that includes Occidental Petroleum stock and cash, worth a little more than $815,000. (Again, this figure is derived from using averages — the actual value could be more or less.) It’s not clear whether Gore has access to the trust, however. Occidental’s stock is off 4.7 percent this year.

“If he has control over the Occidental Petroleum stock — I can’t tell — my suggestion would be to immediately consider liquidating the majority, if not all, of that stock and investing it in an allocated portfolio,” says Tobias.

“Most likely his earnings in the future, whether he wins or loses this election, will be significantly higher than they have been in the past. He’ll end up on the speaker’s circuit, tapped for boards of directors. So while you don’t want to bet on the future, if I were in his position, I’d be willing to get a little more aggressive in my portfolio.”

Assets, But No Income

For Gore, Tobias recommends a portfolio made up of 45 percent domestic large-caps, 30 percent international equities and 20 percent small-caps, with the balance in fixed-income investments. For now, the vice president’s only stock appears to be the holding in his father’s trust.

Gore does appear to have some Treasury bonds, but they’re in trusts for his children. “There’s not a dollar of dividend income on his tax returns,” says Tobias, “and there’s no evidence of him owning any municipal bonds.”

Gore also owns: a house in Arlington, Va., listed at $375,000, a house in Tennessee listed at $175,000, a farm listed at $175,000 and an additional property listed at $75,000. His other assets include a bank account worth around $75,000 and a credit union account with less than $15,000. And he has a mineral lease valued at about $75,000.

And Tipper owns a stake in a real-estate concern (in the form of an S Corporation, so-called because of its tax structure) worth between $100,000 and $250,000.

“Gore’s got assets; he just doesn’t have income,” sums up Tobias. “It could be they’ve put all their money into this real-estate corporation of Tipper’s. It’s hard to tell. But next year, I’d love to give him a full-fledged financial-planning session, and I wouldn’t even charge.”

Whether he takes Tobias up on that depends on what Gore will be doing come Inauguration Day.