I have spent my entire career in wealth management. It happened by accident. I wanted to be an investment banker, but neither of the regional banks that recruited at my school were interested in me. After graduation, I interviewed for a position on an institutional fixed income desk. Afterwards, I rode down the elevator with an advisor who hired me to be his sales assistant. I began working with high net worth families and never stopped.
I never thought of wealth management as the “slow money” until a friend running a hedge fund referred to me as such. At the time, I was considering an overweight in the energy sector after oil prices crashed in late 2014. At an industry conference, we realized that my multi-year time-frame was completely different than his daily view on stock price movements.
Running the slow money has its advantages. We don’t worry as much about the level or direction of markets in the near-term because we have a fair amount of certainty that stock markets will be higher decades from now. Why decades? Because our clients’ lifespans are our time horizon. Time horizons are even longer for multi-generational clients. Rather than take extra risk to stay above water in the short-term, we can take calculated risks with more certainty in the long-run.
I describe our investment style as the safety money. Our goal is two-fold; preservation of capital and growth to keep pace with inflation. The stakes are too high when managing a family’s entire net worth. Instead of swinging for the fences, we eliminate as many unnecessary risks as possible. This makes the investment experience slow and boring for those accustomed to fast trading styles. It can be like watching paint dry.
Since I joined RWM, I have had the opportunity to work with several fast money clients. It’s a challenge for me because these clients understand markets in a very different manner than I do. They have their hands on the daily pulse. I’m standing back looking through a 30-year lens. There are days that I am not aware of the direction of the stock market until I hear it on the evening edition of MarketPlace. My nose is deep in to cash flow projections, mortgage refinance options, tax returns, and college savings plans all day long.
Believe or not, I don’t pull up a market dashboard in the morning, and I haven’t had a television in my (home) office in over a decade. I couldn’t tell you the share price of the latest hot IPO, and I definitely don’t think in Dow points. I am like the tortoise in Aesop’s tale, consistently putting one leg in front of the other as I inch towards the finish line. My path is slow but steady, and very very boring. Trading to “make” money is very different than investing to “preserve” capital.