Fighting the temptation to sneak off to Disney World, I made my way over to the conference, where I ran into former cover star Terri Spath (below), chief investment officer at Sierra Investment Management.
Los Angeles-based Sierra oversees around $3 billion in assets under management and advisement. As part of her role, Spath runs two funds of funds – the $529.4 million Sierra Tactical All Asset fund and the $986.9 million Sierra Strategic Income fund – as well as around 300 separately managed accounts based on the same two strategies. The Sierra Strategic Income fund invests in between 20 and 25 funds at any given time, and the Sierra Tactical All Asset fund invests in between 25 and 30.
Spath had been glued to the Winter Olympics and had even discovered a new sport – skeleton, where competitors hurtle down an ice track at speeds of up to 80 miles per hour.
Spath said the sportsmen and women who do this manage to survive by taking the course one corner at a time; an approach, she added, that ‘can work for investing too.’
‘A good motto is to control what you can control, which is risk. In other words: “Take it one curve at a time,”’ Spath said.
She currently sees opportunities in certain parts of emerging markets debt, municipal bonds and high yield corporate bonds, as well as a handful of more unique parts of the bond world.
After a morning of meetings and panel sessions, I went for lunch. As luck would have it, I sat at the same table as one of the most successful RIAs around, Ric Edelman (below).
His firm, Edelman Financial, manages $21.7 billion in assets for more than 35,000 clients across the country. The firm was founded in 1987 by Ric and his wife, Jean, to provide financial planning and investment management services for ordinary people.
Edelman told me: ‘We committed ourselves to serve all investors – regardless of how much or how little money they had to invest. We focused on providing financial education, because Wall Street was and still is notorious for bombarding consumers with intimidating, confusing jargon that too often is meant to obfuscate rather than inform and educate. By teaching people how money works, in plain English, we distil complex financial concepts into simple language, helping clients create financial plans to meet their goals.’
Edelman Financial provides each client with a diversified portfolio featuring a broad range of global asset classes and market sectors, using low-cost ETFs and index funds.
The Edelman Managed Asset Program (EMAP) is an asset allocation model designed for a wide variety of client needs and risk tolerances. Edelman’s planners recommend one or more portfolios based on a thorough examination of a given client’s situation. Approximately 40 investments are used in EMAP, with each portfolio containing between six and 26 funds. The investments that Edelman includes in EMAP are all low-cost, and none charge any commission or 12b-1 fees.
‘We use passively managed, market-based funds and do not recommend funds that are actively managed,’ Edelman said.
He had spoken earlier in the day on a panel about blockchain technology and cryptocurrencies, a theme he expanded on
at lunch. He argued that advisors needed to embrace these rather than fear them, or risk being left behind.
‘As I travel the country speaking at industry conferences, I get to talk with thousands of advisors. I find most are unfamiliar with the impact that exponential technologies are going to have, while many others are in denial as to the profound impact [these technologies] will have.’
After networking with several RIAs from around the country, I had the chance to sit down with Jim DeCarlo, chief executive at StratWealth, and the rest of his team (below).
Founded in 1991, StratWealth provides independent financial planning and wealth management services. The RIA has more than $1.3 billion in assets under management. Anchored in planning, the Maryland-based firm serves more than 820 families and 100 qualified retirement plans.
Like Edelman, DeCarlo has a firm eye on the future. ‘Most advisors around the globe hold on to legacy systems and old ways until they find a better approach, or until they’re forced to change because the world has moved on,’ he said. ‘At StratWealth, we have a process for paying attention to industry issues and for getting in front of the curve.’
When it comes to portfolio management, StratWealth’s advisors are not restricted by a list of investments and can choose from a broad range. When a client joins, the advisors first define the client strategy, including asset allocation, risk and any income needs. This is then handed over to the portfolio management team, which builds the portfolio using a suite of investments approved specifically for each sector.