A Conversation with
Head of BB&T Wealth Portfolio Management
Please provide a brief overview of your background, especially in the field of investing.
I graduated from the University of North Carolina in 1988 and earned my MBA from Wake Forest University in 1992. I have been interested in investments as long as I can remember While the statistical and mathematical side of the markets is important and gets a lot of the press, you must also be able to relate to people on a personal level. At the end of the day, I find it immensely satisfying to help people build investment strategies that are consistent with their objectives and individual personalities. It feels great to see these strategies come to fruition and see the financial peace of mind a solid plan can give people.
Why did you choose BB&T?
For me it all starts with BB&T’s strong and unwavering focus on values and doing the right thing for our clients. I think we have all seen in these last few years that not all institutions have a strong emphasis on values. BB&T has a very strong senior leadership team, and I really like the emphasis that BB&T puts on developing talent and leadership, and on empowering its employees to be advocates for all of its clients.
Give us an example of an experience that helped form your perspective on investment strategy.
I know it is a popular answer from investment professionals, but 2008 made a strong impression. And it was not simply the market decline. You may recall that there was a pervasive sense of dread that it was somehow different this time; that this was more than just a cyclical event. There is a saying, “When the tide goes out you realize who is swimming without a bathing suit.” In other words, the true test of one’s character and stability is borne out when times are hard. The financial events in and around 2008 put a stress test on the financial system as a whole.
Everyone suffered, and many investors were in panic mode. One of the most satisfying accomplishments of my career was that in the midst of all this turmoil, our clients remained relatively calm. This was a strong endorsement of our core belief in hiring the very best Portfolio Managers, providing them with world-class technology, and placing them out in the regions next to our clients. Some competitors have attempted to gain efficiencies by centralizing their investment functions, but our Portfolio Managers are out in their communities with their clients, educating them on current market conditions, and working with them to build individual, customized investment solutions that meet their unique goals.
The market corrections of 2008 drove home the necessity of having a clear and defined process, great technology, and especially the importance of the bond that is formed between good Portfolio Managers and their clients. Our clients knew that our well-trained, objective investment professionals would walk with them every step of the way. This partnership saved some clients from making rash decisions in the darkest days of the market pull-back – decisions that would not have been beneficial to their financial well-being.
How would you describe BB&T Wealth’s approach to managing investments?
It starts with truly knowing the client. To suggest investment solutions to a client without knowing their circumstances is analogous to prescribing medicine to a patient before the symptoms are known.
There are two key premises. First, you must have experienced investment experts working directly with your clients. Second, these experts must be objective. Many investment firms say that their investment experts are objective, but the proof is how they are compensated. Our Portfolio Managers’ compensation is not tied to their investment recommendations. Their investment decisions are based solely on the client’s specific circumstances and objectives.
Next, you must give your Portfolio Managers access to great investment managers and tools to evaluate them. We have a rigorous, well-defined process that seeks to identify “best in class” managers who have consistently added value through a well-defined process. In summary, we seek to understand our client’s individual needs and situation, integrate this information into a customized investment plan, utilize some of the world’s best money managers, and provide the client with a dedicated team of skilled Wealth professionals to pull it all together.
What is it about BB&T’s approach that appeals to most high net worth investors?
An independent investment research firm recently completed an in-depth study of Wealth clients. The study asked respondents, “What do you want from your investment advisors?” The results read like an advertisement for our Wealth process. High net worth investors felt it was crucial to have sophisticated advisors. As I mentioned earlier, we have made significant investments in our Portfolio Management group. Our Portfolio Managers have experience, expertise and proven relationship management skills. Our Portfolio Managers don’t sit in their offices all day. They meet with clients on a regular basis.
High net worth investors also felt it was imperative they were getting independent and objective advice. It is important to note that BB&T compensates our Portfolio Managers in a way that does not cloud their objectivity. High net worth clients felt it was important that their investment process was transparent. We have clearly defined manager selection criteria, and our investment results are calculated by a third-party provider. And last but not least, high net worth clients wanted an integrated approach that took into account all of their holdings and did so in a tax and cost efficient manner. Working in a team-based approach with trust experts, planning experts and advisors, we look at a client’s entire picture, using leading edge technology to holistically manage overall portfolio risk in a tax-efficient manner. Tax management will likely be even more important going forward, and our process evaluates the tax cost of every trade, and does this in light of each client’s individual tax situation. In other words, it is not what you make that is important, it is what you keep.
How does the current economic environment compare to other difficult times in your career?
There will always be volatility due to economic cycles and changing investor appetites, but I think the level of investor worry has broadened to include the fundamental financial health of our country. I am asked as many questions about political topics as I am about investment ideas. The debt burden, combined with a polarized political environment, is concerning for many investors. As a result, clients are generally more uneasy about the long-term health of the market than they have been previously. I think the mood has turned from a return on principal to a return of principal, as evidenced by the large balances in money market paying very little interest. The other thing I would offer is that historically bonds have been a relatively safe place to park money in uncertain times. Given the low yield environment, some investors have extended maturities and lowered their credit quality standards in an effort to attain higher yield. What may have seemed like a way to reduce risk and generate income could backfire if rates rise.
What key investment tenets do you emphasize even in difficult investing environments?
First, the worst time to make important investment decisions is in times of crisis. You should aim to make strategic decisions when you can apply clear-headed logic to your situation. These are also the times to decide how you should, or should not, react to significant market swings.
Second, understand that some people profit by driving investment volume by creating fear and uncertainty. Recognize that not everyone is on your side, and try not to get caught up in near-term noise.
Third, become a student of market history. This can help you avoid emotional or short-sighted reactions. By looking at historical reactions to market fluctuations, you will get an idea of how human psychology can distort the market beyond fundamental value. Fourth, never be afraid to ask questions about investments if you don’t understand a holding or if its behavior just doesn’t make sense. Investment mistakes can be averted with simple questions.
Last, the greatest investors have keen awareness of their strengths AND their weaknesses. Seek to understand your weaknesses and put controls in place to keep them in check.
This article originally appeared in the Summer 2012 issue of Wealth magazine.