In this first video, Goodloe talks about the genesis of our investment management business and the value of advice we bring to our wealth management clients.
Value of Advice for Wealth Management Clients from Porter, White & Company on Vimeo.
This video addresses the retirement savings challenge — knowing how much clients need to save and how to invest in order to reach their retirement goals. This challenge, which many of our individual clients face, is similar in many ways to challenges faced by our institutional and endowment clients, and our thoughts on each inform the other.
My name is Goodloe White. I am the president of Porter, White & Company. We are a small investment bank and investment management firm. We started in the early 1970s, really just raising capital for small businesses and institutions and, over time, these clients asked us, well you’ve helped us raise money, can you help us invest it too, and that was really the genesis of our investment management business which we started in the mid to late 90s.
Our typical clients tend to be professionals or small business owners at or nearing retirement and a lot of people realize that as they’re getting older they’re running out of time to save for retirement and so therefore the decisions they make with their investments are much much more important and the consequences are much greater. So you first have to help them understand sort of their base goals and objectives and then help people understand how much money you actually need in order to be able to retire.
So if we look at a life cycle of an individual, we like to think of it in terms as you have human capital and you have an investment capital. We use our human capital which is our ability to have a job, earn a wage and save money, through savings convert our human capital into investment capital. It’s really not until the last five or ten years before someone retires that the decisions they make about their investment capital become more important than the ones they made about their human capital. That’s the time that we usually start talking with clients more seriously because we have to look at when can you retire.
So one time we had a client come in, perspective client. We went through our normal process of understanding all of their assets and liabilities, their house, their investment portfolios, their other savings, any future inheritance, and we looked at what are your spending goals in retirement and the unfortunate answer was is that on your current track we don’t see you getting there.
And that’s where human capital comes in because they both really matter. You have to manage your investments well and manage your human capital. So for this person that became a client, he figured out a way to transition out of a job that would have had declining earnings into one where he enhanced his earnings significantly. It’s better to have the discussion about retiring and determine that you have enough investment capital before you decide to do it, because working even just one or two years longer can make all the difference of having a better retirement.
One thing I hear back from our clients is they expect us to tell them the hard truth. If you don’t want to hear the truth and you don’t want our objective advice, then we’re not the right advisor. We think that only by giving our frank candid advice can we develop long-term relationships with our clients.
And so if I look at the value of the advice that we provide clients, a lot of it is that conversation we have with them that allows us to better understand what their needs are, allows us to understand what risks they’re willing to take and to help guide them through what I think is a very difficult challenge.