The greater the turmoil in the markets and the economy, the more Don Wilson’s phone rings.
The clients of Atlanta-based Brightworth, where Wilson is director of portfolio management, are not casual observers. Retirees and execs, business owners and entertainers, heirs and athletes, they give the company a lot of money to manage.
And with the economy getting frequent mention amid the constant chatter of cable television, clients wonder how they are doing. Wilson is used to it.
“Part of what we do as advisers is to help people through what can be turbulent markets,” he said. “Our firm has been doing this a while. And over the last decade, we maintained a 98 percent client retention ratio.”
Q: What have you been hearing from your clients?
A: Our clients are like everyone else. They see what’s going on in the stock market and they have concerns. They have concerns about what’s happening in Europe. About the perceptions of what is happening in the U.S. economy.
Q: So the stock market is the trigger for those concerns?
A: Or the economy.
Q: How does the worry affect what you do with your clients’ money?
A: Since the stock market is volatile, that is the more volatile piece of a portfolio. But usually you don’t need that for many years, so you can weather the change. You’ve got to have the right time horizon. You’ve got to be able to say that I have that money investment and it’s there for maybe seven years ... or 10 years.
And we break our portfolio into a number of components. There is a fixed income portion. There is cash. There’s intermediate-term bonds. There’s an alternative component ... where the managers are using trading strategies and hedging techniques to take the volatility out of investments as much as possible.
Q: Are you implying that having the different components reassures clients? That diversity relieves anxiety?
A: I don’t think I’d go that far. When the stock market is as volatile as it’s been, it raises concern for our clients.
Q: Do you put client money in Europe?
A: We’ve had investments in Europe as part of our portfolio. That was something that we reduced earlier this year.
Q: When CNBC became high-profile, it was as if we started covering business and the economy the way we covered sports, day to day, hour to hour. Does that intensify the challenge for you — when you want people thinking about the long term?
A: Yes, I think that’s right. The headlines — what we are seeing in the news every day — are just gloomy and pessimistic. One of the things we are trying to do for our clients is give them peace of mind. Watching a lot of cable news financial shows is often counter-productive. What we want is to have our clients delegate the management to us. We want them to let us do the worrying for them.
Q: Have we gotten past worries of another recession?
A: We think there is a possibility of recession but we hope we can avoid it. My personal expectation of the chances that the economy goes back into recession is less than half — maybe one in three. Maybe 30 or 40 percent.
Consumer confidence has really taken a hit. And when you have such low confidence it can become a self-fulfilling prophecy. If we can just get past this, if you see the jobs pull up, if we just don’t have bad news for a while, people would feel better about things.
Q: Should the Federal Reserve be doing more?
A: The problem is not that interest rates are not low enough.
Q: So what is the market telling you about the economy? If not the market, what should you watch for clues?
A: The stock market is a leading economic indicator, but it is pretty volatile. It does seem to predict the economy at some important moments. ... And interest rates are typically an economic indicator. But because of what the Fed is doing, I don’t know that it has the same predictive ability.
Building permits are often good to look at, but we are in such a tough housing market with so many foreclosures. So I am not sure permits provide the same prediction [value].
We are looking at a whole host of things and trying to create a mosaic. What’s going on with housing, with interest rates, with manufacturing. ... I can give you a list of 25 things, but for the lay person, it’s hard to say there’s just one thing to watch.
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Meet Don Wilson
Family: Married with children ages 7, 5 and 2
Lives in: Tucker
Age: 40
Education: Georgia Tech, degree in electrical engineering
Most recent book read, fiction: “The Defector” by Daniel Silva
Most recent book read, nonfiction: “Security Analysis” by Benjamin Graham and David Le Fevre Dodd
About the Author
