Wealth Managers Tout Modest And Tested Strategies

For each of the past 30 years, Jimmy Witherspoon has watched about 50 students earn trust and wealth-management degrees from Campbell University in Buies Creek, the only school in the country to offer such a program to undergrads. "It's a really specialized area of work," says Witherspoon, the program's director. "There are a tremendous number of older trust officers who are about to age out, so banks see a need of bringing in new talent with that skill set. It's managing property, doing very sophisticated financial, tax, estate planning, but at the end of the day, the people who do well in trust are very people-oriented." Recent financial crises have made investors wary and altered their goals. But as employer-defined pensions have been replaced by employee-managed 401(k) accounts, investors need advisers who can develop customized portfolios that manage wealth for the long term. That demand is why almost all of Witherspoon's students have jobs waiting for them upon graduation.

Steve Pike, president and managing director of Chapel Hill-based Investors Trust Co., which he co-founded 10 years ago, has seen retirement saving transition firsthand. Today, the first step is defining an individual's risk tolerance. "I think individuals increasingly have to take responsibility for planning for their own retirement. By not taking enough risk when you're young, you do face the possibility of not having enough funds for retirement."

Charlotte-based Carolinas Investment Consulting LLC has added resources to its financial-planning efforts, Director of Research Oliver Cross says. "We're going to have a whole lot of folks relying on a government that is less and less able to support them. That's what keeps me up at night." Employers should provide some financial education, he says. Banks are stepping up, and he would like to see it taught more in schools.

One lesson is the importance of bonds. "They're a nice way to build balance within a portfolio," Cross says. At first glance, their typically smaller returns aren't appealing. But alternatives such as equities, currencies or commodities increase risk. "It's our job to educate our clients on likely returns that they'll get from bonds. … We're not in bonds for the excitement. We're in bonds for the stability." Clients need to build and stick to an investing plan. "Anyone that's been in the industry knows you can't predict this stuff month to month or quarter to quarter by jumping around, trying to ride the fad. That's a recipe for absolute failure. We try to come up with a portfolio and a plan."

When the market tanked in 2009, many investors pulled what money they had in it. Now the market has increased almost threefold, but the public in general hasn't returned. "They should be looking through the windshield, but they're looking through the rearview mirror," says R.J. Meurer Jr., managing director of investment management at Charlotte-based Fat Pitch Capital LP. "It's like people getting concerned about hurricanes after the fact." He fears that the Federal Reserve's continued quantitative easing will eventually spur inflation, reducing the dollar's buying power. The mere hint of its slowing this past spring caused the market to plummet and the Fed to reverse course. "They either have to slow it down and let the market crash or continue it and get ever-rising values. The hard part about all of these statements is the timing of it. It could be five years or tomorrow."

Bob Newell, CEO of Chapel Hill-based Franklin Street Partners Inc., recalls an old saying that you must stay fully invested to enjoy the benefits of a rising market. In the third quarter of 2008, he saw conservative portfolios with as much as 15% in cash–now it should make up about 5%. If quantitative easing drives up inflation, he'll pull back from bonds. If the European economy is on the upswing, he suggests investing there. "We try at all times to have a really global view on asset allocation," he says. "From time to time, we may adjust asset classes based on how we view the world." One way to do that is through U.S. companies that do business worldwide, such as New York-based Coach Inc., whose luxury leather goods delight Chinese consumers.

Curtis Elliott has seen the recent economic volatility make investors more disciplined. A lawyer at Charlotte-based Culp Elliott & Carpenter PLLC, his clients are taking a gradual and diversified path back into the market. "Small and midsize businesses are sticking to their knitting and developing business in a gradual way. That's a healthy and encouraging thing to see in our economy."