Active investment management’s weekly magazine for fee-based advisors

Dennis Yamasaki • Lynnwood, WA
Affirmative Financial Services

Dennis YamasakiThe technology industry is growing tremendously in the Seattle area, and I am doing a lot of prospecting with relatively younger people. These individuals have the potential for significant earning power over their lifetime and will need the services of a wealth advisor as they progress and grow in their careers.

I frequently go out to various networking functions for the new technology area. I was an engineer for many years before entering the financial-services field, and I find that I relate well to the people at these events. If I make a contact, I try and schedule an informal coffee meeting. I will let them know what I do and see if I can be of help to them in any area, whether it is with an introduction, real-estate advice, or just about anything. It is a very low-key process.

If they show an interest in my specific services and want to dive into a deeper discussion around investments, that is a great opportunity to explain how an actively managed investment approach can work. These are numbers people, by and large, so we will go through a hypothetical situation.

I will pick an asset level of $100,000 and show how an actively managed portfolio would have grown from 2001 to today, factoring in real strategy results and no distributions. I will assign a middle-of-the-road risk profile for that strategic allocation. Just for fun, I call this the “Mikey Moderation” portfolio strategy. I compare that to a typical allocation mix for a buy-and-hold passive mutual-fund strategy.

The results are usually very surprising to people, with the actively managed portfolio outperforming the passive strategy. I emphasize that there is no guarantee of the results they may achieve in the future, but also that these are real strategies with verifiable track records. The overall message is simple:

  • Managing risk can have a big impact.
  • You do not have to go for home runs or try to beat the market.
  • Compounding works in your favor over all kinds of market cycles.
  • It is critical that you avoid periods of big market losses.

This audience can very easily see the logic in this approach and also the fundamental mathematical principles. It is a generation that wants to be in control of things. They appreciate the fact that many of the strategies I use are quantitatively oriented and can react to and adjust for market conditions. This is a very effective way to help differentiate my practice.

Disclosure: The views and opinions are those of the interviewee only and do not represent or endorse any product, service, or affiliated firm.