Nothing
 ‘average’ 
about it

James Billingsley • Edmond, OK
Southwest Financial Advisory Group • OneAmerica Securities
Read full biography below

Proactive Advisor Magazine: James, what is your core philosophy in working with clients?

The most important aspect of what I do is working to understand every aspect of a client’s financial picture. My recommendations are based on economic realities and look at lifetime value and maximum protection for assets and income streams. I want to deliver real answers that clients can implement and strategies that provide long-term security, hopefully for multiple generations.

I work in sync with all of my clients, whether individuals or small businesses, to help them articulate their financial goals, review the present state of their financial health, identify gaps, and offer strategies to help guide them up and down the financial mountain. Our network of professionals allows us to take a holistic approach and apply experienced resources in just about any area that a client might need. Insurance programs are an important part of what we do, and we use these in a very strategic fashion. They work hand-in-hand with our planning strategies in other areas such as investment, legacy, and charitable planning.

Can you provide an example of that?

Let’s take a simple hypothetical situation: Say a new client, who has been the primary earner in a family, comes to us with permanent life insurance coverage in place. On his or her death, the benefit is $500,000. Having that type of policy in place, which is not always the right answer for everyone, allows for a different look at income and investment strategies.

For example, if that client favors having some portion of retirement income in a guaranteed product, I may recommend a fixed SPIA—a single premium immediate annuity. Again, this might not be right for everyone, but in this case it could offer the highest return out there. The annuity income lost upon death, in this case, will be replaced by the life insurance benefit. That is the sort of concept we look at in multiple areas of insurance, annuities, and various investment products, and we can try to apply that type of thinking across different generations for a client family.

“There is nothing average about a client’s financial needs. But all clients should consider how to manage market volatility.”

Talk about your investment approach for clients.

The majority of our clients are thinking about retirement, about to go into retirement, or already in retirement. Their accumulation years, in a standard salary sense, are largely over. Let’s assume we have addressed all of their security needs in terms of various coverages for liability, property protection, health insurance, long-term care, and life insurance. The key then is in developing a reliable income stream for retirement, growing their assets if their resources permit, and making sure their assets are not exposed to excessive risk.

Like our firm’s clients, my associates and I tend to take a fairly conservative attitude toward risk. Our clients’ assets have to last for a lifetime. In a very broad sense, we are willing to forego some investment upside to protect on the downside, especially in the equity markets. For this reason, we look to active money managers usually for some portion of a client’s investable assets. I want to use managers who can capture their fair share of the upside in equity markets and provide protection in sideways or down markets. If an active money manager can demonstrate that their program or strategies handle volatility consistently over time, that manager will earn my consideration.

How do you talk about active money management with clients?

I have a variety of concepts and tools I use, but let me give you one of my favorites. It has to do with helping clients overcome some common misconceptions about investment performance. I think it is fair to say that a lot of people talk all the time about averages—whether it is a benchmark’s performance for a given year or average returns over some time frame.

First, I share a pretty famous expression with people—I think many people have said variations of it, including Yogi Berra—“If I am standing in freezing cold water, but my hair is on fire, on average I should be feeling pretty good, right?” Yes, that is an absurd statement, but it starts to make a point for people.

Then I take people through some real investment facts about averages. The best average return for the equity markets over a 30-year period was 1970 to 1999. On average, the market returned well over 10% each year for that period. However, let’s say a retiree took out 10% of their principal each year over that same period to live on. It should be no problem, right? In fact, they should theoretically be building their principal given those average returns.

But that is not the case. It does not matter if they started with $500,000, $5 million, or $50 million. Their account would still be depleted during that period, bringing their principal down to a zero balance. That example gets clients’ attention and introduces the concept of the sequence of returns. It also sets up the conversation about why trying to minimize big portfolio losses is so important and sets the groundwork for a discussion of managing volatility through actively managed strategies.

Great example. What are the key thoughts you want to communicate to clients and prospects about your practice?

It is related to that example; you cannot build a financial plan or an investment plan around averages. You have to base a plan on reality, and reality includes the fact that unforeseen circumstances can occur in the general economy and markets, or to someone’s finances specifically. Successful planning means preparation for contingencies and worst-case scenarios, while trying to build wealth in a conservative fashion. Active investment management is an important part of that, as are all the other sophisticated tools and strategies we have to work with.

We also think there is nothing average about any one client or couple’s financial needs and objectives. We want to deliver the specific solutions that will work best for that client’s situation, delivering those solutions through diverse professional resources. Our record with client retention is excellent, and we primarily build our client base through referrals. This focus on a customized approach has proven successful for our firm for many years.

James Billingsley is a financial advisor with Southwest Financial Advisory Group in Oklahoma City, Oklahoma. In that role, he offers guidance to individuals and small businesses on the appropriate use of investments and insurance products to achieve their financial goals. He particularly enjoys helping community-based banks provide a broader scope of services to their customers.

Mr. Billingsley has worked with a wide variety of clients for over 30 years, starting his career in providing financial advice to customers of banks, credit unions, and savings and loans. He holds life-insurance, health-insurance, and annuities licenses, as well as FINRA Series 7, 63, and 65 securities licenses, which he uses “to help families and individuals get the stability needed to face life’s surprises.”

Southwest Financial Advisor Group offers a somewhat unique business model, says Mr. Billingsley, with affiliated relationships with providers of a wide variety of products and services. These include professionals in college planning, employee benefits, social security strategies, business insurance, and legacy planning, as well as associations with CPAs, attorneys, and providers of outsourced CFO services.

A lifelong resident of Oklahoma, Mr. Billingsley graduated from Oklahoma Christian University, where he received a bachelor’s degree in finance and pre-law. He was on the school’s varsity tennis team and is an avid tennis player and golfer.

Mr. Billingsley and his wife reside in the Oklahoma City area and have two adult children and three grandchildren. They are “thrilled at a recent new addition to the family.” He is a member of the Business Advisory Council at Oklahoma Christian University, is active in his local church, and is a supporter of several charities, including Reaching Souls International.

Disclosure: Registered representative of and securities offered through OneAmerica Securities Inc. Member FINRA, SIPC, a Registered Investment Advisor. 1433 NW 150th St., Edmond, OK 73013, (405) 348-8484. Insurance Representative of American United Life Insurance Company (AUL) and other insurance companies. Southwest Financial Advisory Group is not an affiliate of OneAmerica Securities or AUL and is not a broker-dealer or a Registered Investment Advisor.

Photography by David McNeese