A game plan for winning

Garry Dippel • Dallas, TX
Geneos Wealth Management
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Proactive Advisor Magazine: Garry, talk about your overall philosophy when it comes to working with clients.

Sports have always been a big part of my life. I was a four-sport athlete in high school and went on to play Division I baseball. I was scouted by the pros and played in the Chicago Cubs organization. I still officiate high-school sports and am very involved with a special ministry called Coaches Outreach.

Athletics taught me a lot of great life lessons: the importance of preparation, how you must work consistently toward your goals over time, and why it is necessary to set long-term objectives that will move you toward achieving what is most important to you. Those attributes or lessons can be directly translated to the work I do with clients. In fact, my website goes under the name of “Make Plans to Win,” and I tend to use a lot of sports analogies in explaining planning and investment concepts to clients.

One analogy I use relates to how I form a working relationship with clients and, in turn, with my trusted outside resources. I tell the client they are like the owner of a professional sports team. It is their hard-earned money and, ultimately, they have the authority and the responsibility to make the decisions.

But they have hired me as their general manager and head coach. It is my job to do everything in my power to put together a sound plan of action and to assemble the highest-quality coordinators, assistant coaches, and players to help their team achieve consistent success. For example, I conduct an extensive evaluation and selection process of third-party money managers on behalf of my clients. I will recommend the use of the most appropriate ones that fit the investment needs for a specific client. I think this simple analogy of assembling a great team makes a lot of sense to people.

“It is my job to do everything in my power to put together a sound plan of action and to assemble the highest-quality coordinators, assistant coaches, and players to help [my client’s] team achieve consistent success.”

How do you approach the planning process?

I have clients of all ages, but the majority are thinking about retirement or already in retirement. Making sure they do not outlive their assets or their ability to generate retirement income is generally their number one concern.

I use an excellent software program that helps me guide people through the planning process. It is essentially a lifestyle analysis and plan. We look at breaking down the answers to several big questions with clients: 1. What are their current resources, and what will they likely look like in the future? 2. What essential income needs will there be in retirement? 3. What things do they want beyond the bare necessities, such as helping children and grandchildren with education expenses? 4. What are their aspirations for the future—their true wish list? The last question might cover things like buying a second home or relocating; plans for extensive travel; or leaving a meaningful legacy to family, church, or charity.

One of my favorite sayings is “a goal without a plan remains a wish.” Our goal is to make those wishes become a reality if at all possible. In working with the client to answer these questions, we identify the appropriate inputs, crunch the numbers, and run Monte Carlo simulations, all using the software.

What to do with that information is part art, part science, and part experience. I will look at adjusting some factors and assumptions to develop a plan that has a reasonably high probability of success. What happens if a client or one partner in a couple retires earlier or later? What about different Social Security claiming strategies? What happens if assumptions about savings rates, contributions to retirement plans, spending patterns, or investment returns are tweaked? This becomes an interactive process with the client, and I try to make sure they are comfortable with the inputs. They can then take ownership of the plan. This ideally becomes a living plan that can be adjusted over the years as life circumstances change, which they inevitably will do.

When the plan is complete, how do you execute on the investment side?

That is where the team concept really comes into play. Any leader, coach, or business person is only as great as the team they surround themselves with. That is why I consider it my job to put the best money managers and investment vehicles to work for each client.

Virtually all of my clients’ investments are placed with outside money managers. I spend a tremendous amount of my time identifying the right managers, conducting due diligence, and then letting these talented professionals do what they do best. Different managers may have very different approaches, but the key common factor that I look for is the ability to apply risk-managed strategies to client portfolio strategies. I am most concerned with managing downside risk first. My clients for the most part were able to avoid the large drawdowns seen in the markets during the early 2000s and the 2007–9 meltdown. That is not only important from a pure mathematical perspective in seeing their portfolios grow over time, but in managing the psychological aspect of having clients stick with an investment plan through various market cycles.

But I also have to set realistic expectations with clients, and no manager’s performance is perfect. Let’s go back to the sports analogy. A great team with a great plan of attack is not going to win the Super Bowl every year—that is just not possible. In fact, a great team might have the occasional mediocre season. But they are not going to have many of those, and they will seldom have a truly poor year. That is how we should also view the realities of investment performance. I emphasize to clients that one year’s performance is not what they should be looking at. What counts are the cumulative results over time and the progress they are making toward their goals.

Does third-party money management help differentiate your firm?

On balance, it does. Since 2008, I believe advisors have shown much more interest in seeking out new ways to manage client money. There is a greater focus on risk management for client portfolios. So, I do not think our use of outside money managers is truly unique, but I do feel I bring a great deal of experience to this aspect of the business.

Over the years I have met with dozens of money managers or have attended their conference calls or online presentations. I truly enjoy digging into what they have to offer, hearing about their performance, and understanding their philosophy. It is like that head coach interviewing an offensive or defensive coordinator—we have to be in sync and understand each other extremely well.

Through this process I have developed a good grasp of the approaches that managers can bring to work for our clients’ benefit. For example, some managers have strategies that can go inverse the market and work exceptionally well in down markets. Some have specialties in certain types of asset classes or sectors, while others offer broader holistic portfolio approaches. Some managers will have far more aggressive strategies available than others.

The key is to evaluate what managers are most appropriate for any given client and their specific portfolio objectives and risk profile. I think this approach is an important component of my helping clients to design a game plan with strong probabilities of success.