David Salley • Wellington, FL
Salley Wealth Management • Ameritas Investment Corp. (AIC)
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Proactive Advisor Magazine: David, talk about starting your firm and how your practice has evolved.

I made a major career change several years ago and am very pleased with how that has worked out. I was trained and worked in air traffic control in the Navy and then went on to earn my undergraduate degree and dual master’s degrees in aviation management and safety from Embry-Riddle Aeronautical University in Daytona Beach, Florida. From there, I worked in the aviation industry in finance and business development for just over four years and also did some teaching and baseball coaching.

While I enjoyed both positions, I knew I wanted a career that allowed me to work closely with people in the financial industry. I always had a very strong interest in finance, investing, and the markets. I started investing in my teens, had a financial advisor at an early age, and became someone people would informally ask for guidance about their 401(k)s or investments. My advisor was actually the person who set the wheels in motion for me to be recruited into the industry. My first position was with a national firm where I received some professional training, but I ultimately decided their business model was not the best fit for me.

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I wanted a role where I could build deep and long-lasting relationships with clients and provide holistic guidance for their overall financial plan and investments. I looked at several different options and decided that becoming an independent financial advisor was going to be the best model for my objectives. After conducting a considerable amount of due diligence and investigation, I found that Ameritas would offer the kind of broker-dealer resources and support I was looking for. I have the freedom to build my practice according to my vision while having access to an impressive selection of products, services, and practice management support options.

What kind of clients do you work with today, and what are your product and service offerings?

We are a full-service portfolio-management and retirement-planning firm, but we also get into many areas beyond that. Our services include portfolio reviews, fee-based asset management, tax-sensitive planning, insurance products such as life insurance and annuities, college-savings strategies, retirement-income planning, high-net-worth planning and management, and a variety of services for small-business owners.

My personal philosophy is that I will basically work with anyone, any family, or any business owner who expresses a sincere desire to improve their financial situation, is willing to be coached, and who values the advice and guidance our firm can deliver. I work with high-net-worth clients, but the bulk of our clientele is in the mass affluent segment—people who have worked hard all of their lives and need to develop strategies for their financial future. I also work with clients who have a relatively low level of assets or are younger and still very much in their accumulation years. That makes sense not only because it is the right thing to do, but also because they can grow and succeed along with our firm in what will hopefully be a very long relationship.

I am very active in our local community through several civic organizations; our church; local sports activities, including my role as a high school baseball coach; and an executive club I belong to. This affords a wonderful avenue for networking. This allows me to get to know new people, tell them what I do for a living in casual conversation, and plant the seeds for the possibility of working together in the future. I meet many people who have serious concerns about their retirement-planning needs, and that is a natural fit with our firm. It is also a two-way street, and I am always looking to help others with mutual referrals or helping them build their network. I am also interested in acquiring the businesses of advisors who are looking to retire. That is an ongoing objective for our firm.

Please describe how you approach investment management for clients.

Every client is different, and the fact that we build customized investment approaches for each client is a major benefit of working with our firm. There are, however, certain factors that remain constant for all clients.

• We believe in a goals-based approach to investment management. We spend a lot of time getting to know our clients’ short- and long-term objectives and then recommending a personalized investment plan that we think can help them progress toward those goals. For retirement-planning clients, I like to work backward, looking at reasonable estimates of a client’s or couple’s likely expenses in retirement and comparing that to their known sources of income. From there, we can develop the type of investment strategies that will help them fill the gaps.
• In developing an investment plan, understanding a client’s risk profile, both qualitatively and quantitatively, is critically important. I have a twofold approach with tools that approach the evaluation of client risk tolerance very differently. When I combine the analysis of those tools with my own observations of their financial situation, time frame, and objectives, I think we develop a rich picture of where they should be on the risk spectrum.
• We generally will use a blended, strategic portfolio-allocation approach. This again is highly dependent on a client’s situation, but I will speak in a general sense about higher-net-worth clients. These clients are interested in both growth and capital preservation. We will help structure an allocation that will accommodate both of those goals. One growth portion of the portfolio will be an allocation to carefully screened stocks that are usually blue-chip names or sector ETFs or mutual funds. This will be more of a passive, longer-term investment.

The balance of the portfolio might be allocated to a third-party money manager who has a wide variety of strategies. Some strategies might be highly tactical in nature and others could be strategic. They could be anywhere in a range from very conservative to more aggressive. The difference is that all of these strategies are risk-managed. They are designed to mitigate volatility and are based on technical indicators and algorithms. I explain to clients two concepts in this regard: upside capture and downside capture.

This is an educational process where I will take clients through market cycles, explaining that active strategies are intended to manage exposure to severe downside risk in bear markets and to capture opportunities in positive market trends. They might be able to go to 100% cash if the market environment calls for that, or use leverage, or even go inverse the market.

We can look at the bear market of 2008–2009, where some of these strategies had very minimal losses as the broad indexes were losing more than 50% at the worst point. These strategies were then able to get back in the market when conditions started to recover. There are no guarantees with any strategy of course, but in this example, the positive contrast to an indexed strategy is quite striking. Clients appreciate that their money is being managed by professional firms with a research team whose only job is developing the models for these strategies and implementing and monitoring them. The strategies can also encompass a variety of asset classes, so there is a strong element of further diversification in that regard, along with the fundamental risk-management emphasis.

“The fact that we build customized investment approaches for each client is a major benefit of working with our firm.”

What would you like clients to say about your practice if they were to refer you to a friend or associate?

I believe that our values are at the core of everything we do for clients. We have a mission statement we share with our clients, and these are the beliefs we operate under every day.

The first value is honesty, which simply means operating in the best interests of the client at all times as a fiduciary and clearly communicating the trade-offs of risk and reward in all of the recommendations we put forward.

The second is transparency—part of which is helping to ensure that all costs and fees are understood by clients.

The third is diligence, as we are committed to providing knowledgeable guidance and professional service to our clients. We conduct regular reviews with clients of their overall plan and the performance of their portfolios and will be proactive in recommending changes as their life circumstances warrant.

I personally would like clients to tell their friends, family, or business associates that our firm goes above and beyond from a personal service perspective. I believe that has helped lead to the development of strong relationships that should continue to flourish for many years.