Lance Vennard • Mesa, AZ
Sterling Investment Advisor, Inc.

Lance Vennard, CEO of Sterling Investment Advisor, Inc., has had a lifetime of successful and fascinating experiences: star college football player; microbiologist and electromagnetic shielding field engineer; Air Force aviator and combat veteran; top life and securities producer and manager of an extensive sales force; and husband to his junior high sweetheart, Valerie, for 37 years.

And now he’s dedicated to developing holistic financial and investment solutions for families, with a heavy emphasis on actively managed investment strategies.

His advisory firm prides itself on helping individuals and families “who may be overlooked by other companies in the financial-services industry.”

Vennard says, “Our advisors do not just work with clients who have large amounts of discretionary income—they work with everyday people to help them make critical financial decisions that can move them from where they are to where they want to be. Our model is built on independent advice, offering products and services from across the financial product spectrum—not just from a limited number of providers or managers.”

This is especially important for Sterling Investment Advisor’s clients, as Vennard and team are true believers in the benefits of an active management investment philosophy and seek third-party money managers who will meet their often diverse needs.

Vennard says, “It was really about 1999-2000 when I came full circle to active management. I could see the volatility in the markets and more or less instinctively moved much of our client money out of the equity markets.

“I asked one of our large mutual fund managers after the market really cratered why his firm had not seen this coming. And he replied that indeed they had, but that their charter was as a long-only fund with a commitment to staying long at a high allocation. So, while they knew things were going to get rough, they were powerless to do much about it.

“That really cemented things for me. Ever since, I have been committed to third-party active managers for the investment side of our client accounts. I am convinced that is the best way to serve client needs and interests.”

“Using lower-beta approaches and trying our best to diminish portfolio volatility can work in our clients’ favor over the long haul.”

Sterling Investment Advisor’s thriving practice now operates as an RIA on a fee-only basis and relies heavily on the selection of third-party money managers to implement Vennard’s active management vision.

He says, “As one piece of the puzzle, I realized that clients don’t like to pay fees when they are sitting in a money-market fund. So, that’s really where my firm got started; when we created it, I wanted to find a better way to try to achieve returns in all sorts of equity markets.

“We built a model of third-party money managers that are asset-allocated across a variety of investment classes. I also wanted to diversify the different types of managers and the kinds of things they managed. I work hard to manage the managers so that we are in the right areas for our clients. It doesn’t matter if you are the best high-yield bond manager in the world if that is not the sector to be in at the time.”

Over the past several years, Vennard has evolved Sterling Investment Advisor even further, looking for ease of execution, multiple strategies, and management control through selecting a number of third-party managers who can put “the whole package” together under one umbrella.

He says, “We created our own portfolios drawn from different style managers that can move between managers almost like you could move between mutual funds.

“It allowed us to be able to really manage, in effect, the active managers in various sectors. We construct portfolios that are designed to be active, removing out-of-date asset-allocation strategies. We have replaced those mutual funds and ETFs to a great degree with active tactical managers.

“We really think what we are doing is very distinctive. I still work with executives from some very well-known and recognizable brand-name fund firms, but I feel they are at times stuck in the Stone Age, with traditional asset allocations and rebalancing.

“In our model, even if a sector or asset class is not doing what we expected it to do, the manager has the ability to tactically move to cash or go short or possibly use a hedging alternative strategy—instead of sitting there waiting to get hit by a freight train. That is the major benefit of this approach, in addition to being able to relatively easily make adjustments to portfolios on a timely basis.”

Throughout the evolution of Sterling Investment Advisor’s management and strategy approach, to Vennard it is still all about clients: making sure they have the appropriate plan parameters in the first place and, equally important, managing their objectives and expectations.

For example, during the 2008-2009 financial crisis, many of Vennard’s clients showed positive net gains for the period, even as the S&P 500 finished 2008 with a significant loss. But what tends to be a lower-beta approach for most clients can also result in some underperformance versus the S&P in strongly bullish years for equity markets.

But Vennard says, “That is pretty much exactly the plan and what we tell our clients they should expect. We are probably always going to underperform a bull market, strictly speaking. But the flip side is the objective of achieving positive results and avoiding the huge down market losses. That is where using lower-beta approaches and trying our best to diminish portfolio volatility can work in our clients’ favor over the long haul.”

Vennard summarizes, “Our focus is on the client—their unique needs and life goals. We think the reason our clients have been so successful is our commitment to having a one-on-one relationship with them.

“We are not out chasing high-net-worth ‘elephants’ around all the time, but have built our advisory practice around bringing top-tier planning tools and the most-sophisticated financial strategies to everyday people.”