Larry Mathis, CPFA • Lake Oswego, OR
Pearson Financial Group • Osaic Wealth Inc.
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Proactive Advisor Magazine: Larry, what are your main goals in working with clients as an independent financial advisor?

​My goal is to meet each client’s unique needs while helping to educate them on the changing landscape of the financial world. I work with a team of professionals who offer a wide range of financial resources and experience. This helps me to provide objective and reasoned solutions to my clients.

Many of my clients are at a life stage where they are starting to think seriously about retirement or are already retired. Preparing for that next step in life isn’t always easy. I believe the combination of experience, professionalism, and access to a variety of products and services can help them meet their financial goals, estate strategies, and insurance needs. I am also happy to provide financial guidance outside of traditional investment strategies, including helping to navigate important real estate decisions.

Talk about your planning process.

I focus on a four-step process:

1. Helping clients identify appropriate financial goals, paying special attention to any top-of-mind concerns. My goal is to make those concerns far less of a worry point over time.
2. Showing what is currently being done to address their goals. Then, we present our detailed recommendations, including different options, for strategies that could offer a more favorable and higher-probability opportunity to meet the desired goals. For younger clients, this can have an exponential impact on having a more positive financial future.
3. Identifying any gaps and offering solutions to fill them. We take a holistic view of financial planning. A client might work with our firm to develop a solid retirement income plan, but that means little if it is at risk due to inadequate protection planning now and in the future.
4. Helping clients prepare for milestone events in their lives. Whether it’s college planning, a major lifestyle change such as buying a new residence or second home, welcoming new additions to the family, charitable giving, or legacy planning, we can help clients identify the appropriate resources and think through strategies to help them achieve their goals.

This process requires our firm to focus on providing highly personalized service, applying modern insights for planning and investments, and having the capability to address multiple client needs. I believe in continuing education to stay on top of new trends in the industry, such as how AI is impacting business models and investment opportunities. I work closely with my firm’s associates and many different third parties, including proprietary investment managers and advanced markets resources, bringing in specialized expertise where needed.

“Clients need to be prepared for their portfolios to take defensive positions in down markets.”

Discuss your investment philosophy as it relates to client portfolios.

My investment philosophy centers on the principles related to risk management for client portfolios. I was once responsible for training other advisors throughout Oregon on investment portfolio construction and related issues. This responsibility prompted me to further immerse myself in investment theory. There is truth to the adage that the teacher is also the student. When you train someone, you also learn a great deal or reinforce and refine what you already know.

I have always been a student of the markets and understand the boom-bust nature of market cycles. History tells us that these cycles will repeat over time, and it is important for an advisor to guide clients through full market cycles with confidence. We do not want emotion to take over, causing panic in down markets or overconfidence in euphoric markets. I believe in the value of rules-based investment approaches that can help mitigate volatility through active management and, where appropriate, the use of sophisticated hedges and buffers. Diversifying by strategy style can be just as important for portfolios as diversifying by asset class.

When advising clients, especially those near or in retirement, it’s important to prioritize the protection of their assets when considering investment plan alternatives. Clients need to be prepared for their portfolios to take defensive positions in down markets and, just as importantly, to be positioned to take advantage of markets that are trending higher. In general, I tell clients that our goal is not always to capture all of the upside of a bull market but also to avoid the worst of bear market returns. Active investment management, with a focus on controlling risk, plays an important role in most clients’ portfolios.

Larry Mathis with youth team members Waylon and Reagan Boardman.

How do you educate clients regarding the benefits of active management?

I try to educate clients throughout the planning process, but a key element is discussing risk and determining the appropriate risk assessment for each client. Since a lot of my work involves married couples planning their retirement together, it is important to involve both spouses in the risk discussion. I ask them to fill out a basic questionnaire independently, and then we discuss the results together. My goal is to find common ground that meets each person’s comfort level. This method works better than asking a couple to fill out a questionnaire together, which may not reveal their individual feelings—they might think differently about money and investments.

Once we have established a clear risk assessment and identified the degree of market volatility a client or client couple can comfortably live with, I explain the differences between passive and active management. This topic comes up frequently, given the publicity that indexing has received over the past several years. One of the core concepts I discuss is the sequence of returns. If you are approaching or already in the distribution phase of your life, a large portfolio decline will have a bigger impact than if it occurred when you were younger.

While an investor can theoretically recover from this in their early years, it has far more impact during retirement. Just because the market drops 30%, 40%, or even 50% in a given year does not mean your retirement income needs for the next 20 to 40 years go away—you still have to fund them. What if the first year without a salary turns out like 2008? The math will not be in your favor.

Providing a client with a comparison of the type of portfolio they may have used in the past versus a portfolio of managed strategies that I construct can be very effective. While it is impossible to guarantee any investment outcome, I feel comfortable telling clients that we can create an investment approach they can stick with over the long term. Yes, adjustments may be necessary along the way, and we constantly analyze performance. But this approach is very attractive for most people—tempering the volatility of their portfolio without sacrificing returns over complete market cycles.

What message do you want new clients to take away regarding a managed portfolio approach?

I tell new clients that this is not the world of their grandparents or even their parents. What may have worked in the last century in terms of standard portfolio allocation faces unique challenges in today’s investment environment. We have new technologies and increased global interconnectivity. What happens in a small country in Europe or an overseas bank, for example, can have a huge impact on global markets.

There is geopolitical risk, systemic market risk, interest-rate risk, inflation risk, and several other factors that need to be prudently managed. Despite the market’s gains since the great financial crisis, many clients are rightfully concerned about what the future holds—especially in terms of market volatility. My number one goal as an advisor is to help clients build planning and investment solutions that will work to meet their specific, customized needs while applying modern techniques for risk management. This message resonates with clients and will continue to be an important element in building strong client relationships and growing my practice.