Making the case for risk management

Mary Salisbury, CPC, QPA • Wilmington, NC
INVEST Financial Corporation
Read full biography below

Proactive Advisor Magazine: How did you transition to becoming a financial advisor?

I worked for about 10 years in positions of increasing responsibility as a paralegal specializing in employee benefits and retirement planning. By the end of that phase of my career, I was involved with highly technical litigation issues and played a key role in many major cases. Along the way I received several certifications in the employee benefits and pension areas, developing a lot of specialized knowledge about many areas pertaining to workplace and retirement issues.

I later joined my former husband as a partner and administrator for a very successful bankruptcy trustee practice. I administered over $20 million in trust accounts and handled reorganizations, court pleadings, and asset sales and auctions.

Throughout my business career, I was always very interested in investments for both my personal and retirement accounts. Though I was semi-retired for a period, it became clear to me that my legal and business background and experience with investing could come together nicely as a financial advisor, especially as one well-versed in many issues around retirement planning. I fully made the commitment a few years ago, obtained my securities registration, and was recruited by a major financial-services firm. I appreciated that training and experience but, frankly, thought that I could offer more to clients on my own.

Talk about your experience with investing.

I have been successful in managing my personal accounts and have always taken it seriously. I conducted a lot of my own research over the years and was originally what might be called a value investor. I was able to survive the 2000s, but that was a real eye-opener for me. I had been educated to think that you put money into the stock market and, even if you changed fund, sector, or stock selections, it was basically a stick-it-out-for-the-long-term proposition. I saw the damage that kind of thinking inflicted on my friends, relatives, and associates. I have since taken a broad philosophical approach to investments.

How does that pertain to your work with client investments?

My goal is to help clients to protect the wealth they have accumulated so far, and to carefully build portfolios based on their goals, time horizons, and ability to tolerate risk. Why should they be invested in an inflexible portfolio when market conditions change constantly?

“Active management makes perfect sense for my clients, as the focus is on limiting volatility and smoothing out equity returns over time.”

Rather than use a passive management approach to investing, or “set it and forget it,” my strategy is to employ professional third-party money managers to actively manage portfolios. These managers will invest in those areas that their models indicate should do well, while attempting to limit losses in down markets. Some will even use strategies where the goal is to grow portfolios when the stock market is falling. For my practice and clients, this makes perfect sense, as the focus is on limiting volatility and smoothing out equity returns over time.

Of course, risk assets like equities are only one piece of the investment-planning equation. Clients need to plan for what is expected and prepare for what is unexpected. That covers a lot of territory, from Social Security claiming strategies to tax-advantaged investment planning and rollover strategies to developing efficient income streams for retirement years. I have a lot of tools available and try to employ them appropriately for each and every client. Third-party asset managers play a critical role in that overall picture, allowing me to rely on professionals who bring market analysis and models that I could never duplicate on my own.

What types of clients do you work with?

My typical client is generally within 10 years of either side of retirement, where decisions have long-lasting repercussions. I have found that the planning I offer can have a beneficial impact on a client’s financial situation during this time frame. They can represent many different positions in life: working executives, small-business owners, transplanted retirees, or a spouse who is recently divorced or widowed.

My ideal client, or client couple, is interested in self-improvement and in cultivating a greater sense of balance in their lives. My clients tend to be health conscious, are involved in the community, and enjoy the weather and activities Wilmington has to offer. At this point in their lives, they are aiming to secure their own and their family’s future. Many times they are looking to organize and simplify their finances so they can focus on their business or just to do what they enjoy most. They tend to be financially conservative and living within their means.

I have found in all of my previous management positions that working with people, even in very technical areas, is not just about the numbers. Being a financial advisor is certainly about finance—the technical end of this business—but it is also about very important advice, and that takes real communication and relationship skills. And while my training and expertise is all about the hard numbers, I have been successful in developing a strong rapport with clients and their families. I tend to be similar in age, background, experience, and values to those I work with, and that helps in building relationships that go beyond the perspective of dollars and cents.

How does working with third-party money managers benefit your practice?

I was introduced to this concept by the manager who initially recruited me to the business. Investing on my own, I did not have access to these types of high-net-worth strategies, and I immediately was drawn to them. Being able to offer these types of money managers to the average investor, and having both my own due diligence and the due diligence of my broker-dealer behind my selections, provides a competitive edge for my practice.

There is also the ability of being able to offer a philosophical approach to investments that inherently appeals to the demographic that I am trying to attract. My clients tend to be conservative, and the emphasis on risk management fits well with that client risk profile.

The particular asset managers I use depend on models and algorithmic decision-making to know how to make asset-class or sector decisions and when and how strongly to be exposed to the market. I find it intellectually appealing, as do my clients, for non-emotional decisions to be made when it comes to times of market stress. With the market crash of 2008 still fresh in most clients’ minds, that is very reassuring.

Finally, there is the pragmatic aspect of having investment professionals handle what they do best, for both my practice and my clients. My time is best spent with clients determining overall financial-plan direction and making adjustments along the way. Having a strong team behind me on the investment side allows me to focus on current client needs and to work on the development of new client prospects.