October 1, 2011

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Wealth Management

Sean Whalen

Do Payday Lenders Offer a Way Out or Just Enough Rope to Hang Yourself?

Kris Rudarmel


Wealth Management

Utah Business Staff

October 1, 2011

JOHNSON: A big part of what we do is help our clients understand the information that they see in the media. They receive so much information, more than at any period in the past, and the amount of information will only continue to grow. They can get confused by the headlines and then make an emotional decision and panic. For example, the University of Michigan Consumer Sentiment Index is at its lowest point since 1980. Well, it’s easy for the media to make a big deal about that. But if you look at how the stock market has performed when the Consumer Sentiment Index is at those low points, it has actually performed very well following those points.

How has the profession changed over the past 10 years? What are you spending more time doing today? Is there something you are more worried about today than you were 10 years ago?

MCNEAL: There is a huge change going on in the profession. Ten years ago I wasn’t in this profession. I would not have wanted to come; I would not want to just sell something to someone. When I look at this career field now, I see it as an opportunity to use the education and the background that I have to help people.

BAPIS: Even though there have been tremendous changes, many things are still the same. And I agree there’s been a lot of people that have been burned.

I love what I do or I wouldn’t still be around, but I read probably two hours a night and maybe four hours a weekend to try to stay on top of it. We’re having to spend a lot more time to try and figure out who is really legitimate in what you are reading and who you can depend on over the long term.

HOLMGREN: When I started in the late ‘90s, things were going well. People were saying, “No one is going to need your help.” We were being described as dinosaurs—no one would to pay a professional to help them when they could do it all themselves on the internet. The profession has actually grown and become stronger because it’s become more complex, even though the media claims that it is such an easy thing that anyone can do it—that has not changed.

YOUNG: I’ve been doing this for 25 years and there have been significant changes over time, but there is so much noise out there that a lot of it doesn’t matter. I read a lot and study a lot, but I’ve found myself pulling back. There is so much of it that is opinions, and so much just doesn’t matter and confuses the issue. It takes you away from the basics: you’ve got to save more than you spend.

Most clients don’t want to know how to build a clock; they just want to know what time it is. So they want a guy to guide them through this mess, and all the noise out there is confusing the issue.

ULBRICH: Baird has been in business 92 years and I don’t think we would have survived if we had just sold stuff to people. So it’s really back to understanding your client’s goals and objectives, and if you do that, you can filter out the wheat from the chaff. If you’ve done the proper job of communicating and setting those goals and objectives, you can keep them focused on the prize long term. How are you advising your clients about emerging market funds outside of the U.S. borders?

JOHNSON: This theme of international investing is something we’ve seen a big shift towards gradually over the years, more so now than ever. So much of the growth is happening outside of these developed markets. It’s important from also a currency diversification aspect as well because the dollar has been on a downward trend for quite some time now, and so just to be able to hedge currencies is an important part of it, too.

MCNEAL: It is true that you need to have international stocks as part of your portfolio, both emerging markets and developed, but it’s not a panacea. Like you mentioned, the problem was that they had 98 percent of their portfolio in stocks, period, and all stocks are highly correlated. It just depends on how much risk you’re taking on, depending on how much return. But the movement of stocks up or down is highly correlated. It doesn’t matter whether it’s emerging markets or U.S.

The problem is that during the ‘80s and ‘90s, when most people who have money today learned how to invest, they just learned that it was the stock market—whatever you put in the stock market made money for you over time. So they did not understand how much risk they were taking on, nor did they worry about valuations or anything along those lines.

The industry has experienced massive growth. We’ve seen an explosion in a whole number of different instruments out there that people didn’t even hear of a year ago. Do you see any fundamental change or is it really back to basics?

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