From the May 2007 issue of Investment Advisor • Subscribe!

May 1, 2007

Advising Individuals, Not Institutions

One of the areas where Robert Levitt feels that the industry in general may have taken a wrong turn is in managing money for individuals in the same way that they do for institutions. "What we've come to understand is that a wealthy family may have a long-term time horizon, just like an institution, but they have a very short-term evaluation horizon," he confides. "So while an institutional manager might look at their returns six weeks after the quarter, many wealthy individuals are looking at the returns every day and particularly in volatile markets like this."

Early in his career Levitt was trained to place his primary focus on the risk, but experience has taught him something else. "Our clients are not risk-averse, they're loss-averse," he says. "They don't mind taking a chance, they just don't like losing money."

He says that all of his clients' portfolios tend to be similar, because they all want the same things. "Everybody wants to make money when markets are going up and nobody wants to lose money when markets are going down," he notes. The variations have more to do with including securities that the clients brought with them, or addressing a greater need for income, "but for the most part, we're trying to run all the portfolios as closely as we can together."

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