When Investment Advisor last spoke with Ken Fisher two years ago (“Straight Talk From Ken Fisher,” September 2003), Fisher Investments boasted $15 billion in assets and a $2 million-a-year budget for direct mail, Web, and broadcast marketing. Since then, Woodside, California-based Fisher Investments has grown to $25 billion, making it one of the country’s largest separate account managers. For the 12 months ended March 31, Fisher’s Global Total Return account, which comprises 88% of the firm’s assets, was up 6.7%, against 10.6% for the MSCI World Index. Editorial Director Bill Glasgall caught up with Fisher during a visit to New York in May.

How many clients do you have? Of our $25 billion in assets, two thirds are from high-net-worth investors and one third is from institutions. We have 15,000 high-net-worth customers. While our high-net-worth side has grown very fast, the institutional side has grown just as fast.

What’s your minimum account size? The only people we do business with are those with half-million-dollar minimums.

We reported in 2003 that you’d stopped participating in Schwab Institutional’s advisor referral program. Are you still out of it? We don’t do referral programs. For us, being in a referral program is an unnatural act. A referral program is like renting distribution. We own ours. We don’t seek referral business. But we do continue to do [custodial] business at Schwab. We also do business at Merrill Lynch, Smith Barney, Bear Stearns, UBS, and Fidelity. We see them as vendors and pit one against the other. If you wed yourself to any single custodian it’ll eventually be a problem. It’s not that a custodian might go out of business or get involved in a scandal or try to take your business away from you. It’s all those possibilities. Chuck Schwab is a marvelous guy, but he’s not going to be there forever. He either is going to bring in a new CEO or the firm gets sold. You have to be prepared for it, whatever it is. You could say this about Fidelity or anybody else.

Where do your clients come from? Big entities that have a service problem: the banks, asset management operations of major broker/dealers. They’re like dinosaurs waiting to die. Nobody has market share, simply nobody. Fidelity has share in one little slice, the mutual fund business. Merrill is still a big kahuna, but in the greater scheme it still doesn’t have market share. We compete head-on with all the biggest firms in the country.

Where do independent advisors figure in? Today there exists a slice of advisors who are feeling increasingly burdened by things like a need to create a chief compliance officer. Some guy who’s 66 and a growth manager who thought he’d be retired by now–he’s got to do all the stuff he didn’t think he’d have to do. There has to be a way to give that guy a way to retire gracefully. We’re looking into buying advisors or assets, in a sense what Jessica Bibliowicz [of National Financial Partners] did with bigger firms. I spend a lot of money on compliance. I’m committed to never having any problems with my regulators. But when you get above a certain size, you can amortize all of your costs like compliance over your entire volume.

How do you stay in touch with clients? People like getting stuff from us, our Client Owner’s Manual and quarterly bulletins. We have a seminar program. In the 50 largest cities we do lunch once a year for clients. In Manhattan we’ll do several in a row, 400 clients at a crack. I do half of the 50 cities and another guy does the other half, and the next year we switch.

When will you start buying advisory firms or assets? I don’t know. We’re noodling. We noodle slowly.

Let’s turn to the stock market. In your February Forbes column, you said you expected equities to be up 25% this year. I am mindful that there is a little more than half a year to go. One of the features of the market is that when it wants to, it can get up and gallop in no time: It can go up 20% in a couple of months.

What would make this happen? The things I talked about earlier in the year are happening: the dollar would be strong, long [bond] rates would not go up, the economy would be strong, and inflation would not be a problem. All of that has worked except the market is not going up. People are in a gloomy fog, but the sun is burning perfectly fine overhead. The sun is going to burn the fog off at some time by the end of the year. If it does, I’ll get my 20%. Equities are cheaper now than they’ve been in a quarter century, not just in America, but around the world.

Do you own or short stocks that you write about in Forbes? Heaven forbid, no.