The 2012 Top Wealth Managers Profiles: No. 9—Financial Clarity

Potential new employees go through rigorous screening. Young says the firm is a great place for new employees to learn the business, particularly since as a smaller firm it offers the opportunity for them to play many different roles. A career path of sorts arises from the fact that it takes three to four years, according to Young, “to learn how to do the job right.” A bonus structure awaits employees who remain with the firm, and so does the potential position of vice president.

While Young says he doesn’t “have to be the sole principal forever,” provisions in case of a catastrophe include measures more designed to keep the firm running till someone else steps in than to replace him directly. If he “keel[s] over or get[s] hit by the proverbial bus,” he says, possibilities include an employee buying out the business or clients being merged into another firm. Because the firm is nondiscretionary, he adds, client assets would not be tied up in such an eventuality; they would be free to move to another advisor if they chose to do so. Still, he vows, “I’m going to be around for a while.”

2008: The Big Test

The financial crisis of 2008-2009, says Young, presented multiple challenges. One was the need to “make sure that clients don’t cash out at the bottom.” Another was that the crisis itself was a wakeup call, in the sense that existing models failed: “You have to rethink what you’re doing with asset allocation, because models that have been traditionally used for optimizing asset allocations that are based on efficient market theories have been exposed by that period as being not valid.”

Equities as a class, Young explains, have become much more correlated in their component parts than they used to be, so instead of thinking “large cap, small cap, international,” other strategies are called for. Illiquid assets might offer more promise, he adds, since they are “still severely discounted in the marketplace” and are less efficient markets, so they offer more opportunity. “But you can only have so much in illiquid assets,” he concedes.

However, while a combination of more-correlated equities and extremely low interest rates together make for a more challenging environment in which to make money, he adds that all of Financial Clarity’s client portfolios are customized, with not a model portfolio in the lot. And opportunities are increasing in the marketplace to gain access to illiquid assets in more liquid forms, through such products as ETFs and mutual funds.

“Business Would Continue”

Asked about concerns for the business that might contribute to sleepless nights, Young says that “most of the time I sleep pretty well.” Still, “during the financial crisis, I had some sleepless moments,” he recalls, “and I remember looking out the window at the big road going by here and seeing all these cars and seeing people going into restaurants and thinking, ‘Don’t they know there’s a crisis going on? They’re actually going out to eat lunch!’” That, he said, “gave me some comfort that business would continue.”

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