advisor Kathy Roeser has found herself using the word “cloud” quite a bit this year, as in the cloud that’s been hanging over the economy and markets. While acknowledging the gloom, she has been telling clients to look ahead to brighter days. “Something will break, something will happen,” says Roeser, a highly ranked Barron’s advisor who runs a $2 billion-asset team based in Chicago. “Will it be that the Fed pivots? Will it be the war ending? I walk them through some things that could happen that will reset us on another bull market.”
Those words of encouragement are proving quite prescient: We spoke with her on July 28, when markets were in the midst of an incipient rally but before the good news on inflation. Since then, the S&P 500 has risen 3.3%, while the Nasdaq is up 5%.
Speaking with Barron’s Advisor, the 35-year veteran explains that she made her own breaks by outworking rivals. She acknowledges that she’s needed coaching to become an effective team leader and reveals the inducement that’s become critical for retaining young hires.
Where are you from? I grew up in suburban Detroit and majored in marketing at Michigan State University. I moved to Chicago after graduating in 1986, and at age 23, I started working for
the life insurance company, which then got bought by
Lincoln had a growing presence in financial planning for their clients, which at the time was not something you saw a lot of firms doing. Early in my career, I was primarily responsible for helping life insurance agents with investments and financial planning for their clients. I was probably 30 when I started my own business doing financial planning for clients.
How did you get started building your client roster? I illustrated to prospects the necessity for holistic wealth management. I explained that the biggest risk a person could take was looking at their financial situation in a silo, versus doing it comprehensively. The more comprehensive approach is common today, but when I got started, you didn’t see a lot of that.
Who was your first client? My first client was 28 years old, the son of a successful person. I helped him get started with his financial planning and his 401(k). He didn’t have much money, but he went on to be a major success.
What have been the keys to your successful career? I do a lot of mentoring for young people who are looking at wealth management as a career, and I talk to them about what they need to do to succeed. One reason I was successful was that I worked long hours in my 20s and 30s. You can’t waste that time. I spent a lot of time getting educated in as many areas of wealth management as I could. And I outworked everyone. Really the number-one key is work ethic. In our industry, you’re your own boss. Nobody’s telling you what to do. My dedication to helping my clients with their financial success helped me build my business.
Why did you leave Lincoln for Morgan Stanley back in 2007? I started looking in 2005, 2006 during the bull market. I felt that I needed more of a global investment platform and more investment opportunities to offer my clients. I looked at a lot of different firms and ended up going to Morgan Stanley because of their global footprint and their access to some amazing intellectual capital that would help me guide clients on the capital markets and where to invest. I had clients that I just knew needed to be at that next level of access to capital markets.
What kind of investments did you get access to by jumping to Morgan Stanley? More alternatives, more private equity, anything in the alternative space, and more broad-based research on the stock and bond world. And just as important is our global investment committee, which helps us decide where money should be placed.
One member of your team, Roberto Barbanente, became a financial advisor just a few years ago and is already an equity partner. How did that come to pass? When I moved to Morgan Stanley, it was myself and a client-service person. Roberto started with me about a year later. I saw the ability once I was at Morgan Stanley to really grow my practice and assets under management. Roberto moved through various roles on our team, including client-service person and analyst. Eight years later, he was ready to become a financial advisor.
In the meantime, I was realizing that in order to provide clients with more services and a high quality of attention and opportunities, I needed to expand with more financial advisors. Roberto was ideal for that because he had learned the business from the operational and the client-service side. I think that’s actually one of the best routes to becoming an advisor. I mean, that’s where I came from.
I think a lot of people see what a great career this is, and they want to be in the relationship part of the business. But the real challenge is being able to tell the story about how you can bring value to a prospect and why they should be part of your group and be part of Morgan Stanley. And that’s really what Roberto and I are responsible for: bringing in business and then also maintaining it. And as we get more opportunities, that’s where we need to add more equity partners. We’re going to add another financial advisor next year, and with that, we’ll have gone from a two-person team to a seven-person team.
Do you think you’re good at running a team, or is it something you just have to do?
I think it’s something you have to do. I would not say it was natural for me. I’ve spent a good amount of time working with coaches to become a better leader.
What’s a valuable lesson you learned about leadership? I think it’s understanding that people have different goals and work ethics and personalities, and that you can’t build a team of people who are just like you. I’m hard charging and go100 miles an hour, but not everybody is the same. The key is to find people with the skills and personality that fit the needs of the team. And then you’ve got to support them and educate them. You’ve got to provide career paths, especially with the new generation. You can’t hire someone right out of college and expect that they’re not going to want to move on.
What’s worrying your clients these days? They know they need to be in equities, and they know that while cash is a place to hold money, in the long term, it doesn’t keep up with inflation. They’re not interested in bonds because they’re a challenge. So they have to think about taking more risk and plan around that. They’re also concerned about the general state of the world.
Do you mean things like climate change? Politics? The war in Ukraine? Yes, politics, war…I’m here in Chicago where we had the [July 4] shooting in Highland Park. I find that more and more, people are letting politics sway their investments, which it shouldn’t do.
What do you say to clients who are worried the world is falling apart? I remind them to think about history and about all the things we’ve gotten through.
What do you tell clients who ask when the cloud over the economy and the markets will lift? The word “cloud” is something that I’m using very frequently now. The reason why the market is volatile is because no one knows where this is headed. I just talk about the fact that at some point we’ll get data that will give us an opportunity to know where the next go-to opportunity is. Something will break, something will happen. Will it be that the Fed pivots? Will it be the war ending? I walk them through some things that could happen that will reset us on another bull market.
How are you navigating the markets at present? I am telling people that you have to really be thinking about cash management today because we’ve moved off of zero. If you’re going to be in cash now, where are you going to go? Are you going to be more short-term or buying CDs? Rising yields have created a lot of opportunities because I think people are holding more cash now than they have in the past.
In the bond market, we’ve been coaching on being more on the shorter end and watching through this year. That is a view that our team has made a lot of money for clients with, because we’ve been more on the shorter end of things. In equities, we are definitely saying to hold good quality companies, emphasizing value over growth, and more of a focus in the U.S. versus internationally.
And then finally, what’s changed over the past three years is education about alternatives. What does the world of private debt look like, and what are the opportunities there? Private debt, private equity, hedge funds, and real estate. It’s like a reset as we educate about going forward in a higher inflationary market after the past decade’s low inflation.
What’s your biggest business challenge right now? I think it’s managing clients’ expectations about their investments and their wealth. Prior to this year I felt reviews were pretty easy to do because clients had made so much money. And now we’ve given a lot back. So how do you manage their expectations?
How do you relax and recharge? I never really got the chance to take a break during Covid. But now I consciously take time off. I love to golf and spend time with family and friends. I think as an advisor, you can get really focused on the work of growing your business. And it’s important to do other things.
I have to ask, what’s your handicap? My handicap now is a 16. When we did another interview many years ago, I said I was going to lower my handicap by 10—and you put it in the article! My friends read the article and were like, “Oh, you’ve got to be kidding me. You can’t do that.” Well I did not lower my handicap by 10, but I probably did lower it by six.
That’s the right direction at least! Thanks, Kathy.
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