Ten Years

“I just have to say thank you. I’ve been in this business a long time. I’ve worked with a lot of people. You’re the first person who never lied to me.”

I smiled as I felt the ball in the back of my throat swell up, fought back a tear, and gave my partner Jonathan Novy a hug.

That experience took place at FutureProof, the best financial conference I’ve ever been to. The event out in Huntington Beach lined up with our tenth anniversary at Ritholtz Wealth Management. I’m more of a look forward than back sort of guy, but in thinking about where we came from and what Jonathan said, it’s hard not to reflect on the incredible and lucky journey I’ve been on for the last decade.

This will be longer than my usual posts and a bit self-indulgent. I don’t do a lot of this because nobody cares about your wins, but if you allow me, I’ll try and do it in a way that is filled with thanks and gratitude.

Before I met Josh, which is a story I’ve told before, I was going nowhere fast. A 27-year-old without any real work experience in financial services who was both unemployed and unemployable. I spent a few miserable years cold-calling at one of the giant insurance companies. The only thing I took away from that experience was what I didn’t want to do ever again.

And then I met Josh. He took a chance on me when nobody else would. I cannot imagine what my life would be like if not for that one-in-a-million chance encounter. Working for him and Barry in the early days of 2012 was a dream come true. The first day in the office, Josh told me to get him some notes for his hit on Fast Money. Hearing him use my words on Research In Motion, I thought I’d died and gone to heaven.

My role in the early days was a bit amorphous. I didn’t know what I was doing, and they didn’t know me or what I was capable of. They quickly realized that I was a fast learner and hard worker. Before long, I  took over trading, account management and reconciliation, billing, and working with our tech vendors. From there, it grew into research and writing, portfolio management, and, ultimately, helping with all aspects of the business.

Somebody asked Ben and I on YouTube what we actually do at RWM. I think what he was really asking was, like, “You guys do a million podcasts. How do you have the time? Do you actually do anything for the company?”

Here’s what I said on Animal Spirits in front of a live audience at FutureProof: We have almost 30 financial advisors who don’t do podcasts or write blogs. They are working with clients all day, all week. We have a couple of service advisors working alongside them. We have four traders and seven client service associates. We have four people working full time supporting our media efforts. We have four people in tax and two people running our 401(k) plans that we oversee. We have a Chief Compliance Officer, a Chief Operating Officer, a Chief Financial Officer, a Director of People Operations, and a President who we recently brought in to make sure all of these people are working together. And then I have my partners, Kris, Josh, and Barry.

So, that still doesn’t answer what I do, but it gives you an idea of how I’m able to do all the podcasts. I forgot to mention that I hired a research associate, Sean Russo, who has been extraordinarily helpful in all aspects of my work day.

The most important thing we have at Ritholtz Wealth Management, aside from the amazing clients, which I’ll get to later, are the people we work with. One of our operating policies which I coined, is, “If it’s not an obvious yes, it’s a no.” We don’t always get it right; nobody does, but I could not be more proud of the team we built over the years.

Warren Buffett says, “It takes 20 years to build a reputation and five minutes to ruin it.” That’s how I feel about hiring advisors, which is the hiring that I’m most directly involved in.  I’ve spent the last decade building a reservoir of trust with our advisors, and I’m going to do everything in my power to preserve it. If we bring somebody in, my team knows they are on our level. The proof is in the pudding, as every advisor we ever hired is still with us today.

We are on the cusp of passing $4 billion in client assets. This is not a responsibility we take lightly. People’s financial lives are in our hands. As a member of the investment committee, I spend a lot of my time on making sure we get things right. More accurately, we’re trying not to get things wrong. If you can deliver approximately average returns for a long enough period of time, you’ll do a lot better than average.

We don’t make big market calls or take excessive risk in any single asset class, industry, style, or security. We’re believers in diversification and simple over complex. You might take this to mean that we’re only buy-and-hold investors, but we’re not. The world is not black or white. While we are big believers in doing nothing forever, i.e., buying and holding, that’s just not realistic for most people. They get bored or they get scared or they get tempted by the next big thing. It’s true that long-term returns are all that matter, but clients don’t live in the long-term. They feel bear markets. They can’t “tune out the noise,” which is easy to say and hard to do. We never want to say to a client in retirement, “Don’t worry, stocks always come back.”

We like to diversify by both asset class and strategy in our portfolios. One of those strategies is a rules-based tactical model we run in-house that can shift its allocation from stocks to bonds depending on the market environment. Unlike most strategies that employ some sort of signal, we don’t believe it needs to have 75 inputs or be completely indecipherable to the layman in order for it to be effective. In fact, we believe the opposite is true. All we want out of our tactical strategy, really, is to keep our investors from doing anything rash with the bulk of their assets, which are bought and held. There’s a lot more to how we think about managing client assets, but that’s between us and our clients.

We work with roughly 1,300 households. I haven’t spoken to all of them, but all of them have gone through our process. Prospects reach out to us every day because of the market commentary we put out into the world. And while asset management is an important component of what we do, it’s just one piece. And it’s the last piece.

People might reach out because they’re interested in what Josh said about the market on TV, but they’re really reaching out because they want to know if they’re going to be okay. That’s what we do for clients. We tell them they’re going to be okay. And if they’re not, we try and course correct and make sure they can safely arrive at their final destination. And none of our clients, not one, needs us to beat the market in order for them to live a happy life.

I also run a venture capital fund, which I haven’t spoken much about publicly. The idea behind this was simple. We’ve worked with a lot of wealth tech vendors over the years. And we’re proud to have had a big impact on the ultimate success of some of them. I’ve seen countless companies over the years and have a decent sense of what advisors want and need. And with our platform, connections, and audience, we thought we could continue to have an impact on these companies, especially if we are financially aligned. The process has been fun and exciting and stressful and terrifying. And yes, I invested what, for me, is a lot of money into the fund.

A lot of my time is spent thinking about the future of our business. Where do we want to put our resources, both time and money? A good example of this was the acquisition of Future Advisor from Blackrock, which we did earlier in the year. I did the deal, but I couldn’t have executed on it without a world-class team of operators behind me. And this is what I’m most grateful for. I work with incredibly talented and highly motivated people. We do what we love, and we love what we do. I’m beyond lucky to be a part of the team.

The last ten years went by in the blink of an eye. I can’t say that we’ve gotten everything right, who has, but we did what we felt was right at the time, even if history didn’t always unfold the way we hoped.

Ten years ago, we were a startup. Today, we’re an organization. I’m as excited for the next ten years today as I was a decade ago.


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