A Holistic View of Finance

A Holistic View of Finance

Susan Moseley is the financial ring leader for her high net worth clients, ccoordinating portfolios that take into account the entire financial picture.

By Sean Roth

Real Estate Editor

Susan Moseley is more than happy to say she was ahead of the curve. When Moseley started in the financial investment industry, she says it was clear a lot of the larger stock analysts and investment firms were playing a rigged game. So she jumped the corporate ship and started her own Bradenton-based financial investment firm, Moseley Investment Management Inc. So it was with more than a little understanding that Moseley watched the news media report on stock analysts who mislead investors and hyped stocks they benefited from.

Recently, Research Magazine recognized Moseley as one of its "Top 40 Women Financial Advisors in America" for 2004. The ranking was accumulated largely from a survey with about 50 securities firms, insurance companies, banks and independent financial consulting firms. Moseley was ranked 33rd based upon her 2003 performance and other financial-growth criteria. The article listed her assets under management at $300 million. Moseley recently sat with GCBR to talk about the stock market, her investment philosophy and the importance of reading both her clients' words and body language.

What inspired you to go into business 14 years ago and what is your background?

Actually, when I graduated from college at 21, I wanted to be a stock analyst. I graduated from the University of Florida and then became a certified investment analyst from Wharton School of Business at the University of Pennsylvania. I worked for Raymond James (Financial) and Dean Witter (& Co.). I encountered a lot of cases of conflict of interest, so it was no surprise when everything came out that (New York Attorney General) Elliot Spitzer was looking into the Wall Street stock houses. I had decided early on that I did not want to be tied to investment. I grew up on the East Coast and have pretty much been based in Florida dealing with clients on the West Coast of Florida since the very beginning. My role now is really as a consultant helping wealthy clients manage their investments. I built the business up through referrals.

What services do you currently provide?

We look at the total financial situation. We look at their real estate holdings. We look at it from a tax holding perspective. We also look at their business holdings. Most of our clients have a high net worth so we look at gifting. This is really multi-generational. Most high net worth families have an average of four financial relationships. Unfortunately, most are not coordinated and therefore, overall asset allocation parameters are seldom met. Our job is to properly allocate all assets, including real estate, to balance risk and achieve return goals. We offer retirement investment advice and coordination, estate planning and tax advice. What sets us apart is we can answer questions about whether they should sell their house or keep it as an investment.

How do you get to know your client and their investment style?

I believe it takes three meetings with a client, asking questions in different ways. We evaluate not simply their answer on a piece of paper, but their physical reaction to hard questions like "What would you do if you lost 25% of you portfolio value in one quarter?" Studies show 70% of communication is not through words, but through body language and voice inflection. Personal meetings are the only way I know to really get to know the client. My job is to evaluate the situation and prescribe a response. After the initial meetings, I require quarterly meetings to continually monitor the client's changing needs.

What was your return on investment last year and average ROI over the company's history?

No two client portfolios look alike at my firm, because they all have different assets and different risk levels. Since no two families have identical net worth statements and holdings, it is difficult to answer the question on an apple to apple basis. Overall, I would say our real estate assets on average have been returning about 30%. Not including our real estate assets, you have to remember that over the past year the stock market has had three horrible years, one good year and one so-so year. Over the last five years we are probably at 8.5% not including real estate.

What other measures do you use to judge the effectiveness of your financial planning?

We set up quarterly tracking of net worth values and monitor them to see if they meet our long-term goals. Since each family is unique, each client has an individualized tracking goal for three and five years out to retirement or to the next generation. All investment accounts are tracked against their related indexes. Income and estate tax levels are monitored on an ongoing basis.

What is the outlook for the stock market for the next six months?

I am very optimistic about the next six months. I'm more confident now than I have been in three-and-a-half years. However, that doesn't mean that I am not protecting the portfolios in case of an unknown international event. I am encouraging 7% to 10% stops. I see the S&P as up 12% by yearend.

Over the next decade?

Being a baby boomer myself, I am a great believer in the power of this generation to make money and spend it. The "me" generation will push its way into retirement, and fortunes will be made helping the boomers continue their self-actualizing interests. Money will be made in travel, warm climate real estate, and health and beauty aids.

In the even longer term?

Once the baby boomers stop spending money, there very well could be a cooling off period for the U.S. It is, therefore, a necessity to be invested internationally to properly diversify a portfolio. Many European countries have a much younger population than we do and will provide growth over the longer term.

What is your investment

philosophy or style?

Asset allocation brought me through the 2000- 2003 period. I use the G.A.R.P. approach, growth at a reasonable price. Constant monitoring is imperative. I like to combine growth and value stocks in a portfolio. Microsoft Corp. is an example of buying a growth company at a reasonable price right now, in my opinion. I also like to include pure value holdings in a portfolio such as Warren Buffett's (Berkshire Hathaway Inc.) style of portfolio management.

What type of compensation system do you use?

We are compensated on a fee basis.

Where is your money right now?

Fifty-five percent is in real estate, 45% in equities. Any cash or fixed income allocation is in senior floating rate funds. I only buy laddered-bond portfolios, but I don't like putting new money to work in bonds at this moment. I feel certain energy stocks will do well. There are several pharmaceuticals that should as well.

Right now, the two major U.S. stock indices have been yo-yoing up and down violently. What advice do you offer your clients?

Asset allocation across all categories including large-, mid- and small-cap companies, growth and value style investing, and international and domestic. I am recommending stops be placed on accounts due to the questionable international situation. Now that the transfer of power is complete in Iraq, and the Fed has made its first real move, I believe the markets will move forward. Historically, the greater return during a presidential election year is in the second half of the year. The markets hate uncertainty. The closer we get to November and better we can gauge who will be elected, the more the markets will have confidence to move forward. Real estate is also a component of asset allocation and should be considered.

What is the average age of your clients?

Early 60s. Since I practice family wealth management, I generally have the grandparents (80s), parents (60s), children (30s and 40s), and grandchildren (trusts and 529 college savings accounts).

Where do you see interest rates going, and how will that affect things in the next year?

The pendulum has swung. I see interest rates trending gradually higher over the next year, increasing in quarter-of-a-percent increments. The two areas of concern are still the budget deficit and inflation. As long as inflation stays in check, interest rates should have a stable movement. Since the deficit is expected to be handled by larger revenues from a more robust economy, the growth of business is a necessity at this point in time.

Your firm emphasizes a generational approach to investing (i.e. gifting programs) what has been the result?

Management of high net worth families includes the transfer of wealth from one generation to the next. Careful gifting methods need to be employed to make sure responsibility is also conveyed from one generation to the next. All too often, grandchildren of high net worth families become less achievement-oriented as a result of gifting programs. We strive to accomplish the goal of tax savings, but also look carefully at the negative effects of money transfer to younger family members. It's difficult for a lot of families to talk to their children about money. We act as the intermediary advising them. Sometimes that means being the bad guy. But that's OK.