In His Own Words
My professional career began in the early 1980s. My introduction to business was much like being taught to swim by being thrown into a lake. The difference was that it wasn’t a lake; it was the boiling rapids on the floor of the Pacific Options Exchange working for Dean Witter Reynolds.
At first I was enamored by the action and pace of the Exchange. The floor of the Exchange is not a place for rational minds and is truly the place where the term “herd mentality” is most appropriate. I quickly came to understand the differences between investing and speculating.
Working on the floor one day, trading exploded with the news of the accident at the Union Carbide chemical plant in India killing hundreds of local residents. One trader on the floor who had been heavily invested in Union Carbide was financially wiped out in a matter of seconds. Later that same day he took his own life. I quickly learned that there are grave consequences when you work in an environment incapable of separating emotion from investing.
Building a small, personal, honest, straightforward, consistent, education-oriented, and relationship-based advisory firm is our goal.
Edward L. Ward, CFS
Moving from the floor of the Exchange to a branch office helped me develop the skills of an emotionally detached market observer. Keeping the market at arm’s length allows for rational thought and the clear perspective needed for long-term investing.
During this time, the financial industry was in its infancy of deregulation. Prior to deregulation, the financial community had clearly defined and segregated the different roles of insurance agents, brokers, and planners. Deregulation meant that brokers could sell insurance and annuities, insurance agents could sell mutual funds, and while doing so, everyone started calling themselves financial consultants. If I were to introduce myself to someone as a financial consultant when an insurance agent had met them first, they would run for the hills.
With the development of technology and software programs in the 1990s, firms were able to buy programs to develop financial plans. Unfortunately, the software was easily corruptible. It became a foregone conclusion that if you had a financial plan written by an insurance agent, the results clearly showed that you needed more insurance and more annuities. If the plan had been written by a broker, then the recommendations would clearly show that you needed more stocks and bonds.
To compete in a business that had so many wolves in sheep’s clothing, I set up an independent financial consulting practice working as a “jack of all trades.”
I offered advice in cash management, risk management, tax strategies, investment strategies, retirement planning, and estate planning.
Then came the bull market of the 1990s. As a financial planner, clients retained my services for an annual flat fee. One year a client to whom I had provided hundreds of hours of service in areas of risk management and estate planning chose to not renew my annual contract because his globally diversified portfolio “only” gained 40 percent that year, compared to the 45 percent gain his wife’s 401(k) had realized being fully invested in her company stock. I stopped to reevaluate my business plan. I took a few weeks off and sailed the South Pacific with my brother. During that time I came to the conclusion that if I was going to be judged solely by the performance of one’s portfolio in this market, then I would specialize in that field and offer the other advisory functions as a complementary service.
At the time, people within the investment advice industry were debating philosophical issues regarding commission-based versus fee-based advisors, and market timing versus buy-and-hold investment strategies. Based on my personal views, I sought out a local firm that seemed to be a perfect fit, and folded my practice into theirs. The firm was small with a staff of ten or so, and had an environment that displayed integrity, good ethics, personal service, and a commitment that put the client first. The company was a fee-only firm and offered both timing and buy-and-hold investment strategies. The fee-only practice implied minimum conflict of interest, and multiple strategies meant I could serve Republicans and Democrats equally.
Fast forward to 2006: The world has changed and the markets have changed. As part of that evolution and based on my industry and professional experience, I started Robinswood Financial with the goal of providing investors with the personal, honest, straightforward, consistent, education-oriented, and relationship-based quality of service that I have sought to provide to my clients throughout my career.
Keeping the market at arm’s length allows for rational thought and the clear perspective needed for long-term investing.