Change of Fo­cus Brings Prof­itable Business

Mercer Ad­vi­sors

The Suit - - Contents -

That time-worn adage: “Change is in­evitable,” is cer­tainly an over­worked, road-weary cliché. But when ap­plied to eco­nomics, those changes might re­flect th­ese lyrics in­stead, “A change is gonna do me good,” pop­u­lar­ized by songs cred­ited to Etta James and El­ton John. At least, that’s what Dave Bar­ton, Pres­i­dent and CEO of Mercer Ad­vi­sors in Santa Bar­bara, CA, will tell you.

The Great Re­ces­sion forced Bar­ton to re­vamp what was once a suc­cess­ful business model – one that had worked since 1985. Prior to 2010, Mercer Ad­vi­sors had fo­cused solely on ad­vis­ing den­tal prac­tices. But when the econ­omy de­vel­oped a gap­ing fi­nan­cial cav­ity, the pain was as real as a flar­ing root canal.

“It was a tough time for den­tists. It was a tough time for us from a client stand­point and it re­ally chal­lenged our

business model,” Bar­ton said. “As a high per­cent­age of all den­tal care is dis­cre­tionary, its ex­pense was an ob­vi­ous one to de­fer dur­ing the Great Re­ces­sion,” Bar­ton ex­plained. What many high net worth in­di­vid­u­als and fam­i­lies felt they couldn’t af­ford to take out of their bud­gets, how­ever, was com­pre­hen­sive fi­nan­cial plan­ning. That’s where Bar­ton and Mercer Ad­vi­sors turned in 2010 – and made their mark.

“We in­creased our staff and be­gan de­liv­er­ing com­pre­hen­sive, cus­tom­ized fi­nan­cial plans through cer­ti­fied fi­nan­cial plan­ners,” Bar­ton said, adding that es­tate plan­ning, as­set pro­tec­tion, tax plan­ning and suc­ces­sion plan­ning were new ar­eas of ex­per­tise which Mercer Ad­vi­sors opted to in­clude. “We wanted to bring a full suite of pro­fes­sional ser­vices, un­der one roof, to clien­tele.”

To­day, Bar­ton proudly points out that al­ter­ing the business fo­cus to a full suite of fi­nan­cial so­lu­tions was ad­mit­tedly a big risk – but was also one that has paid off. To­day Mercer Ad­vi­sors has more than $5.7 bil­lion in as­sets un­der man­age­ment spread across its 15 of­fices na­tion­wide, serv­ing 4,200 clients. In the past three years, Mercer Ad­vi­sors added seven new of­fices and 1,200 new clients, and has nearly dou­bled their as­sets un­der man­age­ment since 2008.

Bar­ton de­scribed his firm’s ap­proach to in­vest­ing as a sci­en­tific one, uti­liz­ing the four-fac­tor model within the

HELP­ING PEO­PLE LIVE THEIR DREAMS FOR 29 YEARS.

con­text of mod­ern port­fo­lio the­ory and global as­set al­lo­ca­tion. Rather than chas­ing re­turns through stock pick­ing or mar­ket tim­ing which more of­ten are not win­ning strate­gies, Bar­ton said that Mercer Ad­vi­sors opts in­stead for over­weight­ing or tilt­ing their port­fo­lios to­wards sci­en­tif­i­cally val­i­dated ar­eas of higher ex­pected re­turn, and then sys­tem­at­i­cally fil­ter out stocks that do not meet the firm’s pre-es­tab­lished hold­ing cri­te­ria. He is not a be­liever in trust­ing gut instincts; he just doesn’t be­lieve ad­vi­sors are al­ways right in their hu­man anal­y­sis.

“If you look at some of the re­cent sur­veys, they in­di­cate that 65 per­cent of ac­tive man­agers fail to meet or ex­ceed their own bench­marks over a one-year pe­riod,” Bar­ton said. “And 75 per­cent fail to meet or ex­ceed their bench­mark over a five-year pe­riod. That is not a great bat­ting av­er­age.” Our sci­en­tific ap­proach to in­vest­ing con­sis­tently beats our bench­marks, pro­duces great re­turns, with­out risk­ing our clients’ nest eggs.

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