Las Vegas Review-Journal (Sunday)
From tee to greenbacks
Jimmy Lee, former golf clubhouse employee, becomes nationally acclaimed financial adviser
JIMMY Lee attributes the start of his business career to golf — but not because he played the sport. The CEO of Las Vegas-based Wealth Consulting Group, a registered investment advisory firm with about $5 billion in assets under management, said his career path began with connections he made while working in the bag room of a country club in Southern Nevada while a student at UNLV.
Lee’s 27-year career eventually led him to launch Wealth Consulting Group as a hybrid registered investment adviser in 2014, focusing on financial advisory and “personal CFO services” for high net worth clients at 33 branches across the country. He’s regularly interviewed about business news and stock market news for outlets such as Bloomberg and Fox Business.
Lee spoke with the Review-journal to discuss his firm’s growth and his predictions for an economy facing rampant inflation. This interview has been edited for length and clarity.
Review-journal: What brought you to a career in wealth management?
Lee: I grew up in Las Vegas — I moved when I was 6 years old and went to university here. I studied finance and figured out at some point during my college years that I wanted to get into the business of investing, and I thought that could go one of two ways: maybe investment banking or as a stockbroker. I got into the business in 1995. I met someone who was a member of a golf course that I worked at. He was a very
successful financial adviser in Las Vegas during that time and I was already taking finance courses at UNLV so when I was talking to him and learning more about what he did, I got very interested. I knew that was the direction I wanted to go. When I graduated in the summer of ’94, he agreed to hire me onto his team. But the brokerage firm he worked at, they weren’t going to hire new trainees until March because they only hired once a year. I wanted to get a job prior to that. (A friend) recruited me into Massmutual Financial Group in Las Vegas at the time. I started working there and, by March, I got licensed for securities. March was my first production month, and I had a really good month. I had a good first few years in terms of just acquiring some clients and earning some income as a young person. I was able to get the (Massmutual) role on top of being a financial adviser, as an independent contractor of what they call an investment specialist, which was running the securities division of our office. Here I was as a very young person in my 20s, I had to go get some licenses that I didn’t have in order to do this (financial adviser). But I was supervising and running the sales and supervision of a securities operation for a major firm in Las Vegas. That helped me get my learning curve up. I was able to learn very quickly about investments.
How unique is it to have a financial advisory and wealth management firm headquartered in Las Vegas?
Las Vegas actually has a fairly robust financial adviser community, in my opinion. Are we a mega-space for large money management firms that are headquartered here? Not really. There are some institutional ones that offer money management services to nonprofits. Besides the major companies that are publicly traded, there are some other ones that are locally based that target working with nonprofits or government agencies. But I think we’re still the largest one that’s domiciled here. Our average client is a “millionaire next door” — somebody that’s been able to accumulate seven figure-plus investable assets in order for them to be able to live off that in their retirement age and replace their earning income. That’s our target market. I think where we’re unique is that we really believe that the financial planning part of what we offer is very critical to client outcomes. So we as a firm provide the infrastructure for advisers to be able to provide that on a very professional basis consistently to their clients. We really do it as a loss leader. (Advisers) can offer those services without having to create the whole infrastructure, pay for that service on their own or do it on their own. I think that’s part of why we’ve been able to grow and add a lot of advisers to our team. A lot of advisers do financial planning and offer financial planning, but a lot of them do it as sort of an entry into trying to acquire a client. After that, I’m not sure how good they are at actually ongoing financial planning for clients.
Fifty percent of your associates are female, 31 percent of your advisers are female and 20 percent of the firm’s staff is people of color. Can you tell me more about that breakdown?
I really believe in diversity and inclusion. And myself, being a first-generation immigrant coming to the United States, I think it’s very important for us to look like the people that we serve, the communities we live in. It’s common sense for all businesses, really. I didn’t try to build the firm from that perspective, but we were able to win an award in 2018 from Investment News for diversity in our industry and ever since then, I’ve been more aware of it. I wasn’t doing it intentionally but that’s what happened. I attracted a lot of female advisers because it was a comfortable place to work and other diverse team members because it was a very open place.
How has the stock market volatility over the last few months affected what you do?
Investors historically earn 40 to 50 percent less than what the investments earn. It’s because when there’s volatility and the market goes down, they want to get out. As a financial adviser, a big part of our job is to help our clients manage their behaviors when it comes to investment decisions to make sure that they’re not doing the wrong thing. I think a lot of advisers even question their own beliefs on how we manage money for clients. I think it’s very important that financial advisers don’t succumb to thinking that they should be doing something different this time. The reason why we’re being paid what we are — and what investors probably need — is (we’re) somebody that can have confidence in the strategy and keep it invested in the strategy that we put in place. Volatility is a natural part of investing in the stock market. It can happen every so often. This one is not unlike other bear markets. In fact, this one’s not even gone down as much as normal bear markets.
How do you prepare clients for this bear market, or the idea of a possible recession in 2023?
The biggest pieces are making sure that when you first enter an engagement with an investor-client is that you helped them set their expectations. What we’re going through
now is normal. If they’re surprised about what’s going on right now, if it’s new information, then shame on the adviser. They didn’t provide the proper education and information to get people prepared for something like this. Two, if you’re a retired client — an investor should never be forced to sell their investments when they’re down to get some money to be able to use it for living expenses or to buy something. That should be planned out in financial planning. For retiree clients, they’ve got at least one or two years’ of release set aside in something that’s not going to go down when this happens — money market or cash equivalents. That’s a financial planning technique, not an investment technique. So if clients are being forced to sell stuff at a loss to be able to buy things or live on things like groceries, they should fire their adviser and go seek help somewhere else.
What do you make of the Federal Reserve’s continued interest rate hikes?
The Fed will likely raise rates two or three more times from here and into the first quarter of 2023, and the target rate could get to above 5 percent. But I believe that inflation is going down faster than what the numbers show, like in housing, for example, which makes up approximately 40 percent of the core (consumer price index). I do believe that some of the Fed members know that, and I think they should not be increasing interest rates too much more than they are. I believe that inflation is coming down on its own without them having to destroy the economy. So, I’m hopeful that they will slow down sooner than they predicted so far. It is very important for long-term investors to focus on the fact that the Fed will signal a pause some day in the near future. When they do, I think stocks will be up by a good amount by the time those words come out of (Federal Reserve Chairman Jerome) Powell’s mouth.
Investors historically earn 40 to 50 percent less than what the investments earn. It’s because when there’s volatility and the market goes down, they want to get out. As a financial adviser, a big part of our job is to help our clients manage their behaviors when it comes to investment decisions to make sure that they’re not doing the wrong thing.
What do you make of how Las Vegas is handling these conditions, and what could change for the city?
Vegas has always been very resilient, the very rebel-ish type place, and we just keep reinventing ourselves every time we take a hit. I think now we’re insulated to some degree. Large businesses (and) publicly traded companies operating in Las Vegas are being very mindful and cautious of the potential recession that we have ahead of us and the slowdown for consumer spending. But I think they’re also optimistic because Las Vegas has always been resilient. With sports, tech businesses and all the other economies starting to develop in Las Vegas, I think we have more industry than we have aside from just gaming. I think they’ll be able to sustain the growth. While I think people need to be cautious in the shortterm downturn in a lot of areas, like consumer spending possibly, I really don’t think that consumers are going to go into a bad recession. That’s not my prediction. I believe we’ll have a slowdown. But if anything, we’ll be one of the better cities when it comes to how the global economies are performing in 2023.