Manage your money like the wealthy do

Embrace risk, despite the uncertain times. Even if you’re a conservative investor and even if you’re retired, a portion of your money should be in stocks.

Jack Markwalter

Jack Markwalter

Those words come from someone with a far better track record than I have. In fact, I don’t know a better way to get financial advice than to talk to a manager of rich people’s money. A local firm, Atlantic Trust, just came in first place in a national survey of wealth management firms by the Luxury Institute research firm.

So I sat down with Atlantic Trust CEO Jack Markwalter to see what his firm is telling clients — those with at least $5 million in liquid assets — and what average investors might be able to apply. As a division of Atlanta-based Invesco, Atlantic Trust manages $17.6 billion for 2,200 families. (Put away the calculator — it’s an average of $8 million per family.)

“We’re not trying to hit home runs. We’re trying to hit singles and doubles,” said Markwalter, an Augusta native and Georgia Tech grad.

Even though many of his clients are in a defensive, “capital- preservation” mode, Markwalter’s firm recommends that at least 20 percent of their money is invested in stocks. And that’s for the most conservative investors. For the average client, the recommendation ranges from about 35 to 45 percent in stocks, with another 15 percent or so in select hedge funds that counter-balance some of the equity risk. (Average investors can get access to hedge funds through mutual funds that invest in “alternative assets.”)

Markwalter, a 51-year-old father of five, thinks U.S. blue chips are attractive right now, as are stocks in emerging markets. And, he points out, that with the increasingly global nature of large American companies, investors are often getting both elements in one stock.

With respect to the other major investment in most portfolios — bonds — Markwalter said the most conservative Atlantic investor generally has about 50 percent invested there, while a less risk-averse investor might be in the 25 percent to 30 percent range.

He’s a big believer in municipal bonds because they’re generally exempt from federal taxes, as well as state taxes if purchased from a government entity from the same state where the investor lives. Because of the risk of rising inflation, which undermines the value of bonds as interest rates increase, Atlantic ladders the maturity dates of those purchased.

He had a few other key suggestions:

– Often, your age can be a huge factor in determining how much risk to take on. Younger workers, he believes, should be particularly aggressive, putting most of their money in stocks. As the decades go by, the percentage of stocks should be reduced, but not eliminated.

– Many younger or middle-aged workers accumulate the bulk of their money from one source — possibly from the sale of a business or a big investment score. It becomes critical, he said, to diversify that money as time goes on.

– Finally, it’s important to take short-term bumps in stride.

“Don’t ever get too excited or overly positive when things are going well and don’t ever panic when things get difficult,” he said. “It’s important to maintain a disciplined, long-term game plan and look for opportunities at the edges.”

- Henry Unger, The Biz Beat

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11 comments Add your comment

Destin Dawg

June 21st, 2011
6:51 am

Save and invest… stay diversified.. with no load mutual funds.. large and small caps.. international and emerging markets.. REITS.. Bonds.. Hard assets… dollar cost average into Co. 401 K and/or start A ROTH…


June 21st, 2011
7:24 am

When Your current mortgage has a prepayment penalty you should not refinance your loan, do not make costly mistakes, use tools like “123 Refinance” they make it easy to refinance

President Barack Obama

June 21st, 2011
8:32 am

No need to worry…I have the economy under control.


June 21st, 2011
8:42 am

Define rich. Define wealth.

I have a LOT more wealth than a lot of people I know. I’m not RICH, but I’m wealthy!!!!!


June 21st, 2011
9:52 am

Absolutely! Diversity is key. Also, taking advantage of the Unitrust can help to shield you from the capitol gains taxes on your investments. Anytime I roll over a large amount of stock or cash, it’s set up under a Unitrust.


June 21st, 2011
10:07 am

Gold and Land should not be overlooked either…They are not making any more of either.

Buzz G

June 21st, 2011
12:15 pm

The rich are sending their money overseas, mainly Switzerland . They do not trust Obama. They will not bring it home or invest it in this country until they see how much damage Obamacare will do to our country and what the $15 trillion debt will do to us. Or until we have someone in the White House who understands economics and respects the free market. Henry does not get this.

Real Estate Report

June 21st, 2011
12:22 pm

Gene Marks

June 21st, 2011
2:00 pm

Diversity is certainly important… I think Destin has the right idea.

Gene Marks


June 21st, 2011
2:50 pm

All good advice. But nothing new that you couldn’t find by leafing through a copy of Money Magazune.

The Tin Foil Haberdashery

June 21st, 2011
4:00 pm

Buzz, your order is ready for pick-up.