RIAs take short, BlackBerry-intensive vacations in the summer of 2010

Brooke’s Note: Elizabeth, Frank and I all took vacations during the last month. Frank headed to Lake Tahoe, proclaiming that the summer was dead and that he wouldn’t be missed. I talked with him as regularly as ever, and he returned e-mails promptly as business sizzled along. Elizabeth went to Polson, Montana, to visit her family’s home after a brief stop in Portland, Ore. The only time I felt out of touch with her was the night she spent on the train from Oregon to Montana, and she produced articles and edited almost constantly. I went to Maine for two weeks and spent one week working full-time from a friend’s office in Portland. A second week, I tried to stay away from electronics but discovered that my vacation cottage had Wi-Fi. As the week wore on, I helped read articles and weighed in on decisions. It turns out our Type-A vacations are typical, not only of our start-up, but of breakaways and RIAs this summer. Advisors are all about managing risk, and most will tell you that being off the grid is a risk, especially in lousy market conditions, that they don’t want to take – even for a brief, beachy respite.

Tom Meyer planned a dream 10-day trip to Australia that would depart on June 28, but – like any good RIA – he hedged his bets.

The president of Meyer Capital Group Inc., which manages about $540 million of assets from Marlton, N.J., bought refundable airline tickets and kept a close eye on the markets as June wore on.

He decided to go on the trip as markets showed life but he hedged further by bringing his BlackBerry on the trip, only to find that he couldn’t make it work Down Under.

“It was tough – (then), around the third or fourth day, it wasn’t hard,” he says. “It was hard getting used to.”

Vacations are business-lite

Meyer is like many RIAs, especially fairly recent breakaways, who are taking time off this summer. They get away, but their vacations aren’t marked by a restful, Riviera circa-1920s feeling, when the office seemed like it was a million miles away. Rather, their vacations are more like business-lite.

RIAs have been living the 24/7 culture via today’s better communication technology for a while. But the need to stay connected has been heightened this summer by the lousy market and business that are demanding more attention than ever.

“The markets have gotten increasingly volatile and I think that necessitates being more in contact with clients and the office,” says Malcom Gissen, principal of Malcolm H. Gissen & Associates Inc. of San Francisco.

Four clients and three plays

Gissen, who keeps his Palm Pre handy at all times, finds it helpful to deliberately mix business with vacation. He took an 11-day trip from his San Francisco home to Washington D.C. and New York earlier this summer. He met with four clients in each city in addition to seeing three plays.

Malcolm Gissen says market volatility shapes
RIA vacation practices.

Later this month, he’s taking 16 people [mostly clients] to Ashland, Ore., to see seven plays over the course of five days. He’ll do meetings with his clients by day.

Keith McKenzie, principal of Delphi Private Advisors, who broke away earlier this year from Bernstein Global Wealth Management, is taking his first two vacation days off this week as an RIA.

“We really don’t want to take a day off,” he says. ”We’re having so much fun with the business. [When you step away] you feel like you’re missing something.”

When the partners at Delphi of San Diego do step away, they stay connected. McKenzie [an engineer by training] uses an iPhone and his partners both take BlackBerries with them.

Foreseeing the fires

“Some people see it as an intrusion,” he says. “Client expectations are that they can get ahold of you. I prefer to come to the office knowing that there’s not a fire.”

David Armstrong, partner in Monument Wealth Management in Alexandria, Va., which has about $250 million in AUM, will stay in touch by iPhone when he leaves for a beach vacation this Friday. He’s not so concerned about market events. His clients know their plans and portfolios aren’t designed to react to market events like yesterday’s.

In fact, he hasn’t had a single phone call about yesterday’s decline in the market.

What will cause him to check his phone, however, is that the two-year-old firm, affliated with LPL, is growing its headcount and moving to a brand new office.

David Armstrong is checking to make
sure construction of his office proceeds
smoothly.

“I’ll need to be available for any last minute decision on construction,” he says.

He says he doubts any market event at all could bring him back from vacation — and in fact remembers that during one of the darkest days of the fall of 2008, he was at a seminar in Richmond. As the market tanked, dropping something like 700 points, he remembers briefly wondering whether he should return to the office. No, he decided.

Not a trading shop

“What would I be doing? Not trading,” he said. “We’re not a trading shop.”

He’s fairly sanguine about the market, saying that he believes the recovery is going through a soft patch, but will continue. Portfolios at Monument are weighted toward cyclical sectors, including technology and consumer discretionary, and de-emphasize late-stage sectors. The asset allocations haven’t changed since early 2009, he says.

When I called Justin Krane for this article, he answered the phone on two rings from his hotel room in Hawaii, where he was vacationing with his wife and children. The principal of Krane Financial Solutions carves a middle road on vacation.

“[In the morning], if I recognize a call, I pick it up,” he says. “In the afternoon, I turn off the cell phone.”

He doesn’t feel like he can unplug completely as a solo practitioner managing $75 million of assets. “It’s hard now because it’s all me. But I don’t have clients in a panic; the market’s down 250 [points] today, and I haven’t heard from anyone.”

Chris Harvey, franchise partner and financial advisor in the Leesburg, Va.-based Ameriprise Financial franchise, McGill, Harvey & Associates, , is also taking a measured approach this year. His practice has assets of $120 million under advisement.

Shorter vacations

He’s taking shorter vacations this summer. On a few occasions, he’s taken off for the beach for a few days, but nothing extensive.

With one wary eye on the market and the Federal Reserve, he’s been continuing to move money out of U.S. equities and into emerging markets equities and debt.

He’s avoiding the U.S. and Europe.

“I’m very concerned that the country’s debt is 400% of GDP,” he says.

He is also moving money from domestic bonds to emerging market debt, especially in Latin America and the Pacific Rim countries, where he believes growth will come from the emerging middle class.

One fund he likes is EAGMX/Eaton Vance Global Macro Absolute.

Clients don’t bat an eye

None of his clients have batted an eye about his decision to shift assets away from the U.S. “I’ve been surprised,” he says. “When I started in 1982, hardly anybody was in emerging markets. That’s changed.”

Meyer says he is also able to feel more relaxed in these markets by taking a different approach to the markets. He is keeping more of his investments in non-correlated assets and doing it with traditional mutual funds that mimic hedge funds.

“Losing less means a lot on days like this,” he says.