“A good plan won’t need to be changed very often.” With Jason Hartman & Gary Ran

Don’t follow your investments — your investments should be the result of a plan. A good plan won’t need to be changed very often. Make sure your investments are such that you don’t have to worry about them constantly. Ihad the pleasure of interviewing Gary Ran the Chairman and CEO of Telemus, an independent, fee-based […]

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Don’t follow your investments — your investments should be the result of a plan. A good plan won’t need to be changed very often. Make sure your investments are such that you don’t have to worry about them constantly.

Ihad the pleasure of interviewing Gary Ran the Chairman and CEO of Telemus, an independent, fee-based firm that’s nationally recognized as one of the top firms in the industry. Telemus currently manages and advises on approximately $3 billion in investment assets for wealthy individuals, families and their related interests from offices in Michigan, Illinois, and California. Gary has been in the investment business since 1979 when the Dow Jones Industrial Average was around 800 and has become one of the most established, successful and respected advisors in the industry over the course of his career.

Can you tell us the “backstory” about what brought you to the finance industry?

Ifirst became interested in investing around the age of 10. My grandfather, Phillip Stollman, was a very successful businessman and a major shareholder in two of the largest banks in Michigan at that time. He encouraged me to follow the market and it became a hobby of mine. By the time I was in my late teens investing was my number one interest. I would often spend weekends at the library looking at various research publications while my friends were out playing around. Eventually, I decided to make it my profession and I’ve never regretted it. I often say I never worked a day in my life because I was able to turn a hobby into a business.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?

It was the spring of 1995 and I was in Palm Beach, Florida on vacation. Staying at the same hotel coincidentally was Jamie Dimon who back then was at Smith Barney (I think) and Peter Lynch who was the manager of the Fidelity Magellan Fund and the most recognized investment manager in America at the time. One afternoon, the three of us were talking in the pool when another guest came up to Peter and asked him what he thought the market was going to do for the year. At the time the Dow Jones Industrial Average was about 7300 or so. Without even thinking about it Peter said to him something like “I don’t know which direction the next 1,000 points is but the next 7,000 are up not down.” I use that story whenever we have a correction in the market. The lesson is no matter how long or how far the market drops it always recovers.

Are you working on any exciting new projects now? How do you think that will help people?

We recently launched a family office practice. We’re finding that our clients who have an increasing amount of complexity to their lives want more help in managing that. Accounting, administrative and information management services are essential to the smooth running of a family with complicated finances and investments as well as keeping its stakeholders well informed. Our virtual family CFO service provides a coordinated, technology-enabled approach that meets the complex needs of most individuals and families.

Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

Early in my career, I worked for a small independent brokerage firm that was founded by a Yugoslavian immigrant who had come to America for a better opportunity. He had saved up and bought a seat on the Philadelphia Stock Exchange and opened up his own firm. I had been working at a mutual fund company because I couldn’t get a job elsewhere and desperately wanted to be a stockbroker. He not only gave me the opportunity that started me on my way but he also taught me the business and the importance of client service.

From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?

Over the many years I’ve been doing this there have been numerous events that have caused people to worry. While the causes are always different, the results are always the same. What we’re going through right now is certainly different than anything any of us have been through before but like other times of uncertainty, this will eventually end. What I’ve been telling people is that in a year or two I’m sure we’ll be back to worrying about some of the old issues like climate change and probably a few new ones.

If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?

I would absolutely advise them to continue doing what they’ve been doing. One of the many things I’ve learned doing this is that its time in the market that determines success, not market timing.

If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?

I would suggest they take both a passive and active approach. I would recommend with part of their funds they invest in index funds that cover large-cap, mid-cap, and small-cap stocks. For the remainder of their funds, I would suggest using an active manager who can give them a more concentrated approach. Given the unprecedented nature of this situation, I would want exposure to the broad market as well as specific companies.

Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?

There have been a number of industries that have been severely impacted by the shutdown of the economy like airlines, hotels, car rental companies, etc. that offer outsized returns potentially. In addition, the credit markets have gone through a severe disruption and are offering opportunities that we find attractive.

Are there alternative investments that you think more people should look more deeply at?

There are a number of alternative investments that offer investors real diversification. We favor strategies and investments that are non-correlated to traditional asset classes like life settlements or litigation finance. While primarily available only to wealthy investors, increasingly these options are being offered to small investors.

If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long term investment what would you advise them to do with it?

Everyone knows the story of the tortoise and the hare. Using that for reference, I would advise them to invest it in an index fund that covered a broad swath of the market or the “tortoise” approach. As I noted previously, what counts is time in the market not market timing. I would advise against buying a handful of individual popular stocks or using the “hare” approach. Too often, one or two end up a disaster.

If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?

Ok, here you go:

  1. Don’t save for retirement — I’m not saying don’t save for retirement, but make sure you have enough readily available savings to get you through tough times.
  2. There’s more to investing than the stock market — while stocks are certainly an important part of anyone’s portfolio, they shouldn’t be the only thing.
  3. Don’t pay off your mortgage — while it’s nice to own your house free and clear, that’s not going to impact if the house goes up in value or down in value. Not having so much money tied up in your house will help you diversify.
  4. Don’t hire an advisor — you get what you pay for and if you don’t need it, don’t pay for it. Most investors can use an online tool until they have enough complexity to their situation that paying for advice is worth it.
  5. Don’t follow your investments — your investments should be the result of a plan. A good plan won’t need to be changed very often. Make sure your investments are such that you don’t have to worry about them constantly.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

My favorite life lesson quote is, “the grass is always greener on the other side.” All too often, people think that what they’re going through, no one else is going through, and if they only could switch places with someone else, their problems would be solved. Early in my career, I almost left Merrill Lynch to join Paine Webber because I thought that things were better there. Luckily, I decided not to make the move and a few years later, Paine Webber was basically out of business.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be?

I would influence people to take care of the world around them. I love to travel and I’ve seen some incredible things and sites — both natural and man-made. I’m hopeful my great-great-grandchildren can experience the same things.

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