Meet an Advisor: Simon Brady

Simon Brady: One thing to note which might give some context to some of my answers – I am a solo practitioner and I’m not affiliated with any institution, broker, etc. My firm is a regulated Registered Investment Advisor (RIA) and I’m what is known as a fee-only advisor. That means I don’t take any commissions from any third parties and I don’t make any kind of product sales. I’m compensated exclusively for my time, expertise, and experience and the guidance that I offer. I have an hourly rate – a bit like an old-time lawyer. Whatever work we do together, I invoice project-style based on the time spent working on it, not relying on any transaction that has to come at the end of it or a commission for getting you to buy something or invest in a particular fund or anything like that. Because of this time-based compensation model, a client’s asset level is not important to me. So I have no minimums. And I do not require them to hand over their investment accounts to me to manage. Although, I do have the ability to do so if they wish. So, I can work with essentially anyone.

Evan Harp: That’s really interesting and I think that’s great context for the rest of the interview. When and how did your practice begin?

Brady: I set up the practice in early 2016, working out of a WeWork space in midtown Manhattan. Prior to that, my background had all been in institutional Wall Street trading in currency and equity derivatives in London and New York. You know, the whole “Wolf Of Wall Street” screaming and shouting numbers all day thing. I then worked for one year as a personal financial advisor at the United Nations in New York. I was there for a year but figured I could do better on my own – certainly with less bureaucracy!

Harp: What is your investment philosophy?

Brady: That individual single stock and bond investments are generally not a good idea for most people. I will only put clients into exchange traded funds (ETFs). I firmly believe in a highly diversified either passive or semi-passive approach to client investments. The difference between the two is that I am very open to the idea of factor-based ETFs in many cases. But not necessarily sticking to just the straight-up passive market-cap index ETFs. And I think that in certain cases there is something to be said for putting clients into more screened ETFs from providers like Dimensional, Avantis, Invesco, and many others that emphasize (and de-emphasize) the ETF holdings according to a particular philosophy or screening mechanism. And, as we know, there are a lot of such solutions coming out all the time. It’s important to me to keep up on all these developments for the benefit of optimizing managed client portfolios. Which is what attending the Exchange ETF conference is all about. I had a great experience in Miami in February and I’m looking forward to Vegas next March.

My principle is to essentially have clients buy, mostly hold, and then add to as much as possible, with maybe a relatively small number of informed tactical tweaks and rebalances along the way.

There is one thing that impacts the answer to this question. Something I perhaps should have said at the beginning. It is that my target demographic is largely individuals, couples, and families in their early 20s to mid-40s. I’m not generally dealing with people at the back end of their accumulation phase or who are about to move into the distribution phase. I’m mostly working with people at the beginning or, at the latest, the middle of the accumulation phase. Therefore, the idea is to get these people optimally invested in a diversified and low-cost manner and keep them invested, since they tend to have some pretty long time horizons. The idea is to create multiple effective portfolios that are time-horizon-dependent. And just encourage the client to put as much as possible in a systematic, automated fashion into those various buckets. Plus getting into the habit of continuing to do so for a long time. The idea being that their future selves will be very glad that they did.

Harp: I am thrilled to hear how you are using the Exchange conference. And that philosophy totally makes sense to me. What’s the biggest obstacle you had to overcome? And how did you do it?

Brady: That’s a bit of a therapist-on-the-couch question.

Harp: [Laughs] I suppose it is.

Brady: I think, given the demographic I work with, an obstacle is that a lot of people only tend to start thinking about this stuff too late. I’m not just talking about investments. I’m also talking about the other aspects of financial planning: estate planning, debt management, real estate, insurance, college funding, etc. Often it takes having kids, thinking about buying a home, hitting their 40s, etc. before people feel ready to begin to take action to address their personal finances. Prior to that, they either feel invincible. Or that they don’t have enough disposable money to make it worthwhile speaking to a professional like me. And a good number of years can pass by while in their 20s and 30s when we could be laying some really great groundwork for their future financial security.

The overcoming side of it is to try and get across to them that they have these enormous weapons on their side – time and the principle of compounding. That is something the 55-year-old pre-retiree does not have. I’m not going to judge a younger client or nag them or get angry at them because they’re not systematically putting enormous amounts of money away. But I want to get that infrastructure built for them. So that they have carefully curated buckets to start to fill when they are able to and then build those good habits early on. That will make their lives so much easier down the road.

Harp: I certainly wish I knew you in my 20s! Moving on to the next question. What’s something happening in the market right now that not enough people are paying attention to?

Brady: I think the big change is in how to think about cash. Three years ago, even a high-yield savings account was paying a quarter of a percent interest. Cash was literally dead money. Part of my job is not just to get people into stock and bond investments but to get them to hold an appropriate amount of cash. And hold it in a vehicle that actually rewards the holding of cash. Billions of dollars are currently held in savings accounts at banks that are actually paying the account owners literally nothing for keeping it there. With just a few minutes of work, you can very easily earn 5% on that same money right now with no minimums, full access to your money with no liquidity restrictions or penalties, zero stock market risk, and millions and millions of dollars in FDIC insurance. This can be particularly important in my demographic. People may be saving quite significant amounts of money for relatively short time horizon goals like a down payment on a home, for instance.

I think that’s something that people are not paying enough attention to. It’s inertia. I view part of my job as being motivating clients to spend the literally 5 minutes that’s required to start earning some meaningful interest with no market or credit risk.

Harp: That’s an excellent answer. Final question – who is another financial advisor that inspires you and why?

Brady: I think that some of the other people with whom I came through the CERTIFIED FINANCIAL PLANNER™ (CFP®) education and certification process are my greatest inspiration. We were mostly career-changers at the time from highly varied backgrounds (Wall Street, media, marketing, the non-profit world, insurance, etc.). And the intensity of getting the designation over three years of study and a brutal final exam created a bond that still holds a number of us together more than 10 years later. Our practices are all a little different with particular target audiences. But we learn so much from each other and these people are all putting themselves out there to make their clients’ lives better.

I do listen to some of what Michael Kitces has to say on certain things. But I guess he’s probably more of an influencer in our field than a fellow financial advisor.

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