Evan Harp sat down with Clark Kendall of Kendall Capital Management to discuss how his firm helps middle-class millionaires steward their wealth.
Evan Harp: What is Kendall Capital Management’s’ investment philosophy and focus?
Clark Kendall: Our investment philosophy at Kendall Capital centers on serving middle-class millionaires — those with investable assets between half a million and $10 million. We differentiate ourselves by integrating comprehensive financial planning with investment management, all tailored to help our clients achieve their unique financial goals.
Harp: When and how did your practice begin?
Kendall: I started Kendall Capital in 2005 with just a phone, a desk, and a presentation book. I started in the DC market, which is vast, but I noticed that clients with less than $20 million often felt overlooked by firms like Goldman Sachs. Additionally, there is a significant segment of do-it-yourself investors who are not fully aware of the complexities and benefits of integrating wealth management strategies into portfolio management. In a nutshell, middle-class millionaires have questions like, “Should I use a Roth retirement fund? Should I pay off my mortgage? What about a 529 plan?”
This year, for example, the market has seen substantial divergence, particularly with stocks like the “Magnificent Seven.” Many investors struggle with proper asset allocation. Vanguard has highlighted that there are now more index funds than individual stocks trading on the NYSE and Nasdaq. We guide clients through the wealth management process, helping them navigate these challenges effectively.
Kendall Talks About the Markets
Harp: What’s something happening in the market right now that you think not enough people are paying attention to?
Kendall: Too many people are focused on trying to predict when and how quickly interest rates will decline. Warren Buffett famously said that if someone could consistently forecast interest rate movements, he would pay them $1 million a year just to sit next to him and provide that insight.
The real challenge for most clients is managing the macroeconomic cycles we are experiencing. The Federal Reserve has made it clear that they aim to lower interest rates while achieving as soft a landing as possible, without increasing unemployment.
On the opposite side of the coin, we have the impact of the internet and artificial intelligence driving technological efficiencies in our economy. Historically, major innovations — like the invention of the car, the tractor, the railroads, and the expansion of the highway system — have created significant productivity gains.
We are still benefiting from these long-term productivity benefits of utilizing the internet and are just at the beginning of utilizing the benefits of AI. Ultimately, I prefer to focus on broader issues rather than just the outcomes of elections or the exact movements of interest rates.
Kendall on the Fee-Only Path
Harp: What’s the biggest obstacle you had to overcome, and how did you do it?
Kendall: When I started the firm, we positioned ourselves as fee-only fiduciary advisors. Building the brand and loyalty of Kendall Capital took time, especially since we did not start as a commission-based sales organization. From day one, our focus was on being fee-only fiduciaries, which made it challenging to generate that first $1 million in revenue.
However, once we effectively communicated our competitive advantage in the marketplace compared to other advisors, we experienced a snowball effect. We realized we could genuinely help people, supported by our talented staff dedicated to achieving our clients’ goals and objectives.
Inspirations
Harp: Who is another financial advisor that inspires you, and why?
Kendall: I really admire Ken Fisher’s marketing approach; his message aligns closely with ours. However, what sets us apart is our commitment to maintaining a favorable client-to-employee ratio, allowing our skilled team to provide efficient, personalized care to clients.
From an investment management perspective, I have great respect for Jamie Dimon and appreciate the wisdom of Warren Buffett, especially regarding value investing. One important lesson I have learned from both of them is to avoid the investment landmines that come with market fads, like wind energy or cannabis stocks. It is crucial not to get swept up in the latest trend.
I often remind clients about the rise and fall of companies like AOL and BlackBerry — notable examples of productivity innovations that ultimately faltered in the market. Effective portfolio management requires prudence, proper diversification, and a long-term perspective.
For more news, information, and analysis, visit VettaFi.com | ETF Trends.
