Investment Advice at 35,000 Feet

When American Airlines captain Rob Gormly is piloting a Boeing 777 toward Zurich or Paris or, perhaps, England, the talk in the cockpit often turns to investment performance. How's my portfolio doing? a co-pilot might ask. For Gormly isn't just a well-seasoned international pilot, he's also a financial advisor overseeing almost $100 million in investments for a client base that includes about 70 American

When American Airlines captain Rob Gormly is piloting a Boeing 777 toward Zurich or Paris or, perhaps, England, the talk in the cockpit often turns to investment performance. “How's my portfolio doing?” a co-pilot might ask.

For Gormly isn't just a well-seasoned international pilot, he's also a financial advisor overseeing almost $100 million in investments for a client base that includes about 70 American Airlines pilots and retirees.

And while the hijackings and devastation of September 11 have forever changed his life as a pilot, he says the impact on his business was less profound, though assets under management have fallen.

Through it all, one thing remains constant: His commitment to The Gormly Co., the management firm he runs with his wife Karen, based in the town of Flower Mound, Texas, population 52,000, a 30-mile drive from Dallas.

How does Gormly balance what are essentially two full-time jobs — logging a few hundred thousand miles a year for American Airlines and managing portfolios for his colleagues? The answer lies with Karen who, Rob says, “runs the show” at their six-person office, which was opened in 1992.

‘Relationship Builder’

“Everyone calls her ‘The Boss,’” he says with a laugh. Karen runs the office so efficiently that no one has to call Rob when he's 35,000 feet above ground.

Rob, 53, hauls his laptop along on his worldwide jaunts, and as soon as he arrives at his hotel, he checks the markets. “I determine the investments and do all the selling,” he says. His wife, meanwhile, specializes in relationship building, client service and seminars.

“Rob and I complement each other well,” Karen says. “Even though he's gone so often, it's no problem. Things run smoothly.”

They met on a sailboat in 1985, when one of Rob's friends brought Karen along on a race. Karen, who sold product labels to a manufacturing company at the time, says the advisory business came naturally to her. “I didn't mind cold calling,” she says. “I didn't mind if people hung up on me. I love talking to people and finding out about their kids, their dogs, their vacations, their gardens. I'm a real gatherer of information.”

A Backup Plan

Rob's father was an American Airlines pilot, and it was the younger Gormly's dream to become a pilot, too. He realized, however, that many people fail to become pilots for a variety of reasons. So he had a backup plan: majoring in business and insurance at North Texas State University (now known as the University of North Texas).

He was hired by American Airlines in 1973, about the time of the Arab oil embargo. Just as he completed ground school, he was laid off. Thankful for that business degree, he got a job at Aetna Insurance, specializing in selling tax-sheltered annuities to school teachers. When he was recalled by American Airlines in 1976, he soon realized he could do for pilots what he had done for school teachers.

“When I saw pilots getting lump sum distributions from their 401(k)s and making poor investment decisions, I felt I could apply what I learned at Aetna and help the pilots out with their investments,” he says.

With flights lasting up to 12 hours, Rob has a captive audience for his sales pitch in the cockpit. But he resists: “That wouldn't be very polite.” Inevitably, however, the cockpit chat gets around to what the pilots' interests are when they are not flying. And once a co-pilot discovers what Rob does when on terra firma, the financial advisor is peppered with non-stop questions about stocks, bonds, mutual funds and pension plans.

Over the years, his investment philosophy has changed a lot. “I used to be an asset allocation advocate, but I'm not satisfied with it anymore because it just hasn't worked,” he says. “It does not protect us in down times, and it holds us back in good times. Now, I base my investments on what the Federal Reserve is doing. If interest rates are plunging, I get back in the market. If interest rates are going up, I get out of the market.”

He's is a proponent of Rockville, Md.-based Rydex Funds. “I like the fact they don't mind if I move money around if I want to get out of the market,” he says. “I used to be with Fidelity Advisor Funds and they had a problem when I was moving $50 million to $60 million in and out of the market, even though I did it only two or three times a year.”

Rob says the market slump and the terrorist attacks have shaved 15 percent to 20 percent off the assets he oversees. He managed to avoid more severe damage, he says, by not putting much of his clients' money in American Airlines stock, although most of his clients have worked for the company. That stock was one of the hardest hit by the post-911 travel slump.

Gormly and his colleagues have bigger worries: “Everybody's been very traumatized by the events of September 11,” Rob says.

What is vastly different for Rob and his American colleagues is “the way we view people who are disruptive,” he says. “Before, we were passive because no one ever conceived anyone would kill themselves and take everyone down with them. If a hijacker said, ‘Take me to Cuba,’ we'd say, ‘Yes, sir. We'll take you to Cuba.’ But this new reality that someone would want to use our plane as a destructive devise, well, it's a real eye opener for all of us and to everyone in the business, and even outside the business.”

No Nonsense

These days, Rob “doesn't put up with anything,” he says forcefully. “There's no nonsense anymore and the passengers know it. And the passengers don't want us to put up with any nonsense. Actually, the passengers have been awesome. They're ready to jump into action at the word go.”

Now, when Rob welcomes his passengers over the public address system, he doesn't mince words. “I tell the passengers that if a flight attendant asks for any help, give it to them. Don't hesitate.”

“It's a very sensitive time right now,” Rob says. “You have to be cautious of everything.”

Whether in the air or in the market.

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