Erik S. Davis
Founder, Navigation Group,
Redwood Shores, Calif.
The Advice: Don’t confuse wisdom with knowledge. Many advisors hold out that they know things they cannot possibly know. Be humble about what you don’t know. The thing that will save you is knowing what you know today and the process that flows from knowing what you know today.
Background: “Over 23 years in the business, I have become comfortable telling clients what I know and what is unknowable. While I have my opinions and am a knowledgeable advisor, I’m quick to tell my clients that I cannot say with certainty when the next downturn will come or how tax laws might change with the next Congress. My role is to help them make the best decisions possible at any given point and to make needed changes when life deviates from the expected. I try to help them understand that at certain times, their emotions might make the same consistent advice they have happily relied upon during good times suddenly very difficult to take. They need to understand that life is uncertain, but their process will remain consistent and we will find a path forward together.”
Why It Matters: “Market movements have consequences, and clients get to decide whether those movements are good or bad. When adverse events occur, I try to be knowledgeable within limits—and humble. You can’t dodge every bullet, and sometimes things don’t work out. I try to help my clients build a muscle memory about how things are going to be when investing doesn’t feel good. I tell my clients [that] I hope to be their trusted advisor for decades over good times and bad times.”
Pertinent Anecdote: “Look at what happened when the market dropped in the last financial crisis. For some clients, it was hugely impactful, and they had to make some lifestyle changes that were painful. For other clients, the market drop represented the best investment opportunity they had in their investing lives. There was nothing different about the event, but the circumstances of the clients dictated the outcome. I haven’t changed; the strategies haven’t changed; what’s changed is you.”
The Bottom Line: “I’ve had loyal clients who stuck with me over my 23 years in business. When the most recent market downturn happened, it was certainly not fun, but unlike my friends at the brokerage houses who were juggling time-stamped voicemails, I didn’t get a single call from a panicked client.”
Erik S. Davis is the founder of the Navigation Group in Redwood Shores, Calif. Davis earned his business degree from the University of Colorado, with an emphasis in finance. He became a Certified Financial Planner in 1997, becoming one of the youngest CFPs in the country at that time, and is a member of the Financial Planning Association. He and his wife Victoria reside in San Francisco and are very active in the Bay Area community, serving on several boards and working with numerous charitable organizations throughout the area. In addition to raising their son Dresden, they both are accomplished performers and enjoy traveling, scuba diving and hiking.
Managing Partner, Co-Founder,
GCI Financial Group, Summit, N.J.
The Advice: Hard work and discipline are givens, but to build a successful, sustainable business, sometimes you must be willing to make a sacrifice.
Background: “When I was starting out as an advisor, I was prepared to work hard. My younger self thought that it would take hard work and that’s all it would take. I accepted that building a business required effort and lots of time, and that if I made enough phone calls, I’d be a success. But what I’ve since learned is that, by itself, hard work is not sufficient. Building a legitimate business requires sacrifice.
That means giving up something valuable for something else of value. Sometimes it means making a painful investment and it sometimes means forgoing an income stream. You can’t just hang a shingle and hope—like in ‘Field of Dreams’—that if you build it, they will come. The enthusiasm of youth, even when married with charisma, will get you only so far. Not even dedicated, purposeful effort can guarantee success.”
Pertinent Anecdote: “Our firm was transitioning from a hybrid advisory model to a fee-only RIA. There were a lot of benefits to being fully independent, but we also realized that we had some existing accounts that we would no longer be able to service at a profit. For example, when we transitioned we had a number of our clients in 529 plans. We realized that if we wanted to have freedom to operate fully independently, we would have to sacrifice some revenue streams. Since our clients are important to us, we made the decision to service some accounts and manage some assets without respect to whether we were paid or not. This is the type of sacrifice we decided was what it took to take our business in the direction we wanted to go.”
The Bottom Line: “Accumulating capital is important, but sacrifice occasionally requires letting some of it go.”
Michael Greco is a managing partner and co-founder of GCI Financial Group. He also serves as chief investment officer and director of financial planning. Michael graduated from Lafayette College with a joint degree in economics and mathematics. His first official foray into financial services was in the Treasury Department of M&T Bank. Working on the fixed income desk, Michael traded Fed funds, mortgage-backed securities and foreign currency. He has served as an adjunct professor of economics and finance at Seton Hall University, and he is also an arbitrator in the Financial Industry Regulatory Authority Dispute Resolution forum.