Magazine

Older but Wiser Advisers


For these three, retirement was a chance to turn an old interest into a new career: Money management

For many people, managing money is a chore—the financial equivalent of flossing. But for some, like the men profiled here, tending a portfolio becomes a passion, and then a profession. At a time when many might kick back and hand their money over to others to invest, they turned pro, and began managing other people's money as well.

THE PILOT: READING MARKET TRENDS

For most of his career, Greg Morris was a pilot. In 1975 he graduated from the U.S. Navy's "Top Gun" school and flew fighter planes until 1978. And for the next 26 years, Morris flew domestic and international routes for Delta Air Lines (DAL).

But while flying was his first love, Morris was fascinated by the markets. He bought his first stocks, United Airlines (UAUA) and Monsanto (MON) among them, in late 1972. His early experience was great—his stocks did nothing but go up. But in early 1973 his stocks started to fall. And fall. And fall. He held, and held, and held. By the end of 1974, Morris was down 65%. "I lost my rear end," he says, and almost gave up on the markets.

Then he learned about a way of trying to read market trends called technical analysis. That approach assumes all the data an investor needs is in the market, waiting to be unlocked. Technical analysts spurn fundamentals like price-earnings ratios in favor of tools like moving averages (the average price of a stock over a given time frame) and other arcane measurements.

On Sunday mornings, Morris would create charts of moving averages with a calculator and graph paper. When personal computers came out, he spent off days (he flew three to four days a week) programming his computer to do the analysis. Overall, Morris devoted over 10 years of his spare time to writing financial software and becoming an expert in so-called candlestick charting, a technique pioneered by Japanese rice traders. It tracks stock moves with bars (the "candles," which show stock moves based on the closing price) and lines ("wicks" that come out of the bars and show how far, high or low, the stock moved during the day).

Morris' expertise led to a partnership in 1995 with John Murphy, then CNBC's star technical analyst, and the pair started the investor education Web site MurphyMorris.com. The site took off, and in 1999 they opened MurphyMorris Money Management. In 2002, MurphyMorris.com was bought by StockCharts.com for some $1.5 million, and in 2004 the money management business was merged into PMFM, a fund provider and money manager. At 56, Morris came on as PMFM's senior portfolio manager. He now manages $1.1 billion in two mutual funds, separately managed accounts, and 401(k) plans.

Morris, now 60, has no regrets about waiting 30 years to start managing money for others full-time. "The security of the airline job gave me the comfort I needed," he said. "I look back and think everything fell into place just about right."

THE CONSULTANT: FINDING GREAT COMPANIES

In 1994, at age 49, Jim Huguet hit the jackpot. He sold his consumer-products consulting firm, NEO, to bar-code specialist Information Resources in an all-stock deal. He stayed on as a vice-president but, after a six-month holding period, began liquidating his stake.

Huguet then faced an enviable problem: what to do with all the cash? He hooked up with a broker at UBS (UBS), where his returns typically matched the markets, he says. On his own, he researched mutual funds and their investing approaches.

In 1997, Huguet retired and planned to work on his golf game. But, unhappy with his returns, he started thinking about better ways to invest. He thought back to his time consulting for some of America's most prominent companies, such as Johnson & Johnson (JNJ) and Colgate (CL), and about the link between well-run companies and above-average market gains. He decided to focus on companies with strong leaders, dominant market positions, and long records of earnings growth. He called it his "Great Companies" strategy.

Huguet was solely interested in improving his own returns, but in 1997 a buddy said the idea sounded like a good topic for a book. He put Huguet in touch with an agent, who sold the book to a division of Random House. Great Companies, Great Returns was released in mid-1999, during the Internet bubble. Huguet's picks, which included GE (GE) and Medtronic (MDT), returned a none-too-shabby 25% by yearend but paled next to stocks like Internet incubator CMGI (CMGI) (up 260%). Huguet decided to ignore the zeitgeist and stick to his guns. A year later, GE was down 4% and Medtronic actually rose 76%, while CMGI fell 90%.

The book led to a deal with financial services company Aegon (AEG), and a Great Companies mutual fund was created, with Huguet picking the stocks and Aegon handling the business end. It eventually built up $1.4 billion in assets. When Aegon consolidated its mutual fund business and closed the fund, Huguet kept the name and went into the advice business. He teamed up with an independent adviser that pursued a similar investing approach, and today Great Companies manages $350 million for institutions and individual accounts. "Consulting allowed me to understand what made a good company from the inside out," says Huguet, now 63.

THE WHEELER-DEALER: STAYING DIVERSIFIED

How does one become a financial adviser after 60? Tom Hepner, 64, has always been an entrepreneur at heart. After a stint in the U.S. Air Force, he headed to Harvard for business school. While there he worked part-time as an investment analyst with Putnam Investments. But looking for more excitement, he took a job doing deals in the rapidly consolidating newspaper industry in the late 1970s. Hepner left that job in the early '80s, but after a few years in marketing teamed with an investment bank to start a company that bought and sold local weeklies and printing operations.

What Hepner really wanted, however, was to run a newspaper. He got his chance in New Hampshire. Two weeklies—one nearly bankrupt but loaded with assets, the other profitable but asset-light—were trying to merge and Hepner provided the mind-set and money to make it happen. The two papers merged into one and then grew into a chain of weeklies. That business was sold in 1997, and Hepner was out of the newspaper industry by 2000. "I had a lot of property, lots of money, but I was getting tired," he says. He then moved to Colorado and bought a health-care services company, which he sold in 2007, and truly retired.

Well, sort of. Hepner moved to Florida and hooked up with advisory firm Ruggie Wealth Management, where he now works as client relations manager. He specializes in working with clients who have most of their assets tied up in a single area, such as a business or real estate holding, and helping them diversify into alternative investments. His goal is to help Ruggie Wealth Management grow from $300 million in assets to $1 billion in four years. "That's our report card," he says. "That means we're successful." Those aren't exactly the words of someone looking to slow down.

Return to the 2008 Retirement Guide


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