Menu Close

How a Top Advisor Structures Investments to Weather Hard Times

view original post

Virgil Kahl, owner of Spring Ridge Financial, is No. 62 on this year’s Barron’s Top 100 Women Advisor ranking.

Photograph by German Vazquez

Virgil Kahl, president and owner of Spring Ridge Financial Group in Wyomissing, Pa., originally planned to become a psychologist, but in college she took a hard turn into accounting after realizing that certified public accountants could earn more. It wasn’t until moving into wealth management in 2002 that she felt she was on the right path. “I’m interested in the minds and hearts of my clients,” she says. “I get to use my financial skills and a little bit of psychology to give people peace of mind.”

Kahl manages a 13-person team, which oversees some $1.1 billion for 1,900 clients, most of whom are approaching or in retirement.

Barron’s: With so many clients, do you sacrifice a personal touch?

Virgil Kahl: Sometimes when practices get large, the manager does a cameo in client meetings. I still want to be the one who is present and making decisions. I’m involved in the big picture, and in the weeds with details. I’m always in communication with our clients and my staff. I’m in the office eight to 12 hours a day, but if you love what you do, you don’t work a day in your life.

Read More in Top 100 Women Advisors

Many advisors sell off a book of business once they grow to a certain level, and focus only on the larger clients. I believe in the saying, “Don’t forget where you came from.” Even though I have a minimum asset size of $500,000 for new clients, I still take care of clients I’ve had for the past 20 years even if they are smaller, and will always make time for them.

News has been terrible for retirees. Stocks are down and inflation is up. Have clients had to make hard changes?

Clients are asking how this will affect their retirement. Naturally, those who are newly retired or considering retirement in the next year are more concerned. But we structure portfolios to ensure assets last for the rest of their lives. I’ve been through many market cycles with my clients. None have had to return to work after the 2008 crisis or after the corrections in 2011, 2015, 2018, or the pandemic decline.

How are investments structured to withstand tough times?

We allocate assets to three buckets: short, medium, and long term. In the short-term bucket is fixed income used for cash flow for up to three years. In the medium-term bucket are dividend-paying stocks, income strategies with higher yields to buffer volatility, and funds with a history of recovering from declines faster than the market. These medium-term assets slowly replace what is being spent out of the short-term bucket. The longer-term bucket allows even clients in retirement to invest for the highest possible long-term growth, since these assets won’t be used for at least 10 years.

Key Data

  • Team Assets
    $1,125 Mil
  • Typical Account Size
    $1 Mil
  • Typical Net Worth
    $2 Mil

What portfolio adjustments have you made?

Heading into this year, we were aware of valuations and knew that interest rates were expected to rise. We were adding commodities and inflation-adjusted bonds, shortening the duration of fixed income, and tilting to the value side. We started using some defined-outcome exchange-traded funds to add stability.

What’s your next tactical move?

I believe we are at peak inflation, so you don’t want to be continuing on the inflation trade. The market looks ahead. If you look at the top 10 companies in the S&P 500, all but one is down by more than the index itself. Usually the top companies do better and lift the broad market, but those companies are dragging it down. You still have some higher valuations than in the past, but maybe some have been oversold relative to where they should be. When the largest companies sell off more than the broad market and their earnings and outlooks are fine, for the long term you probably want to add more.

How does your tax expertise come into play with clients?

Having a CPA license is a total value add. It helps me see things through a different lens, everything from investing for after-tax returns to maximizing wealth transfer. As my clients get older, many are in a lower tax bracket, which opens up planning opportunities. For example, we evaluate whether IRAs should be slowly converted to Roth IRAs many years before the required minimum distribution age. In many cases, delaying and paying tax on IRA required distributions after age 72 causes clients to jump into a higher tax bracket than had they converted.

What are the primary reasons clients come to you for advice?

Every once in a while, a client just wants to invest, but that usually leads to other things. A client recently came in for a retirement planning meeting, but it extended to funding the private-school education and college for their grandchildren. It then expanded to helping older parents with the tax aspects of estate planning and protecting assets from being depleted during end-of-life skilled care.

As a female advisor, what insights do you bring to your women clients?

The women’s movement that started decades ago rewired some women to think they have to know it all, do it all, be it all. Women have to forgive themselves for not doing it all and just focus on doing the best they can. I want to be a champion for women to help them focus on their successes, and a financial plan often lays that out very objectively.

Because many women put others first, I’ve also had to guide women to give themselves permission to enjoy the fruits of their labor. Spending money in a prudent way while you are alive should also include more family vacations and making memories.

Thanks, Virgil.

Read about how we compile our advisor rankings