Morningstar Advisor - October/November 2011 - (Page 10)

Advisor Profile Ahead of the Curve By Kate Stalter Hank Mulvihill doesn’t adhere to a buy-and-hold philosophy, and that has been profitable for his clients and himself. Hank Mulvihill says he made a smart career move at just the right time. Fascinated with the stock market since his teens, Mulvihill joined Merrill Lynch in the mid-1980s. A few years later, he moved on to investment bank Alex. Brown & Sons, which was sold to Bankers Trust in 1997 and later folded into Deutsche Bank. None of those transactions affected Mulvihill, however, because he had already struck out on his own. In the mid-1990s, technology was changing the investment landscape. That’s when he says his timing was perfect. “At that time, the Internet was just becoming capable of providing what had previously been unobtainable services to an independent financial advisor,” he says. Not only were advisors able to leverage the new technology to develop financial plans and investment portfolios, but they also were able to put clients into the fast-rising Nasdaq stocks that led the late-1990s’ market rally. Many investors failed to sell in time to keep their tech-boom profits. Mulvihill, who does not favor a buy-and-hold philosophy, got out with gains. “I made a lot of money for my clients,” he says. “I survived the 2001 and 2002 meltdown with profits in both years, and I am very, very proud of that.” Today, he runs Mulvihill Asset Management in Richardson, Texas, with $23 million in assets under management. Know Your Client Base There are many ways that can be accomplished, but Mulvihill says that it always boils down to working with an individual client or family to determine goals and risk tolerance. “It means listening to clients and their families, and hearing their concerns. As a group, advisors probably don’t do enough of that,” he says. “Clients tell me what they are comfortable with riskwise, and I make allocations based on that.” Off the Beaten Path Mulvihill says that after 24 years in the advisory business, he knows exactly who his ideal client is—because it’s a group he’s already working with. “It’s the C-level executives and the entrepreneurs who have plenty of assets but don’t have the time to do this themselves,” he says. “They want to know that an advisor will not let them get completely crushed by not paying attention to their portfolios.” The firm also works with retirees and families, and it does generational planning. His practice has been mainly fee-only for the past decade and entirely fee-only since early 2010. In keeping with his view that an advisor should not lose sight of each client’s objectives, Mulvihill prefers to do much of his own investment research. A junior associate assists him, but Mulvihill’s methodology involves a good amount of hands-on research into individual stocks. His philosophy boils down to this: Deliver total return and growth with reasonable risk. “I look for total return with investments that let me sleep well at night. That involves searching for the yield,” he says. When seeking proper investment vehicles to achieve yield, Mulvihill doesn’t automatically go for index funds. He will use individual stocks, bonds, and even options, in addition to ETFs. One somewhat-unconventional instrument he turns to is straight bonds, rather than bond funds. “They’ve worked well over the last year and a half because we’ve had the most remarkable situation with rates that were very low, and getting lower still,” he says. Among the debt investments he uses are Texas school district bonds, which are tax-free and bring cash flow along with relatively high yield. When it comes to stocks, Mulvihill uses Morningstar.com’s Premium Screener to uncover companies with top fundamental metrics. One of his preferred yardsticks is free cash flow, which he likes to see increasing 10 Morningstar Advisor October/November 2011

Table of Contents for the Digital Edition of Morningstar Advisor - October/November 2011

Morningstar Advisor - October/November 2011
Contents
Contributors
Letter From the Editor
The Emotional Burden
Where Are You Going for Yield?
Ahead of the Curve
How to Use a ‘Collar’
Why Dividends
Is Bond Investing All Uphill From Here?
Four Picks for the Present
Investment Briefs
The Risks of Stretching for Yield
For Banks, Uncertainty Reigns
The Virtues of Dividends
How Well Do You Know Templeton Global Bond?
The Case for Dividends in Emerging Markets
Finding Refuge in Value
Swift, Smooth, and Silent
Crack Open Closed- End Funds to Avoid the Relevance Paradox
Getting Beyond Labels in the ‘To vs. Through’ Debate
Handling the Headwinds
Bonds, Short-Term Bonds
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
A Prisoner of Pricing

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