For years now, Wall Street has been hiring energetic people with PhD degrees in theoretical physics or mathematics to help manage investments using arcane algorithms.
And in that world of brainiacs, Jim Stottlemyre stands apart. A PhD in geophysics? Yeah, he has one of those. But instead of toiling away as a quant, he works as a financial advisor.
Stottlemyre, 64, is different from most other math geeks on Wall Street for another reason too: he didn't jump from college immediately into finance. He actually had a career as a geophysicist, working for years as a scientist and manager at Washington Water Power and later at the Pacific Northwest National Lab, one of nine big federal research institutes, where he focused on energy research.
"I got pretty high up in the lab as a manager," Stottlemyre recalls, "until the lab director passed away and a new director came on. I found myself not on the team, so I took early retirement and went into consulting. That was okay, but after 9/11, travel-especially international travel-got pretty onerous. So I decided I needed something else to do. I couldn't just walk the dog and let my wife work."
The move from geophysics to financial advising wasn't direct, but there was a certain direction to it, he says.
First he went into business for himself, setting up a direct marketing distribution company selling health products. "It was an interesting challenge, and though people said we couldn't do it, we did succeed in setting up a global business, from which my wife and I are still reaping the benefits," he says.
Then his father began having health problems, which he says made him "passionate" about long-term care insurance. He signed on with GE Capital Assurance (now Genworth), and began selling the product, becoming one of the firm's top 10 salesmen in the western US.
"I was successful," he says, "but it felt one-dimensional, and I got bored. I wanted a broader line of products, so I went over to Merrill Lynch."
Three years later, in 2008, with the bottom dropping out of the stock market, Stottlemyre took a job as financial advisor at Baker Boyer National Bank, Washington State's oldest financial institution. "It was a bad time to be a broker," he explained. "Either my family was going to starve or I had to sell products to people that weren't really right for them, and I wasn't going to do that. The bank was offering me a base salary, and that was important."
Baker Boyer only had a small investment program to hand him, with some $12 million in assets under management when he came on board. "But they had $800 million in assets on the trust side."
"Almost all of the book was commission-based at the time I came in," recalls Stottlemyre. "I wanted to build a significant fee-based practice though."
He turned to the bank's private bankers for support. And working with them as a team, he has been able to build the book, over the course of four years, to $75 million in assets under management, with growth averaging 30% to 40% a year. "The thing that makes it successful is the team approach," says Stottlemyre.
"I'm not so good at beating the bushes-it's just not in me. But the private bankers are good at it. We've gotten deep inside the medical community around here, and also the science and engineering community associated with the national lab and the Hanford Nuclear Reservation. This area is getting known as the Silicon Valley of alternative energy," he says.
Stottlemyre says he gives lots of presentations. "We've managed to get connected with the people who bring new medical professionals into the community, and they put those new people in touch with us," he says. He also stays in touch with his old engineering pals. "I tend to still be in technical circles, so it's natural that people I meet will utilize my financial expertise. That's a significant advantage."
He says, "I lead with the financial goal planning processing, using Money Guide Pro software. This enables us to understand where people are, where they want to go and how to get there, in good, bad and downright ugly conditions. Then we go to investment and insurance recommendations."
Baker Boyer is a wealth and business bank, with very little retail banking business, Stottlemyre says, "So we tend to work with clients who have $250,000 or more to invest. "But he adds that this is not a hard and fast rule. "We look at a three-year horizon," he explains. "So if you have a young professional with student loans, we'll help them grow and get up to our minimum."
There is a referral process in place at the bank, he says, though he concedes, "It's not as effective as I'd like it to be." He adds, "I keep asking why the bankers aren't referring, and people say that I'm just one person and they worry about what happens if I were to leave and they got some new person without the same level of service." To address this concern, he says he's currently looking for a second person to add to the investment program, "so it's not just me." He also assures bank personnel that he plans to keep working at least until he's 70. "I get bored so easily," he says, "that I shouldn't even think of quitting. I've proven that. It's my personality."
What Stottlemyre likes best about his latest career, he says, is that he's helping people. "You can't help everyone, but you can help enough people to make it worthwhile. And it certainly hasn't been dull." Friends from his geophysics days often ask him how working with clients' assets can be interesting for a guy who used to be managing program budgets that were tallied in the hundreds of millions of dollars. "I say that coming up with investment strategies for my clients has been as challenging as anything I've done in my life," says Stottlemyre earnestly.
His prior role as a scientist has been a big boon in his new profession, he says. For one thing, most of his clients feel his academic abilities enable him to study problems and come up with multi-variable solutions. "There are so many parameters in this business, and that is what we deal with in the science realm all the time."
He says his approach to investing clients' assets relies on two basic platforms. "The first is for people who want to invest around strategies- whether they want some downside protection or they want something that protects against future inflation," he says. For that he uses a Curian platform. The other approach is for people who are younger. "They don't care so much about risk management," says Stottlemyre. For them, he uses the First Trust ETF data base. "It's passive, but has more quant filtering," he says.
Stottlemyre says he also draws on his energy background as a geophysicist to construct small positions in energy, agriculture, water and cloud computing. "These tend to be limited to about 3% of a portfolio," he says. But he adds proudly that the performance of these smaller holdings has been "really stellar, with gains averaging about 30% per year."
Name: James Stottlemyre
Bank: Baker Boyer National Bank
TPM: PrimeVest Financial Services
Location: Kennewick, Wash.
2011 production: $784,661
2010 production: $463,482
2011 AUM: $68,088,533
2010 AUM: $51,331,588
No. of branches: 1 (with a small amount of business from a second office.)