$5 Billion Virginia RIA Says Bear Markets Don’t Kill Portfolios, Bad Behavior Does

Name: Stephan Cassaday

Firm: Cassaday & Company

Location: McLean, Virginia

AUM: $4.6 billion

Forbes Rankings: America’s Top RIA Firms, America’s Top Wealth Advisors, Best-In-State Wealth Advisors

Background: Cassaday, 66, grew up in Alexandria, Virginia and graduated from Radford University in 1976 with a psychology major and business minor. His first job out of school was with regional firm Johnston Lemon & Co. and then he did stints at several NYSE firms before abandoning the brokerage model and going independent in 1993.

Investment Philosophy/Strategy: “We look for things that work,” Cassaday says, adding, “There is no system that works all the time—you have to accept that fact and choose the best options that are pretty good most of the time.” Over a long period, a diversified portfolio—with stocks, bonds, cash and hard assets—will pay off and perform well most of the time, he describes. “We spend a lot of time warning clients, preparing them emotionally for markets like this,” Cassaday says. “The thing you have to remember is that it’s not the bear market that could destroy your wealth but it’s how you behave during the bear market.”

Competitive Edge: He cites his firm’s hands-on and “preemptive approach,” where an in-house team of experts—from taxes and investments to estate planning—closely communicate to discuss clients together. That broad approach allows the team to alert clients of any new details or changes ahead of time. Says Cassaday, “The integrated wealth management process doesn’t exist for most people—and that’s where most financial mistakes happen.”

Biggest Challenge: Cassaday’s describes having to learn how to delegate early in his career. “When I started the company, I was working long weeks and barely seeing the family or going on vacation,” he recalls. After having a moment of realization while on the phone with his then 4-year-old son, who now works at the firm, Cassaday hired a consultant and expanded the team. “Hiring good people also gives me more time to talk to clients, which is the most productive thing I can do,” he adds.

Biggest Client Misunderstanding: Cassaday says he learned to sometimes “be more persuasive” with clients the hard way. Despite his warnings, a former client was heavily invested in tech stocks leading up to the dot-com bubble and took big losses when the crash eventually happened. The client left the firm shortly after, telling Cassaday, “‘you should’ve been more persuasive’—I’ll never forget that,” he recalls.

Investment Outlook: He advises staying focused on the long-term and rebalancing portfolios to take advantage of distorted valuations, which have come down significantly amid the myriad of uncertainties facing markets. “Small incremental changes make sense right now… buy when the news is worst,” Cassaday says.