Morningstar Advisor - April/May 2011 - (Page 13)

Advisor Profile Cool Logic, Warm Intent By Kate Stalter Jonathan Satovsky pairs rigorous modeling with noble ideals for the benefit of his clients. Statistics, calculus, and logic were Jonathan Satovsky’s best subjects in college. This suggests that the New York-based advisor is driven by pure left-brain data analysis— but that would be wrong. Instead, he says he’s driven by a desire to help clients live secure, happier lives—and he uses his left-brain skills in service of that. Satovsky’s key goal is to manage assets so clients have sufficient income to allow a spending rate between 3% and 5% of their portfolio value. Satovsky recommends that clients view themselves similarly to university endowments, which maintain relatively low spending levels. That means avoiding extra risk that they may not be comfortable with. “If you’re targeting a 3% spend rate, or 6% after taxes, that’s not exorbitant, and you don’t have to shoot for home runs. You can shoot for singles and doubles and maintain a moderate portfolio,” he says. One Head, Lots of Hats attorney, a stock broker, an insurance agent, portfolio manager, mortgage broker—six or seven professionals who all might have been quite competent, but no one is speaking to each other,” he says. Unifying the various aspects of financial management appealed to him, and he set out to become a resource to his family, friends, and future clients. He does extensive research into market performance, works to educate himself and his clients on salient financial concepts, and makes sure to offer his clients the emotional support that often goes along with financial decision-making. He makes use of tools and research from a wide range of sources. He relies on Morningstar Office to give clients snapshots of their holdings that he manages, as well as their outside investments, such as 401(k)s and education-savings plans. He also uses Morningstar Direct, a platform that aggregates data sources so institutional users can do research and due diligence. He uses the Morningstar data to track money flows in various asset classes. Satovsky’s extensive data analysis is central to making determinations about asset allocation to match an individual’s risk tolerance. He aims to build long-term relationships with clients, and a first step is educating them about market risk and volatility. He likes to illustrate how even the best assumptions can go awry. “We can collectively agree that something might be the best approach in the world. But when we come back from lunch, the world has changed,” he says. Geopolitical events or sudden shifts in market conditions can quickly change the volatility of a particular asset or mix of assets, he cautions. By outlining the specific risks of an investment, Satovsky hopes to steer clients toward vehicles that are appropriate for their risk tolerance. “If someone targets a return of 6% a year, and then they take a low-volatility approach to getting that 6%, they’re much more likely to reach their goals than the person who targets 8% but can’t handle the volatility,” he says. Purposeful Portfolios He founded Satovsky Asset Management, which has $380 million under management, in 2007. By then, he’d spent 14 years as one of the nation’s top Ameriprise advisors. He recalls being intrigued when he first learned about the concept of financial advising in the early 1990s. “As people accrued wealth and became successful, they typically had an accountant, an To construct a client portfolio, Satovsky begins with models from Morningstar, Goldman Sachs, JP Morgan, and others. He wants to see what kind of results a client would get by investing more conservatively or more aggressively. Through back-testing and applying additional parameters, Satovsky develops a set of expectations for the performance and volatility of a particular asset mix. Depending on an investor’s needs, that mix could include exposure to cash, fixed income, domestic and foreign equities, and alternatives. MorningstarAdvisor.com 13 http://www.MorningstarAdvisor.com

Table of Contents for the Digital Edition of Morningstar Advisor - April/May 2011

Morningstar Advisor - April/May 2011
Contents
Contributors
Letter From the Editor
The Debate That Matters Most
What Can the Mutual Fund Industry Do Better?
Cool Logic, Warm Intent
How to Start a Mutual Fund
Owner and Operator
Middle East Revolts Roil Oil Markets
Four Picks for the Present
Investment Briefs
How We Improve Our Odds of Picking Outperformers
Health Care Survived 2010, but Investors Want Proof
The Global Fund-Leadership Playoffs: Europe vs. the United States
U.S. Fund Investors Have It Good
U.S. Fund Firms Learn to Speak UCITS
Balancing Act
The Tamer Ride
Investors Lend a Hand
Healthy, Wealthy, and Wide
Foreign Funds That Win at Concentration
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
VAs Finish 2010 With a Solid Gain
Buying Good Funds, Poorly

Morningstar Advisor - April/May 2011