Photo Credit: Michael PughRobert Balentine is Chairman and CEO of Balentine, an independent, employee-owned investment management firm. He is also a visionary, working in a very traditional field. His ideas about investment, intuition, philanthropy, and client contact are cutting edge and unique. Here is my thought leader interview:
Robert Balentine: When I founded the company in fall of 1987, I wanted to move away from a commission based structure, mainly because I felt there was a real conflict of interest when stockbrokers sold stocks and investment vehicles that they could make commissions on. I wanted our investment firm to be more centered on the client needs than on the salesperson’s bottom line. That kind of consumer centric stance was what I thought was lacking. One of my father’s mottos was, "If you listen to your clients, they will tell you how to run your business." To that end we do listen, and we are an employee-owned company.
JL: Your motto is The Art And Science of Investing. Most know what the science is, because the typical view of investing relates to statistics, economics, and money math, but how would you define it as art? And what do intuition and creativity, two dimensions of art, have to do with successful investing?
RB: Intuition is a very strong element in the investment world, as it is based on greater understanding, and on that understanding, solid judgment. By adopting an intuitive, art based approach to investment management, we can recognize opportunities that aren’t always reflected in our scientific models. Gold is a good example. It is a luxury item, and not something that fits into traditional asset allocations. However, as central banks in the United States, Japan, and Europe have printed money, a need for something to back those currencies arose. As an educational example of this, I carry a 100 TRILLION dollar bill in my wallet. I don’t have to look at it much, but I know it is there. It was part of the Zimbabwe currency some years back, and is a profound reminder of currency debasement. Currency has to be backed by SOMETHING, and if it is not backed by something substantial, this is what happens. If we combine both intuitive and scientific dimensions to our investment decisions, this bill will always be a relic, a remembrance, and not a reality.
JL: One of your differentiators ensures that the client experience drives the investment process, not vice-versa. Can you explain what the components of the client experience are and how the Balentine methodology makes the client experience more successful than others?
RB: In my background in working for large, multinational investment firms, I have seen the consequences of client experience NOT driving the investment process, but rather the investment managers driving the investment process. We are not in the market to do this. We do have a process: discovery/plan/implement/review, but it is fueled by what the client wants us to do. Clients bring diverse experiences to the table, so each scenario is a bit different.
JL: Another interesting component of your business is that many of your staff and partners were educated and employed abroad and more than half of the firm is women. What do those diverse elements bring to the successful investment table?
RB: We believe that an education acquired abroad is a significant component to the overall diversity of vision within the company. This is not to minimize the education those receive here in the United States, but knowing how others in other countries speak, think, and behave; understanding the behavioral aspects of different cultures; knowing the subtle linguistic differentiations all become necessary corollaries for greater awareness of international economics, and consequently, for our investment judgments. Right now, how Europe deals with the economic problems of Italy and Greece affects us all. Especially now, no man or woman is an island, especially when it comes to investments and currency fluctuations. Whether we like it or not, we are all profoundly connected to and affected by world economics. As to why many in the firm are women, we believe that the investment process is not exclusive to a male-dominated “club” anymore. The Old Boy’s Club idea is so medieval. We are far beyond that.
JL: I need to understand in a clearer way what the "open architecture" investment model is and why it is important to Balentine.
RB: It is an idea we support completely. Our investment managers look at outside investment opportunities to identify the best investment strategies for our clients using a variety of perspectives. We don’t offer any proprietary products, and we don’t make commissions based on our investment advice. Our clients pay a fee for our best, objective thinking. That is an open architecture investment model. This open perspective relates in a way to investment as an art form. On our website we say that investment requires an innate ability to see the unseen, to understand emerging patterns that are not immediately evident. But in addition, we also must see what’s extant and persistent: principles, trends and conventions, and balance those differences, by having an intuitive and a cognitive scalability to our investment thinking and our investment model.
JL: Another of the more meaningful components in your business model is the depth, not just the existence, of your philanthropic root system. Explain its origins, and how this has helped your business.
RB: The depth comes from our core values, which has been part of the Balentine vision and mission. If we invest in the community, it is good for the soul. Further, as an investment firm, we know the needs of those in the community have never been greater. Also, we always tip the scales more on what is possible versus what is required. We have built homes in low-income neighborhoods, we established the Balentine & Company Foundation and Employee Giving Program.
JL: Finally, what trend or trends do you see in recent investing? Is there anything new we should be looking at?
RB: Yes, and this is so interesting, from a philanthropic perspective also. It is impact investing, which is basically investments made based on the practice of assessing not only the financial ROI, but also the social and environmental impacts of the investment. An impact investor seeks to enhance social structure or environmental health as well as achieve financial returns. We have seen more of this with Gen X and Y-ers and now with Millennials, which are also the generations that define the adult children of our long-term clients. These young people have strong social and eco-centric consciences, and we are impressed by their desire to do good as well as do well.