Investing in a Low Interest Rate Environment with Jay Tortona, CFA®, CFP® Sandy Spring Trust

Philip Fish, CFP<sup>®</sup> and Estate Planning Specialist with Sandy Spring Trust

As our clients face some of the lowest interest rates in recent history, they are faced with a real challenge:  How to manage their investments during these difficult times. Philip Fish, CFP® and Estate Planning Specialist with Sandy Spring Trust, and Jay Tortona, CFA®, CFP® Senior Portfolio Manager with Sandy Spring Trust, discuss different strategies that can help clients navigate these challenging times. Phil and Jay discuss diversification, risk, total return, bond ladders and other factors for individuals to consider.  

About the Guest Speaker: Jay Tortona, a Senior Portfolio Manager with Sandy Spring Trust, is a Chartered Financial Analyst (CFA®) and Certified Financial Planner Practitioner (CFP®). He graduated from the Investment Institute at the Wharton School at the University of Pennsylvania.

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    Investing in a Low Interest Rate Environment


    - Hello everyone, and welcome to Sandy Spring Bank's Real Life Matters Discussion Series My name's Phil Fish. I'm a certified financial planner and a estate planning specialist with Sandy Springs Trust. I'd like to welcome everyone to our series. Before I introduce our speaker today, Jay Tortona, who's a portfolio manager with our trust division, there is a brief disclaimer that I need to read to everyone. So if you can just bear with me one moment. This material is provided solely for educational purposes by Sandy Spring Trust, a division of Sandy Spring Bank, and is not intended to constitute tax, legal, accounting or healthcare advice or recommendation for any investment strategy or transaction. You should consult your own tax, legal, accounting, financial or healthcare advisors regarding your specific situation and needs. Our staff will work closely with your advisors to coordinate your overall plan. Sandy Spring Trust and the Sandy Spring Bank logo are registered trademarks of Sandy Spring Bank, and all rights are reserved. So today I'm gonna be having a conversation with Jay Tortona. He's a portfolio manager with Sandy Spring Trust and we've been working together for a number of years. And during these discussions, I interview local professionals in the areas of law, tax, finance, and healthcare. So, Jay, thank you. We're gonna be talking today about investing in a low interest rate environment. So thank you for taking time out of your busy schedule. And I just... Why don't we start with you giving the audience today a little background on yourself and your past work experience and how long you've been with the bank and your current position helping our clients manage assets.

    - Thanks Phil. Again, my name is Jay Tortona. I'm a 29 year career portfolio management professional. I've worked for a number of different firms so as large as Goldman Sachs and Wells Fargo, and as small as Riggs Bank here in Washington DC, way back in the nineties. I do carry the chartered financial analyst designation and am a certified financial planning practitioner. So several different degrees as well as a lot of practical experience.

    - And when did you join the bank?

    - 2017 upon my return from New York, I came back to the Maryland area to work for the bank that happens to be a mile from my childhood home. It is literally a coming home moment.

    - Well, that's wonderful. You've been a great addition to our staff and we've got a wonderful staff, I think nine managers who work with our clients. The topic today that we have is a difficult one. I think it's a term you shared with me, is that the low interest rate environment has really been a gut punch to investors who have been investing in bonds and CDs. And for the past number of years, the rates have dropped significantly and they're seeing those CD rates kind of really change to ultra all-time lows. So from your perspective, what has been some of the things driving that low interest rate environment? And then we'll start leading into the conversation of, now that we're facing this challenge, what are some of the strategies we are using to help our clients navigate through this process?

    - Well, among the many things that really drive the two decade long declining interest rates has been an increase in productivity as technology and U.S. economy has advanced significantly in leaps and bounds and a number of risks. So inflation has not really been a major concern over the last two decades. Rather, more liquidity has been the primary risk as we went through many different things from the beginning of the 21st century where we had 9/11 attacks to the real estate and financial bubble and financial crisis in 2008, 2009, all the way to today where we're still in the throws of a pandemic trying to emerge. So these steady events have caused an incredible amount of demand; demand for liquidity, demand for access to funds. And so fiscal and federal policy or fiscal and monetary policy have been very aggressive in maintaining high levels of liquidity in order to support financial system and the economy as well as to support employment which is one of the driving features here in the United States of a strong employment market. So these different things that push interest rates down which has been fantastic for borrowers as well as for risk investors. However, for savers and people who live on more shore income and shore numbers and need access to interest rates on assets that they really can't afford to lose or lose access to in short run, are really the ones that are kind of forgotten in this interest rate environment. So longer term investors, people who can accept the long-term and significant risk, have been able to really capitalize on this both from just regular growth in assets, but also in the ability to leverage using a very low interest rate loans to access additional funds. But savers and conservative investors really have some decisions that they have to make and some reality that they have to face.

    - Yeah, it's very difficult. I know last year, my wife and I were able to refinance our mortgage through Sandy Spring Mortgage. And it was under 3% for a 15 year mortgage. And that's locked in. So it means for 15 years, that rate is set. It means the mortgage company cannot come to Lisa and I seven, eight years from now if rates are higher and say, "Hey, Phil, do you wanna rework your mortgage?" And I can stand up tall and say, no, we have a 15 year set rate. The reverse is, and we'll talk more about this later today, the challenge comes is, if you're purchasing a bond and you lock in a rate for 15 years, the reverse applies. The person or entity that you lending the money to, doesn't have to rework that deal and you're locked in with that low rate even if rates rise and you wanna try and take advantage of higher rates. So I know we've seen an incredible stock market run for ever since the '07, '08, '09 crisis that we went through. It has been a very solid, steady uprising of stock prices. But again, for many individuals, they're very conservative. They don't wish to expose their assets to that type of risk. And they've been more comfortable with bonds and CDs. And it has been... And many of those investors probably remember times when you could earn 5% in the money market rate or even 10%. If you go far enough back, when inflation was out of control at 18, 20%, you could get 10, 15, 20% bond yields out there, which some of our older clients so probably thinking those were the days when I could go to the bank and get a nice 8% CD or 9% certificate of deposit. Now it's like .25, .5, maybe one, if you go out far enough. So it is an incredibly difficult time period for our clients. So what are some of the things you've been talking to your clients about who are more conservative because as you said, if you're willing to take the risk the stock market has been wonderful and the returns have been great. We're really talking today about the challenge for somebody with a more conservative approach who don't wish to invest in the equity side. What are some of the things you've been talking to those clients about recently?

    - Well, one of the biggest stories that we talk about or one of the biggest ideas, is the idea of looking at diversification. The toughest thing for a lot of the folks who are savers, who have traditionally been savers, is that they have primarily invested for the idea of earning interest on very, very safe money. And now in order to earn any additional interests, in order to either grow their assets or create an income, you now have to start looking at other ways in which to earn an interest or income or cashflow. Some things you have to do is consider adding duration to your portfolio. So you can't just have money market type rates or savings accounts. You can add credit risk, which means you're looking at securities that aren't U.S. treasury backed, that maybe issued by a great corporation or a municipality, something like Montgomery County, Maryland works, very well run with a very, very strong tax base. Or, you start stretching into other things that have principal risk such as equities or higher risk bonds. The tough thing is that in this environment there's no real one solution that's going to give you something that you can just earn a very solid interest rate that'll stay ahead of long run inflation and still give you income with which to live on. What you have to do now is now think there's pockets of risk and diversification to try and manage the amount of risk you have and the exposure that you have. So you have several different aspects of risk, whether you have a couple of bonds in your portfolio that are longer-term, coupled with bonds that are shorter term that cover your shorter term needs. You have the ability to absorb some of that risk without exposing your entire portfolio to it. And that diversification can be extended. It can go into other income producing or cash flow producing investments, real estate, stocks, preferred stocks. All those different things can factor in, the issue is how do you manage your exposures to them? Do I go all in and just buy them? Put all my money in a utility stock that has a 5% dividend or do I look at an individual stock, common stock? The biggest one in the S&P 500 has a dividends at 6.2. But there is a risk in putting all your money in that 6.2% dividend. So rather what we try and talk about and say, okay, we'll have this pocket that is your heavy risk bucket. We'll have this pocket that's a little bit more of your intermediate, and then we'll have this pocket that really covers your short-term needs. It really comes down to having a really good understanding of where you are, what needs you need to address immediately and what those long-term goals are behind it. I talked to a lot of people and I talk about the idea of your need for risk. How much risk on the spectrum do you need to have in order to accomplish whatever goals you have? And your capacity for risk; how much risk you can take that would put your short-term real needs at jeopardy or in jeopardy, if you're trying to invest for longer term or vice versa? And having a good understanding of that risk need versus risk capacity can really help you determine what kind of mix of investments you can have to earn that cashflow that you need.

    - One thing I've learned from having interactions with you and the other portfolio managers is the importance of using different investments for what they're good for and understanding the trade-off. So making sure that clients have liquidity and having funds available in money markets and short-term savings for those emergencies and making sure that we're not forced to sell longer term assets to cover short term debt. So to make sure that we have the right allocation. And I think one of the things that I love about working with Sandy Spring Trust is the fact that we do assign portfolio managers to all of our investment relationships where we create these investment policy statements. And we have that conversation with our client and we make sure that the investments that we're utilizing are aligned to that specific needs, taking into account what assets they have with us, what assets they have elsewhere, what bank balances they're maintaining. So they may maintain a significant balance in CDs or in cash, and then utilize our services for those maybe retirement assets. So longer term funds where they can feel comfortable taking a little bit more risk. And the term risk is used so broadly because it means so many things. People say, well, stocks are risky. How do you define that risk? What are your parameters? Money in a money market account or a savings account is risky because it's not earning enough to keep pace with inflation. So it's a different type of risk, but it is... For many years, clients have been saying, oh, the stocks are at an all time high, they're at an all time high, they're at an all time high, I shouldn't be investing. But I know in talking to you a lot of companies right now are positioned extremely well looking forward. They're making lots of money, the balance sheets are strong, their outlook is strong, but also with the pandemic I know a lot of companies are struggling. And that's where the portfolio management team comes into play is, looking at specific companies even whether it's a bond or a stock and deciding, is this entity that is behind this investment whether it's a bond or a stock, how is their outlook? How is the ability to either continue to pay dividends on a stock or continue to meet the obligations of that bonds? And that's where you and your team come into play, is that oversight. Helping clients not only navigate the broader issues of how to manage, but getting into the specifics of the investments that are being used to meet those needs. And are those companies still in the strong position that they were maybe a year ago or three years ago, or is there a storm cloud on the horizon that we need to take a strong look at?

    - We do try and be opportunistic where we can, but at the same time, we try and build really well constructed all weather type portfolios with the idea that being that no one theme or one company is gonna make or break things. We try and have diversification even within the equity portfolio or even within the bond portfolio. By having that broad diversification allows us to access returns, minimize portfolio turnover which causes expenses and try and garner the right types of returns without putting everything in the portfolio at risk to one factor. Rather, we have multiple factors, multiple securities, multiple investments, so that we protect it. But at the same time, we do manage what we have so that we can optimize what we get. We don't wanna just have a portfolio that one side of the portfolio perfectly neutralized the other. No, there are going to be times where if you're invested in equities and equity struggle, you are gonna feel it. But the idea is hopefully if you're properly diversified across asset classes and across securities, you'll feel it a little bit here, but other aspects of your portfolio should support your overall circumstance if we do it right. And then over time as the different pieces work and grind and bake, over time ideally you should be able to produce cash flow to yourself. That should be ahead of what the savings rates are in this environment. I was looking at the national deposit rate of savings accounts. It's 0.06.

    - Oh, dear.

    - Six hundredths of a percent. So savings and deposits on average are pretty much for all intents and purposes, zero. You're pretty much not getting anything. 'Cause even after that, 0.06%, you pay taxes on it. You really, really don't have much left. And then once inflation really starts to kick in, and even if you're not subject to the broad inflation measures like CPI or something like that, different circumstances for different people may mean different effects of inflation. People who live in the Washington DC area will experience much more inflation than certain areas across the country, just because of the nature of the area that we're in. So the savings rates are so low that we may not be able to even keep up with the inflation of our own locale if you're just in deposit levels. So yes, you have to start thinking, is there a portion of my portfolio that I can put duration into? Is there a portion portfolio I can put credit into? Is there a portion that can put equity risk into? Those are all questions you can ask and working with folks like yourself though, you can kinda bounce questions off to get a really good idea of what kind of mix and what kind of ideas are good for everyone. Not every idea is gonna work for everybody. But depending on your circumstances, we should be able to find a good mix that will at least improve what you're currently doing already.

    - The analogy I use when I talk to clients about our role as an investment manager and a navigator is, investing is a bit like you're on the shoreline of an ocean and you're trying to cross the ocean and the distance you travel is gonna be different for different people, depending on your age and your goals and your objectives. I met with a client and say I need to invest for the next six months, I'm going to need these funds. Well, that's an easy answer. It's you need to keep the money and money markets and short term CDs and savings because investing in stocks and bonds for that shorter time period makes no sense. But if I'm dealing with somebody in their forties or fifties, even sixties who may have 30, 40, even 50 years ahead of them, keeping all of that money in a savings account, earning zeros 0.1 0.2, even in normal times, 1/2%, 1%, just isn't giving you the growth that you need to keep pace. But then you look along the coastline and you have thousands upon thousands of choices. Thousands of stocks to choose from, thousands of bonds, thousands of mutual funds, thousands of exchange traded funds which is like a bucket of investments packaged together, all of these different options. And you're tryna pick which one is right. And so that's how I kinda position our team of portfolio managers, people like you and the others in the team, are kind of navigators to select appropriate investments for that specific client. It can not be a static plan because a year, five years from now, things are gonna change; the markets, the clients, their needs. So you have to have the ability to steer the ship to make adjustments. And then as we work with clients, especially those who have a trust for a beneficiary or retirement, where they need a set amount withdrawn each month or each year, then there's definite ways that we can structure the portfolio to provide that cash flow with the appropriate management of risk. And I think that's something we do very well with the laddered bonds portfolio strategy. So can you talk a little bit about a laddered bond portfolio? 'Cause that's something we use quite a lot within our trust division to provide stability of cashflow.

    - All right.

    - So laddered bond strategy is a discipline. It basically says that, oh, we're gonna set a period of time, and we're going to set rungs on the ladder for each maturity date along that period of time. So let's say for example, we're looking at a 10 year period. We're gonna try and put funds out at a maturity level, at each rung of the ladder going out to 10 years. It could be every two years, it could be every three years. But let's say for our example, it's just one rung on every year, over 10 years. What you have then when you initially implement, is you basically buy 10 individual bonds or at least 10 rungs and put even amounts in. That way you're basically creating an income flow from the different levels of interest rates. And this is showing that normal interest rates under normal circumstance rise over time. So the longer you have, the longer bond should have a higher level of interest rate than the shorter bottom. And then as time goes on, the clock ticks, you take that bond that matures and you have a decision to make as it matures. You may have a need for liquidity at the time for yourself or for whatever needs you have, or if you're gonna maintain the discipline, you take that maturing bond and you invest it on the back end of the ladder. That ideally should give you the higher interest rate available in 10 years, but you still have basically the same portfolio you started with in terms of maturity, because that one year bond has now matured, the two-year bond became a one-year bond, the three-year bond became a two-year bond and so on and so on and so on. Even if interest rates don't change, if the yield curve stays exactly the same during those 10 years, your interest will actually rise because you're reinvesting that bond at the higher interest rates and that 10-year bond that became a nine-year bond still has that longer-term interest rate. So over time ideally what would happen, is your interest would rise and let's say, you see it in the portfolio and now is older, and if interest rates don't change, you basically lock in a rate of a certain level of interest. But, if interest rates start to rise the good news is, you'll be reinvesting those early maturities at higher rates. If interest rates fall, yes, you'll be reinvesting those maturities at lower long-term rates, but you'll also have appreciation of the value of the bonds. Although part of being in a bond ladder is really keeping the discipline of holding them to maturity. So you're too worried about it. If you're holding bonds to maturity, you really have a good solid structure of cash flows. And then as things tick along and things move and you continue to put your coupons, you are covered if interest rates either rise or fall because you have longer-term bonds that are already getting interest rates and you have short-term bonds that are being reinvested on the long end. If interest rates do fall, you do still have longer-term bonds that are earning the high rate of return, But yet, if interest rates do rise especially if they rise quickly, there's this tiny opportunity costs depending on how high those rates rise. But if you're holding some maturity, you shouldn't be threatened, your principal shouldn't be threatened because you know what your cash flows are. As long as you bought bonds with positive yield to maturities, your principal should not be threatened. In the meantime, if emergencies come up, we actually use bonds that are liquid. So if we need to sell something, we can fairly quickly although it will be subject to the terms or the pricing of those bonds of the market at that time.

    - But the nice thing is with a bond ladder you could then look at the portfolio and decide, what are your needs? Where would you... You have choices to access different bonds. And eventually over time you would have 10 10-year bonds that are maturing a year from now, two, three, four, five, six. And the other thing we talked to clients about is, the big fail with investing once you get into a little bit of stock exposure whether it's 10% or 20 or 30% in the stock market, is that fear of that fluctuations in the values of the stocks. But what we stress to clients is if you have a well managed portfolio and it structured properly, you should never be forced to sell those stocks to raise capital or cash flow because we should have structured the portfolio through the dividends, the interest, the bonds that are maturing so that the cash flow is coming from non-risk locations. So we can allow the stocks time to recover. And we see the portfolio managers when the markets get a little rough, the portfolio managers may actually increase the stock exposure within the portfolio. And when the stock portfolios do well, the portfolio managers kinda capture some gains and even extend out the bond ladder. So you may end up with a 12 year bond ladder because you've had a couple of good years in the market. And you and I... You taught your clients a lot about discipline. If you have a 50% stock, 50% bond allocation, over time you want to maintain that which is difficult to do because it means you may be forced to sell a stock or stocks for profits because they've done well. And you're always... It's always difficult sell a winner just as it's difficult to buy something that's not performing as well. But I know you talk a lot to clients about the importance of maintaining a discipline, determining your risk allocation and then staying with that over time. So you don't become... If somebody had started 10 years ago with a 50 stock, 50 bond allocation and not rebalanced, they would be very heavily over weighted in the stock market right now.

    - Yeah, that discipline is very important and it's very difficult actually for individuals and professionals. And last year is a perfect example of why it works. If you had gone into March of 2020 at a 50% allocation, chances are by the end of that month, you were probably more like 40% equity exposed, 45% equity exposed. And if you follow the discipline it forces you into a buy low sell high philosophy which is I'm gonna buy some more equity to get me back to that 50%. I actually will phrase it differently than increasing my equity exposure. Rather I'm restoring my equity exposure, getting back to that target allocation. And that forced me to buy in March of 2020. Now here at the top end, where people are concerned about having hit the all time highs, which may or may not be true as far as what is going to happen in the future. But, this is a good time to rebalance your portfolio. Do what I call equity pruning, which is trimming off a little bit of the equity. And you do it smartly. Especially if you have a well-diversified portfolio with individual securities, you have the ability to cherry pick what positions you wanna trim, what positions you may need to trim to help manage your tax implications, as well as to just restructure, just rebalance the portfolio to the way you want it to be for the long run, and use those funds to add to the safe side of the portfolio, restore that safe money, or that stable portion of your portfolio, and restore that asset allocation again. So you're basically forced to do a buy low sell high if you just follow that asset allocation discipline.

    - It is so hard. And I know sometimes I'll call you or the portfolio managers. I have a certified financial planner designation. I've had one for 20 years, but I don't manage assets for our clients. It's not my role. And my role is more as a problem solver and doing public speaking and those roles. So, but as you said, even as a professional in the industry there are times when you just start to second guess and you go to your advisor and you talk it through because it's scary when it's your life savings and you're trying to balance between the fear of loss but the recognition that these funds have to work for you and that if they're sitting in cash, it's gotta be very hard unless you have a huge amount of cash to survive that low interest rate. It's gotta be very hard, five, 10, 15 years from now to keep pace with changing costs. And many of our clients listening might remember what it costs to buy a new car now, which seems like an average normal new car runs $30,000 now. And it's nothing too special it's just kind of, yeah, 30,000 for this car, houses four or five, 600,000 just for starter homes. College education, health plan, all of these issues when you think back 20, 30 years ago, what the costs were compared to today. And we talked to clients in their fifties and sixties and we remind them that if there were a couple, and they're in decent health, there's a very good chance one or both of them will live well into the eighties if not nineties. So we have a potential 20, 30 plus year time horizon to be thinking about. But it is scary because it's so confusing. The news that we hear and the indices, the S&P 500, which is just a block of 500 stocks, but as you and I have taught, as we've chatted in the past, a huge return of that S&P 500 is focused in five huge companies which represents like 20% of the returns that they report and maybe only 20 or so companies represent almost half. It's what we call weighted. So the big companies kind of carry a lot of the steam. So it's not like 500 stocks equally distributed.

    - It goes back to the idea that you really need to focus on diversification. There's no simple answer to this. I wish there was. Someone came to me the other day and said can I just buy some high dividend paying stocks with some really good company? And I wish it was that easy. The thing is that if you concentrate yourself just in that pocket of stocks that have high dividends, you're gonna be focused in just a couple of names or a couple of sectors, which changes your risk profile because you're now concentrated there. I'll give you an example kinda along the lines of what you're talking about. If you look at the top half of the S&P 500 ranked by yields, so there are 11 sectors, so let's take the top six. You're gonna look at a dividend rate of around 2 1/2% . But it only makes up 27% of the index. So you've foregone, 73% of the potential returns that that index has to offer, because you focus just in that one spot. Where if you're more diversified and you focus on a total return approach, you now have access to many more tools, many more opportunities to put into your basket of stocks so that you can manage your risk while reaching out to those other returns. But if you just focus on those dividend paying stocks, you run the risk of interest rates rising and all the people who did exactly what you did, now exit those stocks all at once. And all of a sudden those stocks start declining in value because there aren't as many buyers supporting it. So what you do is you try and diversify, spread out amongst securities so that yes, you'll have some dividend paying stocks in there, but when it's the time in the cycle for the dividend paying stock to not do well, you'll have other securities in your portfolio that do well. And I know some people out there wanna believe that they can jump from one pocket to another. There aren't a lot of people who can do that consistently. There's some who do it every now and then, but doing it on a consistent basis without creating significant amounts of expenses in turnover and taxes, is hard to find. So having broad diversification, having quality and having your pockets of risk. Having appropriate levels of risks spread throughout your portfolio, it helps manage the risk and still access those returns that you're searching for.

    - It is so difficult because we live in this moment. And in hindsight, you look behind you and you go, oh, if only I had bought this stock, or if only I had invested here, or if only I'd have purchase long-term bonds back in this time, when at that point everyone thought the interest rates were terrible and they had no concept that they could actually get worse. It's hindsight just throws you, makes you crazy. And also trying to look beyond the event horizon of what the future holds, can give you very gray hair and cause you a lot of stress. What we stress to our clients is, we have to deal with what we know now, we have to have flexibility, be able to move and make adjustments, but ultimately invest in good strong companies, be diversified. You talk to our clients a lot about not having one position, really hoard us if something goes wrong or one sector. Really spreading the risk, being disciplined, being prudent. And as a fiduciary which is how we manage assets at Sandy Springs Trust under the federal fiduciary standards, it really is the mark but do no harm. Try not to expose the client to those unnecessary risk. Don't try to hit the home runs and just get a good rate of return using good investments and make sure the investments are tailored to the client's goals, objectives, comfort level, circumstance. And I think Sandy Springs trust we do a nice job of having portfolio managers working with our clients and having access to all of the investments out there that have no affiliations to us. We don't have Sandy Spring Bank products. We don't have relationships with managers where we lean clients to one area because there's a monetary pool for us to do that. Is one thing I love about Sandy Spring Bank, is our senior management isn't coming to you and telling you, Jay, you need to use these investments 'cause our corporate partner owns these investment companies and we wanna shuttle clients' money over here 'cause it makes the big corporation more money. We have none of that. We have transparency. I think that's one of the attractive things that caused you to come from large organizations to Sandy spring Trust was our transparency and our fiduciary point of view.

    - Yeah, and the open investment platform. The ability to go out to the market and say we're gonna try and get the best in class. And we're gonna try and be responsible about it. If I'm going to use... We don't make investments that don't have risk. We have risk in our portfolios, and we are going to look for some of the aggressive positions, but we may do that in ways that we look to specialized expertise in order to access it. Like if we want to have emerging markets exposure, we'll look for an outside manager who really has feet on the ground in those marketplaces. And when we've looked at them, we wanna make sure that they're good, they're consistent, they stick with what they're supposed to do. And they produce a return that is worth the fees that we pay them. We don't get any of those fees. None of that comes back to us. Actually by paying fees to outside managers it affects our performance. So we're gonna look for managers in those other specialized areas that really utilized that expertise. And if they can't do it and they can't provide the returns that we need, associated with the fees that we paid them, then we looked at other places. And having that open platform, gives us the flexibility to say, you know what, you're not getting the job done, we want this one. We'll use that one. And they are continuing to get the job done, then we continue to work with them. But at the same time, even we don't stay with just one in that space. We may utilize a couple in a certain space in order to make sure that our bets are covered.

    - I know that the portfolio management team really looks at what our outside managers are doing, and they have conversations with them, and they look at are they shifting style? And I know a couple of years ago we left a fund that we were using 'cause they were starting to take some very aggressive stances in a couple of positions and it just made you guys uncomfortable. So we're not locked in to working with these outside managers. We have the freedom to leave. And I know that the previous employer, I started with Sandy Spring Bank bank in 2000, but where I worked before, it was a larger bank and we had our own investment offerings and there was a very strong push to place clients into those offerings. And to be honest, they weren't as good as the T. Rowe prices and the Vanguards and the other investment options out there. But it was more profitable for the institution to use their own in-house options and clients were very unhappy. They would look at the returns and say, there were better options out there and why am I stuck in this XYZ fund? And the reason was 'cause it was proprietary, it was in-house. So I'm really...

    - I'm gonna actually add a little bit to one of your comments, when you say we were free to move to another manager as we needed to. Actually under the fiduciary reasons, our fiduciary responsibilities, it's actually an obligation.

    - Oh, wow. Okay.

    - If this manager is not appropriate or is not meeting the needs of what we have investments, we should be looking elsewhere, we should be moving on. And that's part of our fiduciary responsibility.

    - Yeah. And it's sometimes the manager or managers of that fund get headhunted and they go work somewhere else. And then you have to look at who's replacing them, what disruption because it's not necessarily the name of the fund, it's really the people making those; the gentlemen and ladies, the senior portfolio management team and their years of expertise. And sometimes the whole group will get headhunted and head over to another company. And then you as a team have to decide, okay who's replacing them and make a decision just like you do with individual positions. If you see a change in management and a stock that we're investing, what is this change? How is it gonna affect the company's outlook? How's the management? And that's why we get hired to be that overseer, that navigator, the watchdog to keep an eye on things. So I think we've covered a lot of information today, Jay. So I wanted to thank you. For those of you listening, this is a challenging time and at Sandy Springs Trust our trust division has been managing assets for many years. And if you have questions my contact information will be provided. Feel free to give me a call or an email. But Jay, before we wrap up, are there any comments you'd like to make for our audience who are out there trying to figure out how to manage assets in the low interest rate environment?

    - Well, let me just address some of the more specific ideas out there. I know that there are all kinds of people who will approach others with different ideas. Like I said, dividend stocks, preferred stocks, all these different things. Like I said, there's no one answer. What we do know is that our economy has reopened. It's coming full force. There will likely be some inflation initially. The question is gonna be, how much and how long. Is this just a transient circumstance or will inflation really be here to stay for awhile? We do expect inflation to start moving in, which means that some of these ideas that are just designed and I'm gonna put this one investment that's gonna give me greatest interest, may experience some volatility as we move forward. So it was always important to think about all the different pieces that you have available to you. There are so many tools out there. Like Phil said, there are thousands of mutual funds, thousands of stuff. They're actually more mutual funds than stocks now in the marketplace. So there are tons of different strategies, tons of different tools. And you can find a different mix to really help you meet your objectives. The key is to really do a great job of defining those objectives and what really can fill those needs. And I think that's something we can do here at Sandy Springs, which can work with individuals to help identify, ask the questions that help identify what those needs are, and then really start figuring out what pieces to use in order to fill in the solution, to build the foundation of whatever solution you need. And we'll work with that, we'll work with the individual objectives within what we do, within our specialties and what our skillsets are, and hopefully find a way in which we can help improve the environment and the investment portfolio that you have.

    - Thank you so much for your time today, Jay, and thank you for the work that you do with our clients. It's so wonderful having you join us as a member of our portfolio management team. And I know you all of you work in collaboration. You talk on a regular basis, you share ideas, you have different backgrounds, different areas of strength. So that combined coordination I think really provides our clients with a great depth, even though they're assigned one portfolio manager to work with, they're really tapping into the knowledge and skills of the entire team 'cause the whole team is working on the monitoring of the investments and the decisions that we'd look at. So it's a pleasure working with you and so thank you for your time today. And for the audience today, thank you for joining us today on discussion series. We host these on a regular basis and add to our kind of library that we're building as I interview local attorneys and accountants and healthcare professionals and individuals in finance on different topics as we try to help individuals navigate through life stages. And so please share this information with others. If you notice, when you logged on to watch today's program, the discussion series we do not ask for any content information. We don't ask for your name or telephone number. It's a community service. If you have interest in learning more about how we help clients, I host a number of seminars on our website as well. For those seminars, we do ask for your name and how you heard about the event. So please share information about these educational programs with family, friends, neighbors both locally and around the country. And if you bank with Sandy Spring Bank, thank you. We're the largest local community-based bank in the greater Washington region, founded 153 years ago in 1868. And if you bank with us, we value that decision. And if you don't bank with us, we hope you might think about Sandy Spring Bank for whatever your banking needs might be. Contact one of our local staff and we'd be happy to assist you if we can. I hope you're safe during these difficult times, now on behalf of the bank, thank you for joining us today.

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