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The Golden Touch

Janet Briaud sticks with her investing ideas through thick or thin, and she's usually right.

Jerry Kerns, 02/28/2008

This article originally appeared in the winter 2008 issue of Morningstar Advisor magazine. Subscribe today. We also value your comments. E-mail us with your viewpoints, ideas, and other feedback.

Janet Briaud knows firsthand about what value managers call the "redemption period," when being on the wrong side of the growth-stock rally meant restless nights and fleeing clients.

It was early 1999, and the financial planner--worried about sky-high P/Es and the Y2K computer bug--trimmed her clients' stock allocation to 25% and put the proceeds toward commodities and TIPs. She put some clients in a fixed account that guaranteed an 8% return. She even bought REITs, which had fallen off a cliff.

For a year, it looked as if Briaud had made a decision that ends a lot of careers. The Nasdaq returned 86% that calendar year and the S&P 500 rose 21%. She didn't lose a ton of clients (eight left her practice of 200), but each departure was a "stab in the stomach," she says. Still, she persevered, because intellectually she knew she was making the right moves. But it took a dream to lift the emotional burden of going against the tide.

"I dreamt that we had lost our house, and my two children and my husband and I were leaving, hand in hand," she says. "And I felt okay. The dream was very powerful for me because I realized that I was able to finally say: 'I can lose it all--because I'm doing what I'm doing for the right reasons.' "

A year later, with stock markets tanking, Briaud's moves looked brilliant--which wasn't lost on her clients. "I remember," she says "clients coming back to me saying, 'We wondered what you were smoking. But you had always done a good job for us before, so we just went along with you.' "

Clients Who Let Her Do Her Job
This type of go-along response from clients is typical for Briaud. She frets more about their money than they do. She started Briaud Financial Planning in Bryan, Texas, in the 1980s after moving from Canada (her accent is still more Canadian than Texan). Briaud and a staff of 10 serve 220 clients with $450 million in assets under management. Most of her clients are professors at nearby Texas A&M. (The rest are doctors and business owners.) Her professor clients tend to work in scientific fields, and they value their intellectual capital more than their financial capital, but they have no shortage of the latter. The typical client comes to Briaud in his 50s with $1 million to $2 million socked away in generous 403(b) and 457 plans.

With clients so close to retirement, protecting capital is Briaud's number-one investing priority. But she says she wants to be "conservative with impactful results," meaning that she likes asset classes that have the downside already beaten out of them but have the potential to rebound. For this to happen, she's got to get in early, when the crowd is running the other way. She stays ahead of the masses by hitting the books and analyzing market data that go back a century. She's a passionate researcher and believes history is a great teacher of the present. She's fond of saying that there is no free lunch in the markets.

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