Jonathan Satovsky pairs rigorous modeling with noble ideals for the benefit of his clients.
This article first appeared in the April/May 2011 issue of Morningstar Advisor magazine. Get your free subscription today!
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
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 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.