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Eye on the Prize

Iris Mack Dayoub, a triathlete, is highly energized to help her clients reach their potential.

Laura Pavlenko Lutton, 08/26/2010

Focus on the goal.

Iris Mack Dayoub, a Savannah, Ga.-based advisor and fierce triathlete, insists on that for her clients and herself. There have been formidable distractions, be it 2008's market slide or high winds and extreme heat endured while competing in Hawaii's Ironman triathlon. But she does her best to tune out that kind of noise.

"I've really worked hard to take the emphasis away from how the investments are performing and focus on the goals," Dayoub says. "We do a lot of work with clients to help them convey their goals to us."

In fact, the website for Dayoub's $60 million Alpha Financial Management practice makes scant mention of her investment strategy and doesn't note her affiliation with the Dimensional Financial Advisors, a fund family that employs broad market diversification through a quantitative strategy that's somewhat akin to indexing. What's more evident is a wealth-management philosophy that Dayoub picked up from Ross Levin, author of The Wealth Management Index.

"We want clients to take actions that align with their values," she says. "We ask them to visualize their ideal life."

Reaching goals--be they financial or physical-- takes planning and practice, and Dayoub is well-versed at both. The 73-year-old five-time Ironman competitor is currently training for a national Olympic-distance triathlon set for September in Alabama by putting in grueling hours of swimming, biking, and running each week. Dayoub trains for her races with her husband, Michael, and she's hoping that her effort at nationals will qualify her for global competition.

While Dayoub is preparing to perform under the stress of competition, she's also preparing her clients' portfolios for whatever the markets dish up. To protect her retired clients' portfolios from market risk, Dayoub calculates a client's cash needs over a typical year, doubles that figure, and sets the sum aside in one- and two-year bank certificates of deposit. That way, clients facing down markets can cover their expenses with cash rather than selling mutual fund investments and permanently dinging their nest eggs. This approach helped Dayoub's clients stay invested through 2008's downturn in relatively stock-heavy portfolios, which Dayoub thinks is the best hedge against inflation. The strategy put them in good position to recoup losses in 2009's rally.

The Evolutionary Investor
Dayoub's approach to investing has evolved over a career with roots that wind back to her youth, helping out in her mother's small grocery store. "I loved to help her do some planning," Dayoub says.

Later, when her husband's Army career prompted the Dayoubs and their five children to move every year, she adapted her career along the way. "When the children were growing up and my husband was in the military, having a teaching job was so convenient," she says.

Dayoub began teaching math in middle school and went on to complete a master's degree and Ph.D. in math education. She taught at Howard and Gallaudet universities during two separate years living in Washington, D.C.

Dayoub's investing career was sparked as her youngest child was heading off to college--Dayoub was itching for a change, and she networked with two stockbrokers. With their encouragement, she rewrote her resume, sent it to brokerage firms, and the offers rolled in. "I was totally floored," she said. "I had no experience!"

Dayoub quickly learned that sales-- not financial planning--was the main thrust of her new career. Dayoub tried her hand at stock-picking, with limited success. "It took me a while to realize I wasn't a good stock- picker," she says. "I've gone from stocks to funds, trying to make my life easier."

Dayoub soon began reshaping her brokerage career into one that stressed comprehensive financial planning. She first branched into insurance, harnessing that industry's profiling system to better assess clients' financial needs. Along the way, she also picked up a Fidelity booklet on starting a financial-planning practice. Dayoub struck out on her own when Michael retired in 1984 as a colonel and the couple settled in Savannah. From there, she founded Alpha Financial Management, a fee-only practice that trades through Schwab.

From Active to Passive
Dayoub's evolution from diversified-fund advocate to quantitative passive investing has occurred over the past two years. In 2008, Dayoub's clients were invested in diversified-- but actively managed--funds. Like thousands of other advisors, Dayoub has since moved assets into passive funds. "Even before I started indexing, I was moving toward more and more diversification," she says. "Once I got into indexing, I thought, 'What's the best way to do this?' Being a mathematician, I loved the Fama-French approach at Dimensional."

Dimensional's approach to money-management hinges on three theories: Stocks will outperform bonds; small-cap companies will outperform large-cap firms; and lower-priced value stocks will outperform pricier growth stocks. DFA's funds, which may only be purchased through a DFA advisor, are low-cost, low-turnover, and broadly diversified to capture broad market moves.

Over the past six months, Dayoub has been transferring her clients' portfolios, replicating their current strategies in DFA funds. Guiding clients through this transition has returned Dayoub to her teaching roots.

"I want my clients to be comfortable with the decisions they make," she says. "I go overboard with the explanation. Sometimes people say, 'That's enough!'"

Long List of Goals
Even though Dayoub's age suggests she should be thinking about retiring, that move isn't among her current goals. To be sure, she recently expanded her practice from two to three, hiring Chase Mouchet, a Savannah native and recent University of Georgia graduate. Mouchet's dual degree is in finance and family financial planning, and Dayoub hopes he'll help her attract younger clients to Alpha Financial Management.

"I think I want to do this forever," she says. "I look at the Supreme Court justices and the important work they do. If they can do that, I can continue to run my own business."

Even so, Dayoub says that she often stretches her weekends into "mini-vacations," and she takes time out of her work schedule to train for races and support Girls on the Run, a group that helps third-, fourth-, and fifth- grade girls build self-esteem and make healthy choices by encouraging them to run.

Dayoub also is committed to spending time with her family, which has grown to include 12 grandchildren spread out across the country. The Dayoubs keep track of and encourage one another by posting pictures and updates on the family blog, and in July, they all vacationed together.

Dayoub's list of goals may be long, but she's making strong progress on each of them. "The main thing is helping my clients make good, wise decisions--making sure their heads, hearts, and actions are in a straight line."

Laura Pavlenko Lutton is an editorial director with Morningstar.

Laura Pavlenko Lutton is an editorial director in Morningstar's fund research group. She would love to hear from you, but she can't give portfolio advice.
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