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Keeping It Simple for Clients, and Himself

Financial advisor Eric Nelson sees no need to overcomplicate things.

Kate Stalter, 08/28/2014

This article originally appeared in the August/September 2014 issue of Morningstar magazine. To subscribe, please call 1-800-384-4000.  

Eric Nelson’s “aha” moment arrived as he read The Intelligent Asset Allocator, by William Bernstein. Nelson, founder of Oklahoma City-based Servo Wealth Management, was a broker in the Northeastern United States when he stumbled upon the book. He was frustrated with the sales-focused, performance-chasing culture at banks and wirehouses, which he believed added no real value. But he hadn’t yet figured out a better way of investing and serving clients.

Bernstein, a noted researcher in the field of Modern Portfolio Theory, advocates asset class and index allocation over stock-picking.

“I read the book, and it was like a light bulb going off,” Nelson says. “I realized everything I had been doing was a joke.”

He had grown weary of chasing funds with strong past performance or star managers. He also realized that “pundits don’t have any particular industry insight that we should lean on. After reading this book, I said, ‘OK, that must be why nothing’s working. I’m doing everything the wrong way!’ ”

Nelson tried to incorporate some of Bernstein’s asset-allocation ideas at his employer, M&T Bank, but it was an uphill slog.

“I was a fish out of water,” he says. “You couldn’t create diversified, low-cost, long-term portfolios in a short-term, active-management, performance-chasing, you-have-to-meet-your-sales-goals-this- month culture.”

Cold-Caller
Nelson grew up in upstate New York and attended Hobart College, where he played basketball and remains one of the school’s all-time leading scorers. After a brief stint as a pre-med student, he changed his major to economics upon listening to a guest speaker, a Dean Witter broker from nearby Syracuse.

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