Keep the Dream Alive

Jason Thomas certainly has a knack for crunching numbers. An alumnus of USC College, he graduated with both a bachelor’s and master’s degree in economics in four years. He went on to earn his doctorate in political economy and public policy — also in the College — before completing an MBA at the Stanford University Graduate School of Business.

Jason Thomas ’94, ’00, chief investment officer for the independent wealth management firm Aspiriant, believes a good investment adviser should keep clients focused on their personal financial goals. Photo courtesy of Jason Thomas.

After nearly two decades in finance, Thomas has worked his way up in both the public and private sectors. As a regional economist at the Federal Reserve Bank of San Francisco, he built economic models and contributed to monetary policy recommendations. He later moved into private investment management and consulting, first with Goldman Sachs, then with Wilshire Associates, an institutional investment-consulting firm.

In 2005, Thomas joined independent wealth management firm Aspiriant, where he serves as chief investment officer. 

While maintaining focus may seem impossible in this climate of uncertainty, most investors should re-examine their financial goals and tactics. Thomas is showing them how.

Know What You Want

Concrete objectives are crucial to a financial plan. “The right portfolio, which determines the risk and opportunity for return, depends on an investor’s goals, current wealth and ability to bear risk,” Thomas said.

Once goals are set, whether looking to provide for the family’s or company’s future, stick to them. “The only reason to have wealth is to spend it — be clear about the purpose of your investments,” he said.

Even when markets are down, Thomas stresses the importance of financial goals. An adviser should put goals into context and help investors “maintain a focus on the achievement of those goals over the long term, rather than allowing themselves to be whipsawed by movements in the economy or financial markets.”

Be Realistic (But Don’t Panic)

Investment involves risk, and some amount of loss is to be expected. Thomas states that financial loss causes an emotional effect similar to grieving; but he adds that long-term investors with clear goals need not despair.

“Though the portfolio value goes up and down, the goals themselves should be more constant,” he said. “An investor may feel poor after a difficult year in the equity market, but the value of the vacation home she wanted to purchase has also fallen.” 

Strategic and tactical adjustments may be necessary in order to maximize future returns.  When considering a course of action, be sure to evaluate your ability to take risks and suffer temporary losses for long-term gain. Be wary of “no risk” opportunities, because if something sounds too good to be true, it probably is.

Diversification is an important tool. While behavioral finance experts note investors’ tendency to “swing for the fences” by taking more concentrated risk to make up for losses, a portfolio with many kinds of investments allows investors to withstand short-term concerns.

Time Is on Your Side

In a recession like this, Thomas acknowledges, “The short answer is that there is no short answer.” Yet, he predicts that the long-range economic outlook is not so bleak as it may appear.

The equity markets set all-time highs in 2007, suggesting that all of the negative performance in the history of the equity markets (including the Great Depression) were eventually turned around … in aggregate. “Individual clients may not have the timeframe to wait for the eventual recovery and an important part of our job is to help clients evaluate their ability to take risk and suffer (temporary) losses,” Thomas said.

Economies worldwide are adjusting to the present circumstances, and capital is flowing to new opportunities. “The monetary and fiscal stimulus should act as a catalyst, accelerating the process of adjustment inherent to capitalist systems and markets,” he said.

The analysis is optimistic: “Even clients who invested all of their portfolios at the very peak of the market in 2007 have a high likelihood of reaching their original financial goals during the next 20 years,” Thomas said. So while there may be no quick fix, investors can still reach their goals through planning, focus and patience — and a little sound advice doesn’t hurt, either.

Read more articles from USC College Magazine’s Spring/Summer 2009 issue.