I first met Stuart Zimmerman in Miss Waite's third grade class at the Flynn Park School in University City, Missouri. That was a long, long time ago. We have history. More recently, he and his partners have actually made history. From a 1994 start with four friends, no clients and no assets under management, they have built two substantial businesses that manage over $14 billion for satisfied investors all over the world.
I recently asked my old friend the same question I always ask obvious winners. "What was the most important strategic decision you ever made?" Here is his answer.
We decided to follow the academic evidence showing that passive management, rather than active management, was the right way to invest our clients’ assets. For us, it was simply doing what was right for our clients. When we saw all the evidence showing passive as the clearly better strategy for investing, we actually felt like we would be doing our clients a disservice if we followed anything else.
Instead of spending considerable time and money trying to time the market and pick winning stocks and mutual funds, we would be doing the best we could for our clients by simply capturing the returns the market provide in a low-cost, tax-efficient manner. In effect, we skip looking for needles in the haystack by simply owning the whole haystack.
Sticking to this strategy helped Buckingham Asset Management grow to have more than $3 billion in assets under management. And when we saw the difference it made to our clients (not having to worry about what the market was doing, allowing them to spend more time on other pursuits, etc.), it also helped us realize that we could help other firms across the country do the same thing for their clients.
We started BAM Advisor Services to provide other firms with back-office services adhering to the same investing beliefs. Today, BAM has grown into the leading network of practitioners combining the science of investing with true wealth management, with our firms totaling more than $11 billion in assets under administration.
For us, this is simply proof that doing the right thing for your clients — even and especially when others aren’t — is simply good business. We continue to grow rapidly. Now, we have 110 associates in our family, building our role as the center of passive investing. Stay tuned!
One more confirmation of the obvious truth of core strategies:
What you are doing must truly matter to your clients, and it must set you apart from your competition.
Nice work, Stuart!