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Patricia Baum thinks of herself as both a financial adviser and financial psychologist to her clients, many of whom, she says, have entrusted her with their assets and family affairs for decades. She has $1.3bn in assets under advice.
Ms Baum, of Annapolis, Maryland, has been with RBC Wealth Management since 1998. She started her career at Alex, Brown and Sons in 1985 and has advised clients through wild market swings and market crashes, including Black Monday in 1987, the Asian financial crisis in 1997 and the global financial crisis in 2007-2008.
She says market volatility, such as the sell-off in US stocks last month, no longer fazes her. She does, however, understand the anxiety that clients can feel when seeing short-term paper losses dent their investments.
It is human nature to respond emotionally to volatility. That is why managing emotions is critical to success in investing. “My job is to help them keep their emotions in check, understand what’s going on and feel better,” she says.
In the case of the recent US stocks sell-off, she called clients to discuss the volatility and sent them a strategy paper from RBC Wealth Management; this explained why the main US stock indices fell, why volatility would probably continue for months and why investors should hold their equity positions.
Ms Baum says many of her clients are “progressive thinkers” who worry about the effect of the political climate on markets. Many have vivid memories of the global financial crisis and cannot help but think that the next bout of volatility will turn into a market crash.
“I tell my clients that no one can predict how the market will perform in the short term, but what we can do is stick to quality companies with good fundamentals and good management,” she says.
Protecting investment assets “is as big a priority” as beating the market for her clients. “Our goal is not necessarily to beat the indexes. Losing less has a lot of appeal to investors.”
Ms Baum is a believer in active investing and 58 per cent of her client assets are in stocks and bonds, 15 per cent in mutual funds and the remainder elsewhere.
Of the mutual fund investments, most are in active US equity. She uses passive investments to complement portfolios. Before recommending a financial plan she looks at a client’s tolerance for risk and volatility, and for how long they intend to invest.
The move towards ESG is, she says, the most significant change in her investment philosophy over the years.
The growth in her client assets — one of the criteria for making it into the Financial Times Top 400 Advisers — is due to the performance of her portfolios and the increase in the size of her practice because of referrals.
Ms Baum’s client assets rose by 36 per cent in 2017 and by 21 per cent in 2016, and she is one of only 19 advisers who have been in the FT Top 400 every year since it began in 2013, and the only woman of those 19.
Her sex has not hindered her career, she argues, despite women making up just a sixth of financial advisers in the US.
She says she is surprised that so few women are in her line of work. “In a relationship business, I think being a woman is a true advantage.”
“I think there is a level of trust and a willingness to be honest and open that women advisers can get from relationships with clients,” she says.
Ms Baum says she is involved with all facets of her clients’ financial life and is often in meetings with their lawyers, accountants, spouses and children.
“We talk about the family mission, family history, how the first generation made their money, work ethics, what the parents want their kids to do with the money,” she says.
“We even talk about where they want to be buried, what their final wishes are — things that a lot of people don’t want to talk about but are important.”