Although it often seems we live in a self-centered world, self-interest is the furthest thought from the mind of Jerry Nightingale, CPA/PFS. Located in Palo Alto, California, Jerry focuses solely on his clients' needs and desires. Planner recently visited with him to learn more about his practice methodology, his investment philosophy, his volunteer work and leadership positions, and what makes him tick.
Planner: What kind of relationship do you have with your clients? Is it all business?
Jerry Nightingale: My clients and I are very friendly toward each other. I have been the financial adviser for many of my clients for many years. Over that time, we have become close and it is pleasant working with each of them. Exchanging ideas and information and giving advice is rather consultative and amiable. We talk about what's happening with them and their families, their ideas about current events, what the future holds for them, and what's important relating to their financial situation at that time.
Planner: What is the ideal personality profile of someone engaged in personal financial planning?
Jerry Nightingale: I don't think I can give the ideal personality profile of someone engaged in PFP, but I do have some ideas. I think financial advisers should have their clients' welfare utmost in mind. They should develop and implement everything around what the clients' needs are, while at the same time, educating them about their finances. Advisers should be relaxed, positive with a ready sense of humor, enjoy problem solving and monitoring the clients' progress toward achieving their goals. Of course, if advisers love what they do, so much the better.
Planner: Tell us about your investment philosophy.
Jerry Nightingale: My investment philosophy focuses on individualized asset allocation, diversification and rebalancing the portfolio. I have a fundamental approach with a tactical overlay. Within that framework, I think preservation of capital is paramount. I strive to preserve capital and minimize losses.
Warren Buffett once said that the first rule of investing is don't lose money; the second rule is don't forget rule number 1. If you lose money, you are further in the hole than if you didn't gain, but at least you can start from level ground when the market recovers. When money is lost, you not only lose money, but you also lose time for additional growth by digging yourself out of a hole, back to breakeven, before you can continue growing. Minimizing losses also makes for less anxious clients.
Planner: You’ve kept your practice small. Why is that?
Jerry Nightingale: I like to provide personalized service to my clients. I like to be familiar with them, their accounts and things that can help them. I also like to keep current with my technical skills, such as investments, social security, tax planning and other matters. In order for me to achieve that, I guard against spreading myself too thin, so I try to manage the size of my practice. I like to be able to have that good balance between knowing my clients, knowing my subject matter and having a healthy life.
Planner: What is your compensation model? How do you decide how much to charge a client for services?
Jerry Nightingale: My model is simple. I charge my investment management clients a percentage fee based on assets under management. The more the assets, the lower the percentage charge. That fee includes anything, anytime, and any advisory service I perform, including financial plans, consultations and attending meetings with them. The advisory fee is all-inclusive and facilitates a conversation without clients feeling like they are on the clock. If the person is not a client for whom I manage assets, I charge a flat fee for financial plans based on the complexity of the plan, or charge on an hourly basis for people who want to come in to consult with me about something financial. Those people are usually referrals from other CPAs.
Planner: You’ve been very involved over the years with the California Society of CPAs. How has your volunteer work helped you be a better planner to your clients?
Jerry Nightingale: Another CPA asked me to become involved in the state society years ago, and since then, I've participated on many committees, including Financial Literacy, Finance, and Investment, as well as steering committees and industry forums. My volunteer work has not only led to leadership positions in CalCPA, but also given me skills to hold leadership positions in some non-CalCPA organizations.
My positions in various state and local chapters have helped me become a better planner! I get to listen to, work with and plan activities with very intelligent, creative and good CPA planners and non-planners. We share ideas about planning, taxes, leadership and other matters. Even on the AICPA level, these and other activities open lines of communication so we can contact each other to bounce off questions or concerns. I'm constantly learning from CalCPA and AICPA members.
Planner: Looking back at your career, what would you have done the same or differently?
Jerry Nightingale: I wouldn't say everything was easy—and it wasn't without work. But, I think I would do things basically the same. I believe that if you enjoy your work, you almost never work a day in your life. I know many planners who enjoy their work, too, as I do.
Planner: What book is currently on your nightstand and why are you reading it?
Jerry Nightingale: I'm currently reading Flash Boys – A Wall Street Revolt by Michael Lewis. If the stock markets are rigged, as Brad Katsuyama, a former head trader at Royal Bank of Canada, says in the book, it's important to know if it's true and how. If so, there could be a significant impact on investor confidence, how stock exchanges operate, how trading is conducted by high frequency traders, and on setting guidelines for algorithms and technology.
As a person with a master’s degree in Business Administration, and Operations Research and Management Science from the University of Michigan Graduate School of Business Administration, I thought that, someday, operations research would give people an advantage when competing in business. It never dawned on me that management sciences would be used as described in the book. Also, when 60 Minutes ran its segment with Michael Lewis, one of my clients called me the next day and asked me what I thought about it. We talked some then, but I want to give him a full book report.
Planner: If you were stranded on a desert island with access to only one piece of technology, what would it be and why?
Jerry Nightingale: With all the publicity about Amazon drones, and news about private and military uses of drones, I want to have access to a drone that's large enough to transport me to the nearest commercial airport. Then, I can go wherever I want.