Member Spotlight - Sprague Stevenson Wealth Advisors

Sprague Stevenson is a wealth management firm based in Montgomery with clients throughout Alabama and several other states. It was founded by Jeff Sprague and Steve Nash.

WHEN DID YOU START THE BUSINESS? We started the business in 2012 after many years of discussions about what was the best way to run a “financial services firm” and invest for clients. Jeff had been with several large national firms that had been acquired. When that happens, the culture of the firm changes and not always for the better for clients or the advisor. Steve was with a large regional broker and investment bank and had left several years earlier and was already independent.

WHAT IS YOUR PRIMARY OBJECTIVE AS A BUSINESS? We believe that we have to serve clients in the best way possible. So first we have to provide for them a really good, solid, sound strategy that will help them with their goals and objectives. If that goal is retirement, which it often is, then we want to give them the best possible strategy for their retirement accounts to grow and grow as safely as possible by managing risk. Second, we believe that best way of providing sound strategy toward achieving their retirement objectives is through research about what worked well, or didn’t in the past. Better service then (our viewpoint anyway) comes by assembling all the knowledge, facts and data that we can about what has happened in the long history of the U.S. equity and debt markets by strategy type. Then we analyze the data and spend a lot of time reviewing statistical profiles of how well or how poorly fundamental investing strategy types did in the past. We like to think in terms about what is statistically probable in the future using data from the past. Out of that, hopefully, comes better strategy. We believe in it, and our own accounts are invested this way.

DO YOU REVIEW HOW WELL THESE STRATEGIES HAVE DONE IN ALL MARKETS IN THE PAST? Yes, we have to. A strategy in our view is only as good it looks after it has been tested by a bad market. For instance, some of the best strategies available for doing well in the equities market over long-term periods did no better and some were slightly worse than the entire market itself in bad markets. The difference among the best strategies is that they tend to bounce back really well after bad markets like 2000-2002 and 2008. The best strategies usually bounce back better than the market as a whole after bad markets. Which is key because as Warren Buffett has said, the best time to make money in the stocks is after pessimism has ruled the market for a while.

CAN YOU TALK ABOUT SOME OF THESE STRATEGIES? Sure. First, you hear a lot on business cable channels and websites about investing, including stock tips. We ignore all of that. The reason is unless we’ve seen over a long-term period how a particular strategy worked in the past we’re not going to use it. Second, there are a few things in our research that become themes. Companies that don’t require too much capital to generate high profit margins do really well. We call those quality investments. And anything that has shown consistent profitability in earnings that you can buy at a discount tends to do really well also. We call these value investments. There is a lot more to it than that, but in a nutshell when we put quality and value investments into our clients’ portfolios we firmly believe that over a long-term period of say at least five years, they are going to be in great shape. Because facts and history are on their side.

IS THERE ANY ADVICE YOU WOULD GIVE OUR READERS WHO ARE THINKING ABOUT WHAT TO DO IN THEIR OWN ACCOUNTS? Yes. First, think long-term. Jeremy Siegel (Wharton business school professor and author) has written that the U.S. stock market itself has never been negative over any 20-year period. Now he wrote that a while ago, maybe before 2008 but his point is clearly stating how good U.S. equities have been for Americans for the last 80+ years or so. Second, make sure you have good, sound long-term investment strategy through your advisor. And yes, we acknowledge that some people like to go it alone by doing it themselves. Regardless, to be successful you have to stick to it. The hard part is sticking to it. The caveat is if you have no faith in what you’re doing strategy-wise hanging in there is hard, especially when markets turn down. Third, buying stocks gives you ownership interest in a company. At the end of the day do you want to own a bad business or a good business? Good businesses are usually very profitable and bad businesses are not. Please think of that the next time a relative or friend gives you a hot stock tip about some growth company that is the latest flavor of the month.