Five Questions With: David B. Smith

"Our largest challenge with Bright Rock is breaking through the large number of well-branded competitors in the large cap competitive universe." / COURTESY ROCKLAND TRUST

David B. Smith is the chief investment officer and senior portfolio manager at Rockland Trust and is responsible for the oversight and direction of the investment management group, which includes wholly owned subsidiary Bright Rock Capital. In this capacity, Mr. Smith is involved in performing research and setting investment policy, as well as managing client portfolios.
He has worked in the investment management field since 1990. Prior to joining Rockland Trust, Mr. Smith was a founding partner, senior vice president and a senior portfolio manager of Mellon Growth Advisors, a subsidiary of Mellon Financial Corp.
Smith has a bachelor’s degree in Economics from the University of Massachusetts Amherst and a master’s degree in finance from the Sawyer School of Management at Suffolk University. He is also a chartered financial analyst.

PBN: You manage more than $200 million in assets under management in client portfolios through Bright Rock Capital Management’s mid- and large-cap funds. What is your single biggest challenge in the current environment?
SMITH:
Our largest challenge with Bright Rock is breaking through the large number of well-branded competitors in the large cap competitive universe. Our approach to investing is different and our performance has been strong, but that is not enough. In order to make a buying decision for Bright Rock, advisers need to know we are a potential solution. For us this typically means have a face to face meeting with an advisor so they know our story and our people.

PBN: The competition for wealth management clients is intense. What’s your strategy for maintaining long-term client relationships and for attracting new clients?
SMITH:
Our client service philosophy is to provide a better than market experience for every client we serve. This does not mean all of our clients receive the same service. We need to tier our service based on the client’s needs and our own economics. But for each client tier, we believe we deliver a more robust experience than that client would typically experience from the average competitor in the marketplace. As the word spreads about our service, we find prospective clients are interested to learn more about our service and capabilities.

PBN: Are institutional clients facing any new challenges now in meeting their strategic objectives? Do your Rhode Island clients tend to have any different outlook or goals, in general, compared to clients in other states?
SMITH:
Institutional clients face varying challenges. An example would include Pension Funds who are struggling with underfunded status. While the assets of the pension plan may have increased since the market bottomed in early 2009, the actuarially determined liability has also increased because of the reduction in the discount rate which is determined by interest rates in the market. This requires thorough analysis of the client’s specific asset/liability mismatch and a customized solution to deal with the challenge. Like individuals, each institution is unique and we need to provide a solution that meets each client’s goals and constraints. This is true for all the clients we serve regardless of geography.

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PBN: Technology is critical in today’s wealth management industry. While this gives you access to extensive amounts of information quickly, does it also present challenges?
SMITH:
The difference in technology from when I started in this business in the early 90’s and today is astonishing. While technology has created massive efficiency improvements and made garnering information incredibly easy, it has also created some challenges. One example is the ubiquitous nature of information today. When I started in this business better access to information could create a competitive advantage. As investors today, information comes at us from multiple directions such as TV, Radio, Email, Web Sites, Software we purchase and now even social media. The challenge now is processing the incredible amount of information coming at you in a way that does not overwhelm you. We rely upon our process which forces us to answer the question, what does this new information do to my assumptions on a small group of key inputs to our process. If the answer is “nothing”, we file it away in our notes and memories. If it something that is more material, we will use it in assessing the buy/sell/hold decisions we make every day.

PBN: Do your high net worth and institutional clients require more or less of your time the longer they maintain a relationship with your firm? How does that affect your ability to grow your business?
SMITH:
Clients of all types tend to become more comfortable with our rigorous process as they experience it over time. The result is they very often will request less interaction as our relationships mature. It is not rare that our clients want to meet with us less frequently that we would like to meet with them, because they are confident in our process. The leverage in the money management business model is client interactions. The more time you allocate to client interaction the fewer clients you can take on. The key to financial success in the model is to come up with ways to deliver service efficiently and also provide the right level of client interaction to ensure the client’s feel they are important.

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