Diversifying Pays Off

The Browns use disciplined investment approach

Taking Risks isn’t easy—especially when it comes to one’s finances. Over the years, Bruce Brown and his wife, Lisa, have reached many of their financial goals. As a founding partner of Daversa Partners, a Stamford, Connecticut-based executive search firm that serves software, Internet, and media technology companies, Bruce earns a handsome salary managing the firm’s San Francisco office. A stay-at home mom, Lisa is currently working toward her license to practice marriage and family therapy. With an estimated net worth of $2 million, the Oakland Hills, California, couple has taken measures to protect their nest egg.

Although money is not a problem for the Browns, Bruce, 42, sometimes has to persuade the more conservative Lisa, 43, to take financial risks. “I’m conservative because I got burned in 2001,” says Lisa, who had invested in several tech stocks. “I lost a lot of money in the market, so I was gun-shy at first.”

When the couple began working with their financial adviser, Antoinette Chandler, a senior vice president at the San Francisco office of Morgan Stanley, she suggested that they adopt an asset mix of 80% equities and 20% fixed-income investments. Lisa, however, insisted on a 50/50 allocation, indicating that she was willing to re-evaluate the couple’s portfolio every quarter. The Browns hope to reach their goal of $5million by age 50—that’s when they plan to retire. “You can’t be 50%in fixed-income and expect to double the portfolio,” says Chandler, who conducted a stress test on the Browns’ holdings. She showed them how much contribution and risk were necessary in order for them to achieve their goals.

To fund his family’s future, Bruce is willing to take calculated risks. As an executive recruiter, he often comes across small tech companies seeking investors, and occasionally these firms pay for his services with stock in lieu of a regular fee structure. A year ago, Bruce accepted shares of a budding technology company as payment, and he says the investment paid off handsomely when the stock rose from less than $1 to $16 a share.

The Browns didn’t immediately reinvest the cash into the stock market, but instead decided to wait and see. Because of this payout, roughly 43% of the couple’s portfolio is in safe holdings—30% in a money market account, and 13% in domestic bonds. The balance of the current allocation: about 50% in equities and the remainder in alternative investments, including private equities and hedge funds.

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