She Went Running With Jamie Dimon. When She Said This, He Stopped.

Lori Van Dusen, founder and CEO of LVW Advisors, discusses investing, women in finance, and the importance of having kids take risks.

Lori Van Dusen (Courtesy LVW Advisors)

Lori Van Dusen

(Courtesy LVW Advisors)

Lori Van Dusen’s storied career has hit ever higher notes – only fitting for the self-described “hundred-pound opera singer.”

Grit and self-confidence have helped Van Dusen forge a wildly successful career while becoming a trailblazer and role model for women in finance. Raised by her grandfather, and the first in her family to graduate from college, Van Dusen eventually earned a master’s degree in education from Harvard before making her mark on Wall Street.

Van Dusen’s investment advisory career began in 1987 at Shearson Lehman Brothers, which was later acquired by Citigroup Smith Barney. By 2004 she had become Managing Director at Smith Barney, where she consistently ranked in the top one percent of firm producers in terms of assets under management and revenue. Importantly, she also had Jamie Dimon’s ear. More on that below.

In 2008, when the financial crisis was in full swing, and mistrust and misjudgment percolated in a fiery and toxic stew, Van Dusen declared her independence, joining Convergent Wealth Advisors in her hometown of Rochester, NY. Most clients followed. Three years later, she founded LVW Advisors there.

Van Dusen, who was named to Barron’s Financial Advisor Hall of Fame this week, ranked fifth in the publication’s 2018 “Top Women Advisors” list. She works closely alongside Joe Zappia, Principal and Co-CIO, and Kim Pugliese, Managing Partner and COO. LVW, which manages approximately $2 billion for wealthy families and nonprofit institutions, is a partner firm of Focus Financial.

How would you describe your process for evaluating investments?

I spend a lot of time thinking about building portfolios and think in terms of orchestration. You don’t want to have too much of the same in your portfolio so that you’re diluting your returns. And you don’t want to have too little so that you’re amplifying risk. So every time someone comes to me with a great idea, I think, ‘how is this addition going to improve what we’re already doing?’ It’s always about how do we keep our differentiator, which is being on the higher end of the market, boutique, customized service and solving client’s ever evolving problems. So that’s where I live every day.

What’s your take on the market today?

We use a three-legged stool to invest: valuation on equities, earnings growth, and liquidity. Valuations are certainly not cheap, while earnings growth has been decelerating, the recent quarter has been pretty good, and liquidity is arguably still pretty plentiful. We think in this framework around beta, but skill is the ultimate diversifier. We have a pretty deep network that we built over the years and we also manage money for professional investors. As an RIA you need the resources and a strong network to bring good ideas to clients or you are at a competitive disadvantage. We have deep planning and investment teams, but we outsource capabilities that we feel we can’t build internally.

How has the investment landscape changed over the years?

When I started in business in 1987 there was more small-cap coverage and far fewer private companies. Now the majority of opportunity is in the private space not public. So I feel you have to have deep resources around private equity and I think that’s not going to change. We’ve partnered with a significant third party to build our private equity resources. In a nutshell, finding harder to access, under-researched, and inefficient areas are the places those with skill can make a lot of money.

How do you most effectively leverage your expertise?

Again, being really deep in terms of resources on the private investment side (whether that’s private equity, credit or real estate) is super important to build resources around because those are the things that will move the needle for a client in a portfolio. Additionally, having resources around identifying good active managers and small cap equity is important. In the public space, a hedge fund structure is typically what we utilize. Typically, the principals investing are aligned with the underlying investors or limited partners because they have the majority of their own money invested alongside.

Where do you see value now?

Generally, there is not a lot of “cheapness” in the public markets but you have to embrace technology and the two biggest technology players in the world are the U.S. and China, so you have to be exposed to China. Not investing there privately or publicly, I believe, is a missed opportunity. In the United States, enterprise software and groundbreaking companies around 5G is a powerful trend. There will be significant winners and losers and this is where a skilled manager comes into play as well.

How do you invest globally?

In emerging markets and developed non-U.S. markets, we’re moving away from indexing. The developed non-U.S. indices are very heavily in finance. So if you want to own a lot of large banks that’s what you’re going to own. If you want to own small cap Europe, you’ll want a good stock picker. At the point in time that China becomes categorized as a developed market, there will be a lot of changes in these indices We also embrace active management in international. The U.S. is a different story. For large cap, it’s a default to the S&P 500 and/or passive investing. So in summary, where can we really move the needle? I think that’s in small cap and to a certain extent active international, while layering on private opportunities.

What else do you like or dislike?

I don’t really want to own public real estate right now. I think the valuations are ridiculous. But private real estate, depending on what it is, is still interesting and there’ll come a time when we’ll own more.

You have been a trailblazer for women on Wall Street. What can be done to have more women join the industry and rise through the ranks?

There needs to be a deeper understanding that women are the only sex that can have children. When you have a kid, that’s your first and highest priority, generally speaking. And so somehow there has to be a C-suite understanding about what it’s like to be the breadwinner and have children. In the mid- to late-nineties, when I was on a small internal advisory group at Smith Barney and Jamie Dimon was CEO, he and I sometimes went running and talked business. One time, while running, not long after I had my second son, I asked him why the company treated maternity leave as a short-term disability. He stops in the middle of the road. He couldn’t believe that that was the policy. Once he understood, he acted immediately. Soon, Smith Barney had one of if not the most progressive plans in the industry. I think a lot of Jamie Dimon as a person and a leader.

How can kids gain the confidence to take risks?

It’s important that they see somebody like me, know my story and see that I came from literally nothing. It’s so preposterous that I ended up at Harvard and then on Wall Street in the World Trade Center in 1987. How did that even happen? It shouldn’t have. All the odds were stacked against it. And when you distill it all down, it’s about mentoring, exposure, and helping kids gain the confidence to take risks. My grandfather, who was my father figure, taught me to be an adventurer and to get in larger amounts of trouble and then figure out how to get out of it. Not in a bad way. But to be adventurous, to be an explorer and try new things. And that starts when you’re really, really, young.

Before going to college, you attended the Eastman School of Music as a vocal preparatory student for many years and you remain an unabashed advocate for the arts. How do those two worlds intersect for you?

I think there’s this very high cross-correlation of aptitudes around the arts and finance. I was a hundred pound opera singer. I think that this whole idea that everybody should be in a STEM program is flawed. Exposing kids to music and the arts is important. A lot more about this business is creative than not. So all of this starts when kids are small by showing them role models and exposing them to different experiences. It’s too simplistic. We would have more women in finance today if they were encouraged as children and I think we would have better business people if they were exposed to the arts as well as finance. But it’s still hard and it takes resiliency. Kids should be encouraged to fail, and to learn that life is messy. It doesn’t all look like Instagram posts.

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