CONSERVE. PLAN. GROW.®
January 31, 2023
My father, Lee Butler, lived a long, meaningful life defined by his dedication to his family, his team and his clients.
When he passed away on January 5, 2023 at the age of 96, my father left a remarkable legacy. An honest man of great character, he was always extremely approachable and willing to give helpful, measured advice. Always punctual and respectful of other people’s time, his moral compass was spot-on and never wavered through the years.
I remember him waking up early and reading The Wall Street Journal before work, his love of playing tennis (well into his 80s!) and his passion for history. Defined by a true spirit of service, my father was a longtime member of The Rotary Club of Savannah and Wesley Monumental United Methodist Church and was active on a number of local boards, including First National Bank, St. Joseph's/Candler, and Memorial Medical. He also understood the value of work and encouraged his children to get jobs at a young age.
He started Fiduciary Services Corporation, the firm that later became known as The Fiduciary Group, in 1970 with the idea that clients would come to him primarily for trust and estate administration, since he previously served as the head of the trust department of a local bank. He understood the importance of serving as a fiduciary, always putting client needs, goals and objectives first at a time when the fiduciary model was quite rare. Early on, he found that a growing number of clients wanted him to manage their personal investments as well. He did such a good job managing portfolios for these clients that word of mouth referrals brought in additional clients and investment assets, and the firm thrived. His sound, fundamental approach to investment selection continues to inspire our portfolio managers today and has helped to shape our firm’s investment strategy over the years.
My father was a naturally positive person and he has always held a firm belief in the power of American business to achieve solid growth over time. He implemented this investment philosophy by investing client accounts in large domestically-based companies with operations overseas. The common characteristic of these companies was that they had a history of solid growth and also shared their profits with shareholders by regularly distributing generous dividends to shareholders. He also purchased high-quality bonds to generate a safe and consistent cash flow for client accounts. This investment philosophy has stood the test of time and continues to be an important foundation of our firm’s current investment strategy and overall asset allocation approach.
Many years ago, when my father was in the prime of his business career and actively investing client accounts, he invested directly in individual securities including stocks and bonds. The stocks he selected tended to be household names like Coca-Cola Company and Exxon Mobil and the bonds he acquired were typically state and local municipal bonds. Stocks would be purchased with the intention of holding them indefinitely, while bonds would be held until maturity. Because cash earned anywhere from 5-7%, these portfolios would have a fairly high cash position as well, likely 5-10% of the overall account value.
Today, we continue to invest in individual securities, but our purchase list also includes stocks that don’t pay dividends, and also some large international companies. When we invest in a company today, we intend to hold it only so long as it continues to perform in line with expectations. We monitor all of our holdings on a continuous basis, so we don’t necessarily subscribe to the “buy and hold” philosophy any longer. We are focused on the total return of a security which means we seek an income return as well as appreciation. For smaller accounts, as an alternative to investing in individual securities, we will use actively managed mutual funds and exchange traded funds that invest in large-cap US-based companies.
While we build core positions in large U.S.-based companies, we also diversify with satellite positions that are invested in smaller, faster growing companies, and in companies from emerging international economies with higher growth rates. These types of securities have share prices that might be more volatile than larger U.S.-based companies. So, rather than invest directly in these types of companies, we utilize mutual funds and exchange traded funds (ETFs) to achieve our asset allocation objectives in these areas. By investing in mutual funds and ETFs which hold many individual securities, our portfolios achieve the equity representation we seek without exposing the portfolio to the risk that any one of these small or foreign companies might decline significantly in value.
Another significant evolution in our management of portfolios is our portfolio appraisal report. With much more advanced technology, today our portfolio reporting system provides time-weighted performance returns and updates positions, transactions, and valuations on a daily basis. Security holdings are displayed in a more logical manner, with individual stocks listed by economic sector, and funds listed categorically by market capitalization and domicile (domestic or international). Fixed income investments are similarly segregated by category including government, corporate, and high-yield. We also provide appraisal reports on a consolidated basis for the entire household as well as statements for each individual account.
We still manage a number of portfolios that were originally created more than 40 years ago, and these portfolios have benefited from the overall investment strategy initiated by my father. We have adapted our strategies over the years to focus on total return, and also by adding some additional asset classes. In addition, we have expanded our menu of investments to improve diversification and introduce more non-correlating positions. We have strategically grown our team of skilled professionals and significantly enhanced our processes and resources to allow us to serve our clients even more effectively.
My father’s fundamental belief in the American dream and the power of American business never wavered over the years and continues to be a guiding principle behind our investment philosophy at The Fiduciary Group today. His personal and professional advice resonate with me each and every day. I am deeply grateful for his guidance over the years and for the inspiring legacy he leaves behind for our firm and our family.