Meet an Advisor — Kathryn Schwartz
EVAN HARP DECEMBER 19, 2022
Exchange: An ETF Experience is coming February 5–8, so Evan Harp is sitting down and chatting with some of the advisors who will be there. Today’s edition is focused on Kathryn Schwartz of Pawleys Investment Advisors.
Evan Harp: When and how did your practice begin?
Kathyrn Schwartz: I founded my company in 2010. I actually started in the business over 30 years ago and worked for larger firms in various roles. I really just wanted to get back to working face to face with clients, so I started my Registered Investment Advisory firm in 2010.
Evan Harp: What is your investment philosophy?
Kathyrn Schwartz: I do primarily individual stocks, and I actually launched two private placement Reg D Rule 506 funds in 2011. When I started the firm, I really wanted clients to be able to hold me accountable for the investment performance. I manage the Pawleys Dividend Fund and the Pawleys Growth Fund. They’re both long-only equity funds, and I concentrate both portfolios with high-conviction ideas across all sectors. Stocks of companies with little or no debt, good earnings growth, and rock solid cash-flow, in my opinion, are best positioned to perform well in the long run. As a part of the Jobs Act, back in 2012, there was a lift on the advertising ban for performance. I saw it as an opportunity to not only allow my clients to hold me accountable, but to be able to promote my performance. Things have gone really well. Advisors can invest in my strategies through a TAMP, SMArtX. In 2018, I signed my first family office as a client, and have basically bootstrapped the firm to right around $75 million in assets under management today.
Evan Harp: What was the biggest obstacle you had to overcome and how did you do it?
Kathyrn Schwartz: That’s a really good question. I tend to be an impatient person by nature. But again, when I started the firm, I wanted clients to be able to hold me accountable for the stock performance over the long-term. I really had to shift my thinking to focusing on doing a good job and providing good investment performance for clients, and the firm growth will follow.
Evan Harp: February 5 through February 8 is going to be when our Exchange conference is slated, what do you think the biggest story in the market will be at that time?
Kathyrn Schwartz: Exchange is always such a dynamic, energetic conference. It’s just a great way to stay on top of what’s at the forefront of people’s minds, and learn about the launch of new products But I think this year might be a little bit different, because people have moved past the “shiny ball” syndrome — Crypto, NFTs, and SPACs — the things that used to be the hot topics are no longer working. I think that people are going to come in to the conference with more of a risk-off attitude, and maybe be a little bit more thoughtful about overall portfolio construction, selecting new products, and conducting more due diligence.
Evan Harp: Who’s another financial advisor that inspires you and why?
Kathyrn Schwartz: Evan, that’s a great question. I had to think hard on this one — and then it just was crystal clear, the answer to the question. It’s actually someone who is an advisor to advisors. Her name is Liz Ann Sonders and she is the Chief Investment Strategist at Charles Schwab. I was fortunate to have worked at Schwab for over 10 years, and was on her team when Schwab developed its overall approach to portfolio construction. I learned a lot in that role, and what inspires me about Liz Ann is that she shares context and language that’s extremely helpful to use in client conversations to help them stay on track with their plan and avoid the distraction of everything that comes out in the news.
Evan Harp: Do you have your eyes on any ETFs right now and if so, which ones?
Kathyrn Schwartz: I do almost solely individual stocks but the one ETF I do use is the SPDR S&P 500 ETF Trust (SPY) because it’s just a really good way to make tactical shifts within portfolios. If there’s an opportunity where the markets turn down and we want to put cash to work, SPY is a perfect way to do that.
Evan Harp: What are you looking forward to about Exchange?
Kathyrn Schwartz: Again, the energy. The last the last time I attended, I really started to develop some relationships with people who are in a position to help launch products. Because at some point, I’ll take my 10–11 year track record with my funds and once we have the enough assets to support the expense, we’re looking at launching those as ETFs. I’m looking forward to seeing old friends and meeting new people.
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KATHRYN SCHWARTZLIZ ANN SONDERSMEET AN ADVISORPAWLEYSSPDR STATE STREET GLOBAL ADVISORSSPY