Spend. Spend. Spend.
That’s probably not what you’d expect out of a responsible financial consultant in a challenging economic climate. In fact, it seems as though that attitude was what got so many lenders and investors in trouble in the first place when the real estate bubble burst in 2008.
But it was spending that helped John Graham & Associates emerge stronger after the worst financial downturn in the U.S. since the Great Depression. It was careful, strategic spending that allowed the East Peoria company to grow at a time when many larger firms were folding or being bailed out by the government.
“We tightened our belts and took pay cuts to preserve capital. Then we were able to reinvest that capital in new hires, technology and a learning center,” said Mike Graham, vice president and financial consultant at JGA. “Because of this reinvestment, we became stronger and in a better position to compete with the bigger firms. We hit the pedal on the right and drove through the smoke.”
That smoke included investment giants such as Bear Stearns falling to JP Morgan Chase, Merrill Lynch being bought by Bank of America, and Smith Barney being taken over by Morgan Stanley. These three once-mighty companies fell victim to their own risky investments. Each had been heavily involved in trading subprime mortgages packaged into securities. When the housing bubble burst and foreclosures rose, they were left with toxic assets and no secondary market to sell them.
Even after the U.S. government decided to bail out Bear Stearns in an attempt to stave off an avalanche of failures on Wall Street, investors remained weary and continued to pull their money out of the market. After Lehman Brothers filed bankruptcy in September 2008, other big investment houses began to fall. The government kept stepping in to keep the system afloat until it effectually nationalized banks that October.
“In late 2008, the decline in trust and confidence in the major investment houses helped highlight the benefits of working with consultants at smaller firms,” said Mike Graham. “The landscape of the whole industry changed, and our growth put us in a better position to help our customers navigate the new terrain.”
Time, Not Timing
For JGA’s consultants, the compass for any financial terrain has always been their strong, unwavering philosophy that focuses on diversification and long-term results. They urge clients to look beyond short-term fluctuations in the market and insist that time, not timing, is what’s important.
“Sticking to our core principles is what has helped us and our clients come out ahead through several investment bubbles in the last 15 years,” Graham said. “Our principles got us through the tech bubble in 2000, and the more recent housing bubble. We don’t get caught up in the hype of the day. History has proven that investing in what’s ‘hot’ now in hopes of big returns is not a good bet.”
As one example, Graham says JGA’s consultants have never recommended that its clients invest in non-publicly traded real estate investment trusts, which is what got some of those bigger firms in trouble when a record number of home foreclosures hit. The East Peoria firm does not offer its clients structured products, nor does it have any proprietary products or underwrite securities.
“If we can’t get good research on a product, or if there is not an active secondary market for it, we don’t do it,” Graham said about choosing investments. “We like to dig deep into the research to find the best investment products to fit each client’s needs and goals. It’s that commitment to each individual that sets us apart from the other investment firms.”
Like Father, Like Son
That commitment can be traced back to 1971 when Mike Graham’s father, John, entered the financial industry after a stint in the armed services. The older Graham worked in insurance and investments for several large firms before realizing his dream of owning his own company in 1996.
“My dad was a small-business owner, so the desire for the freedom and challenge of owning my own company has always been part of my genes,” John Graham said.
Mike Graham credits his father’s 40 years of experience with setting the path for their business today. “His strong work ethic and commitment to personalized service to each and every client have been a model that our financial consultants have strived to emulate. Our core principles started with him and have held fast ever since,” he said.
Yet the ever-humble John Graham is quick to point out that JGA has always been a group effort. “There are lots of people responsible for this business getting off the ground and the growth it has experienced,” he said. “We have nothing to brag about and lots to be thankful for.”
Both Grahams see the fact that JGA is a family-run business as one of its biggest strengths. “Our clients see that this is more than a job for us. We are fully committed to them because our time, personal livelihood and families’ reputations are on the line each day,” Mike Graham said.
“We take our time to get to know our clients and help them see the big picture. We help them make the right decisions that will help them be where they want to be,” he said. “Doing the right things for the right reasons has led clients to refer their friends and family to us. These client referrals are a big part of why we have grown so much over our 15-year history.”
Growth & Lessons Learned
The father-son team that started with just one other employee has grown to include four financial consultants and two supporting staff members, as well as a whole second business that serves as the broker/dealer to the firm. JGA consultants offer financial planning services that include college planning and retirement planning for both individuals and businesses, such as 401(k)s, pensions and IRAs. They specialize in stocks, bonds, mutual funds, CDs, 529s and custodial accounts.
Their other business, Midwestern Securities Trading Company, LLC, was started in 2000. It provides financial consultants with access to investments, insurance and investment advisory services and helps keep registered representatives in compliance with regulators. MSTC is also the broker/dealer for 16 partnering financial institutions, including community banks and credit unions. MSTC employs three full-time employees and has engaged over 30 additional professionals to join its network, located throughout Illinois, Missouri, Iowa and New York.
Mike Graham said having its broker/dealer in-house lets JGA consultants better understand back office operations and compliance as well as provide timelier, professional service. “In the end, this business is all about helping our clients achieve their financial goals,” he said, “and having a B/D we can trust to give the service we expect makes a big difference.”
The Grahams believe there are lessons to be learned from the economic upheaval of the last few years. “Who you do business with matters. A company’s philosophy, people, commitment and values matter. It’s not about the marketing or a 30-second sound bite,” Mike Graham said. “It’s about the connections that you make on a deeper level, where you can build trust and common goals.”
His father and business partner echoes that conviction: “The biggest aspect of our success is not the assets we manage, not the building we have, and not the technology we use. The most important aspect is the people who come up and down the front steps every day. It’s our culture and the way we treat people that really matters.” iBi