The investment challenges of small-biz owners are no stranger to Christina K. Boyd — and neither are North Dakota oil rigs
Christina K. Boyd knows a thing or two about managing wealth. Last year she became a managing director with Merrill Lynch, a title held by fewer than 1 percent of its financial advisors. From her base in Wayzata (she grew up in Edina) with Boyd, Bencini, Gibbons & Associates, she advises everyone from doctors to industrialists to small-business owners. Among her many accolades, last year she was recognized by Barron's as one of the Top 100 Women Financial Advisors in the country — for the sixth year in a row. We spoke with Boyd about her advice for small business owners, her favorite sectors, and her work related to the oil boom in North Dakota's Bakken region.
Tell us a bit about your background and your history with Merrill Lynch.
This is my 18th year. Prior to that I worked a little bit in the industry, but this has been the main place I've worked my whole career. I just enjoy coming to work every day because I have really lovely clients and I have a really lovely team.
What percentage of your clientele are owners of small businesses?
I would say 25 to 30 percent are small-business owners in various capacities, whether they own what you traditionally think of as a small business, all the way to my vets that own a clinic together, or my dentist, or my doctors that still have a sole practice.
Where are your clients located?
I have a large portion in Minnesota, but I also do a lot of work in North Dakota, Colorado, Texas, California, New York, and then more around the Midwest, too. Also South Dakota and Iowa ... What tends to happen is it starts as Midwestern clients and then their children live in other parts of the country. Or one of them moves. Or my snowbirds that spend time in Arizona and Florida, or move there 100 percent of the time. That's where my business really develops all over the country.
When it comes to small-business owners, what challenges to retirement do you often see?
People tend to think often in terms of 401(k)s and IRAs, but when it comes to small-business owners, those probably are not the best plans that they could have ... We tend to focus more on SEP-IRAs [Simplified Employee Pension plans] and individual 401(k)s. We do simple IRAs, as well.
Many owners are not liquid enough. Often, much of what they make is tied into the business, and they're putting back into the business. Often, they are not taking much of an income. We need to talk to them about at least creating enough income to maximize what they are allowed to contribute to their retirement plans, if possible.
There are a lot of problems they have if they don't have enough liquidity. If we have small-business owners that are worth more than [the $5.12 million estate limit], we want to make sure that they have enough liquidity that should something happen to them and their heiress inherits the business, they have a sufficient amount of liquidity to pay the estate taxes — so they're not forced to liquidate the business when it may not be the perfect time to sell just to cover estate tax needs.
The other thing that I tend to spend a lot of time covering is diversification. If most of their money and their net worth are tied up into their business, then they're only covering one area. For instance, you want to look at having your business and then your home, and then you want to look at investable assets, meaning primarily stocks, bonds, and cash, and alternative investments. I spend a lot of time looking at the various sectors.
If their business is, for instance, in the industrial sector, even though that is one of the sectors that I think is going to be a real leader in the next couple of years, I'm not going to invest much if anything at all in the industrial sector because they're already too heavily weighted.
I attribute a lot of my success [to] beating the market pretty significantly on the upside while dropping a lot less on the down side. That's my real strength ... I'm very concerned with my clients making a lot of money, but equally or more so concerned about not losing their money. That's the reputation I've built. I think the way that I'm able to do that is by really focusing on the various sectors that are going to be the leaders in the next couple of years. You want to be very careful and not look at what would have been the leaders the last couple of years, but focus on some of our favorite sectors going forward.
What are some of those?
I would focus on information technology. I think that's going to be a real leader. Larger companies are very flush with cash right now. They will not sit on that cash forever, earning almost zero. They're going to do several different things. Primarily, they'll probably either invest, they'll buy shares back. That's good for shareholders in the overall market. Or they'll increase their dividend. That's good for the market as well as their shareholders. Or they will invest back in their company ... One of the leading areas that they invest in first is technology. That will be a very big play in the next few years.
I also like financials ... Even though some of them are not completely out of the woods yet, we think in the next couple of years that things are going to be really pretty cleaned up in the financial industry, and markets move anticipatory. You don't want to wait until that's happened or you've missed it. By the time everything is perfect, you've probably missed most of the growth opportunities.
I do like health care, but very selectively. I like medical technology primarily. Some managed care and then some of the big drug stocks that have underperformed.
Tell us about your activity related to North Dakota's Bakken region.
Not only do I have clients in that area and have done a lot of work there and become very knowledgeable, but I also have clients that say, "How can I get in on some of this?" I have people doing everything from investing in local real estate, to business owners that are already there, mineral rights owners that are already there, accountants and attorneys, and then all the way to the investments that I can recommend.
I spend a lot of time looking at which oil and gas drilling companies look good. Railroads, railways, pipelines, oil and gas exploration, equipment services, rig and construction companies, and then integrated oil and gas companies. Then kind of what the leaders are in those areas because I spend time out there.
I started becoming knowledgeable in this area five or six years ago when the horizontal drilling was getting really big in Texas and North Dakota. I wanted to get an overview. I wanted to understand it from all different perspectives. I will fly out to New York and have breakfast with our oil and gas analysts and have conference calls in London about possibly hedging against their positions if maybe they're too heavily weighted in that area — all the way to actually going out in a rig in the Bakken area recently and attending oil and gas conferences, meeting with governors. Things like that. I really want to understand it for my clients and have the overview. I have laminated maps in my office.
When did you go to the oil rig? That's interesting.
It is interesting. I was probably the only woman for many miles. I went out [last] summer. One of my clients took me out on an oil rig and they gave me a hard hat and they let me look around, and I had a couple of men telling me all the details of how things work and all the process that goes into it. That was really fascinating. Just for the experience, really I would recommend that you go out there and take a look because it's just fascinating.
Are you dealing with people who have inherited land around the oil patch?
Yes, I have a lot of clients that have mineral rights in the area. They just have huge windfalls ... You can almost put it in the same category as somebody winning a lottery. Almost overnight, they've gone from having a modest income to staggering checks. They're somewhat nervous about it and what to do with it. In North Dakota, people tend to be very private about their wealth. They don't want their neighbor to feel that they have more money than they do or anything like that. That's actually beneficial for me because they tend to be more conservative and that's what I like. My whole job is I talk to them about what this could do for their whole life as well as a legacy that they create for their heirs and their heirs' heirs. That's where I have a lot of family meetings and such and talk about what goals do they have for this money and then how we're going to preserve the wealth and grow it for the next generation, and keep it tax-efficient.
It's still a bit uncommon for a woman to reach the level you have in your career.
What are the pros and cons of being a woman in your field of expertise?
There are certainly positives and negatives. I'm a very optimistic person, so I tend to just focus on the positives. The higher up you get, the bigger deal it is. I think as you move up the ladder, you even get fewer and fewer women, unfortunately. I may be in a meeting, there may be three women and 200 men, but fortunately I've always had a lot of guy friends, so I don't really mind. We learn a lot from each other.
I think there are some real advantages to being a woman in the business. First of all, because we are a minority, if somebody specifically likes to work with a woman, we have less competition.
I think we tend to be more planning-oriented. I was at a meeting recently with a lot of my male peers. They're talking a lot more about these relationships we're building [with clients], and really talking to people about their goals and what type of life they want to live and spending less time on maybe just the detailed investment, the complicated investment strategies. I was in the meeting and I thought, "That's what I've always done." It was kind of an eye-opener for many of the guys in the room, and that's always been my focus. I always want to know everything there is about them and their family and their goals and needs.
I hear a lot of people that are referred to me, they say they want to specifically work with a woman that they feel is very trustworthy. I think we as women are willing to take risks, but the risk we take is very calculated risk.
Do you have any advice for younger women trying to break a few glass ceilings of their own?
Stay true to yourself. This has been the biggest thing I've learned in my career. When I started in the business I wanted to be like all the guys, because it was primarily guys ... We dressed in kind of boxy male suits, and I learned to play golf. I was trying to do all of the things that my male peers were doing. I finally said, "OK, I like to golf and I like the males I work with. And I learn a lot, and we learn a lot from each other. But ... I need to stay true to myself." That's where my real success came, once I realized that you need to be who you are.
Stick by your beliefs and you're going to draw people in by that. They're going to see that authenticity ... You're going to wind up with a client base that will, if they come to you and like you, go with you and like working with you. They're going to be the kind of people you like to work with, because they have similar interests. And then you feel good about yourself when you go to work. I think that carries forward in your whole day.