Numbers ‘fascinate’ him. After 50 years in money management, here’s his advice.

July 18, 2018 by Jack Russell & Tom Martin

The man who manages investment portfolios for some of the most prominent individuals and foundations in Kentucky is celebrating his 50th year in the financial advisory business.

Tom Martin talks with Jack Russell, founding partner and Chief Executive Officer of Russell Capital Management.

Question: Your father was in the same business you’re in. What important lessons did you learn from him?

Answer: I can’t remember wanting to do anything other than being in the investment business. My dad’s firm, Russell Long & Company was the fiscal agent for the City of Lexington. They financed it back in the early days — schools and sewers, and all the infrastructure. He was in the investment business for over 40 years. I used to watch him. He would come home and at his desk he had these real long columnar pads that accountants used to use. He would write these long columns of figures and add them up. Of course, they didn’t have calculators back then. Numbers have always fascinated me.

Q: You take on responsibility for the management of your client’s money. It’s a big responsibility. It can be a risky business, given global dynamics. What it’s like to hold that level of responsibility? Do you find yourself holding a lot of nervous hands?

A: Part of our job is to hold hands, to keep people on track and keep their portfolios and their emotions from making mistakes. But a lot of my clients have been with me for years. We have discretion in their accounts. And they’ve come to rely on us and trust us to do the right thing. I don’t get phone calls when the market goes way down. They know that we’ve positioned them well enough to be able to withstand these things.

Q: There have been some major changes in the investment industry that relate to technology and to rules and regulations in the past 50 years, even more recently. What have been some of the biggest challenges?

A: As far as regulations, the imposition of small rules that the regulatory agencies have continually put on more, and more, and more things that our firm has to do that are unnecessary. And hopefully, those things will get corrected here in the next few years. An awful lot of our time is spent just following regulations. It doesn’t help the consumer and it hurts investors. It takes our time from managing the money.

Q: What sorts of technological innovations have made a big difference in your industry?

A: The financial industry is the leader in technology around the world. Most technology is designed for and applied by financial companies. When I started in the investment business in 1968, we had what’s called a Bunker Ramo machine. You could put a symbol in and it would show the last sale of a New York Stock Exchange listed stock. We also had a ticker tape. And the volume was so low I remember the volume of the New York stock exchange got to 2.5 million shares per day. That low. And prior to that, the highest volume ever had been before the crash in ’39. And in 1970, we surpassed that volume at 14 million shares. Then the NASDAQ came along with quotes.

Prior to that, you had to make phone calls to find out what a quote was and called two to three market makers because they didn’t know what the quotes were. They had to make phone calls and you try to get the best price you could. Commissions on the New York Stock Exchange were fixed at $80 per 100 shares. That really limited the liquidity in the market and people trading.

Then it went to negotiated commissions, which really ended up being the best thing that happened to markets worldwide and allowed people to trade more, added more liquidity to the market and then you had the advent of regulated options. The only way that could have come about was through technology. And that added tremendously to liquidity, and stocks and bonds. And the volume has just skyrocketed. Without the technology, you couldn’t do that.

Q: How has the local financial business evolved over that time?

A: When I started in the business, there were a few local firms like my father’s. It’s almost like a club. They were all friendly, liked each other and enjoyed working together on things. And there was Merrill Lynch, a national firm. In 1990 I opened the first Dean Witter office in Kentucky. I left them and opened a branch for JC Bradford & Company. They heard what I’d done at Dean Witter and hired me to do that for them. And then in 1990, I decided I’ve opened enough branches for enough people. I can do my own.

Q: You’ve been in a position to really observe Lexington’s growth and development. What are some important ways that the city has changed in recent years?

A: I think probably the most important thing that’s happened is we have lost our local companies — the larger companies, the banks. The companies that were here have sold out and now, they’re part of big companies, including grocery stores.

When I started in business, there was Graves Cox downtown, or Meyer’s and Lomanzi’s, and all these stores and businesses that are now gone. And I think that’s a major thing. Another thing is the charitable bent of these corporations has disappeared. Now, Alltech has been very active of course, but they’re an exception.

Q: Trade tensions are rising right now. Major tariffs implemented by President Trump. Major retaliatory tariffs coming from his targets: China, Canada, Europe. Does the rhetoric that’s out there right now make a financial adviser and a planner uneasy?

A: No. You steel yourself to all the rhetoric and the ups and the downs. And as far as trade goes, we are putting on retaliatory tariffs. That’s what we’re doing. We have been subject since the `80s to some really abusive type behavior by our so-called friends in trade. And people don’t understand that.

Q: How do you counsel clients during these times of market volatility?

A: We manage money with discretion based on a client’s risk tolerance. We have instructional seminars for our clients to keep them informed about things like Social Security and trade, and what is a blockchain. We try to keep our clients informed.

Q: Would you encourage young people to get into this business? And if you would, what are some important ways to prepare for the career?

A: This is something we talk about in our firm a lot. Our custodian firms, we use TD Ameritrade and Charles Schwab, are very concerned about this. The financial advisers in the country are aging, both brokers and advisors. It’s an aging population. And they probably will be needed more than ever with the large number of inheritances that are going to happen with the aging of the population. So, I would definitely encourage people to get into it.

Tom Martin’s Q and A appears every two weeks in the Herald-Leader’s Business Monday section. This is an edited version of the interview . To listen to it, find the podcast on Kentucky.com. The interview also will air on WEKU-FM 88.9 at 7:35 a.m. on Mondays during Morning Edition and at 5:45 p.m. during All Things Considered.