By Katy Stewart
Although it is a city of 3,722 college students, Lexington also beckons to retired people — and their investment dollars. A new wealth management firm opened this month to take advantage of that opportunity.
Davidson and Garrard, Inc., a registered investment advisory firm based in Lynchburg, opened its doors for business Feb. 1 on North Randolph Street.
Davidson & Garrard’s office joins a dozen investment firms already in the area, not to mention the investment staffs of area banks. Because of the large number of retirees, investment advisers see the community as a promising place to do business.
Lexington residents have almost $2 billion that is or can be invested. That includes money in banks, mutual funds, stocks and other assets, according to market data from Edward Jones Investments,
a wealth management firm with three offices in Lexington. In Rockbridge County, residents have another $1.8 billion in such assets.
Of the 22,307 residents of Rockbridge County, 20.7 percent are 65 or older, according to the most recent Census data. In Lexington, 15.3 percent of residents are in the same age bracket.
Lexington retiree Farris Hotchkiss called the town a “retirement mecca.” Hotchkiss graduated in Washington and Lee’s class of 1958 and retired in 2001 after a long administrative career with the
university.
The two universities, the beauty of the Shenandoah Valley, and the reasonable price of land make Lexington and Rockbridge County attractive to many retirees, Hotchkiss said.
Hotchkiss has invested with The Main Street Group for about 10 years. Hotchkiss’s adviser, Steve Crawford, has worked for the company for more than 25 years and opened a storefront in Lexington seven years ago.
Hotchkiss said most other retirees he knows do not feel they have the expertise to make complicated investment decisions. They want someone educated and professional whom they can trust with their wealth.
“It takes a very sophisticated person,” he said.
David Hansen, who operates the new Davidson & Garrard office, has been working from a home office in Lexington for two years, focusing his business in northern Virginia. He has about 60 clients in other parts of the state and about 12 in Lexington.
“That’s about how much a person can handle and do the job well,” he said.
Hansen said he moved from a home office to an office space when Davidson & Garrard’s management told him to focus on attracting new clients from Lexington and the surrounding counties. The company didn’t conduct much market research to make that decision, he said.
“We just realized the need,” Hansen said.
Hansen said Davidson & Garrard is different from other wealth management companies because it is a registered financial adviser, a certification that requires examination and licensing by the
U.S. Securities and Exchange Commission. He said that not all brokers are certified. Edward Jones and The Main Street Group’s parent company, LPL Financial, are certified with the U.S. Financial Industry Regulatory Agency.
Hansen works with alternatives to typical stock funds, such as gold and real estate investment trusts. That improves diversification and makes clients’ portfolios less susceptible to market fluctuations, he said.
“We’re much more active with customizing a strategy and offering more asset classes,” he said.
Hansen charges clients a fixed fee based on each client’s assets. The minimum portfolio size is $250,000.
But the variety of wealth managers in town offers Lexington retirees other options for investing.
One adviser in the area, Dan Vance, has worked for Edward Jones for 26 years; his office is on West Washington Street in Lexington. Edward Jones, based in Missouri, has nearly 12,000 offices in the U.S. and Canada. Vance said he has worked with more than 900 households in his career.
His average client is 62 years old. He requires a minimum investment of $250, but has clients who have invested as much as $15 million.
He’s not worried about Davidson & Garrard taking any of his business, he said.
His clients prefer stocks and mutual funds over the managed assets that Davidson & Garrard focuses on, he said. Managed assets involve a legal agreement, and Vance said many of his clients don’t want to relinquish control or take on the extra fee.
“I’ll advise you what to do, you say ‘yes’ or ‘no,’” Vance said.
Hotchkiss echoed that, and said he takes an active role in the wealth management process. After all, it’s his money.
“Anything they do is a product of our discussion,” he said.