PBJ Interview: Ferguson Wellman's Steve Holwerda on the Wrong Way to Manage Money

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Originally appeared in the Portland Business Journal January 22, 2016

by Matthew Kish

PBJ Interview: Ferguson Wellman's Steve Holwerda on the Wrong Way to Manage Money

A cast iron mechanical bank is a fitting symbol for Ferguson Wellman Capital Management. The Portland investment firm, which this year is celebrating its 40th anniversary, manages more than $4.3 billion for 743 wealthy clients and is known for strength, solidity and an approach to investing that steers away from risk. Not surprisingly, Chief Operating Officer Steve Holwerda collects mechanical banks. His office is lined with more than 30 of them, each more than 100 years old and bearing the original paint. This week, Holwerda sat down with the Business Journal to talk about the firm’s 2016 outlook, the secret sauce to its low turnover and how a high school drama teacher changed his life.

Questions and answers have been edited for brevity and clarity.

The market is down 9 percent this year, but your advice to clients is “stay in your lane.” How do you reconcile the market volatility with the advice to stay calm and consistent?

The volatility emphasizes the reason we talk about staying in your lane. Stay with your goals and what you’re trying to accomplish. It’s at points like this where it’s the most important. There have been 20 corrections of 10 percent or more in the last 25 years. The market is higher than 19 of those. The only one that’s not is the one we’re in right now.

Given the volatility, how is the firm able to stick to its knitting?

Everybody that’s invested has made mistakes. The most common mistake is zigging when you should just stay the course. The thing that an investment adviser provides and what we try to provide is discipline. There isn’t necessarily a right way to manage your money. But there’s a wrong way. And the wrong way is not to have a process and a discipline.

Ferguson Wellman is known for low turnover. What’s the secret?

A lot of that has to do with our founders. They believed in broad ownership and brought in people who shared the same core values. Our interview process also is very rigorous. People who get hired tend to interview with a lot of people so there’s buy-in across the firm. Once you’re here, it’s providing an opportunity to own a piece of the firm. You treat your own car better than a rental. Everybody is eligible to have ownership once they’ve been here five years. About 75 percent of our employees have been here at least five years.

As the chief operating officer, your job is to make sure the firm’s positioned for the next 25 years. How do you see it growing?

One of the things we did two-and-a-half years ago, we realized there was an opportunity for clients who have below our minimum of $3 million, but have significant wealth. We selected $750,000 and we founded West Bearing Investments, a new division of our firm. The idea was to provide individual security management to a segment of the market where it wasn’t readily available.

What about geographic expansion?

We used to be basically in Oregon. While our headquarters is here, over the years we’ve been active in Boise and Spokane and we’ve expanded to Seattle and San Francisco and all of Oregon. We have clients in 33 states.

Your chair the University of Oregon Foundation. What can you say about the ongoing $2 billion capital campaign?

We’ve raised $800 million so far. We’ve got three or four years left. Two billion is a big number. I think we’re going to get there. But we need to keep running fast to get to that number.

You played college basketball. A lot of executives at the firm played sports. What’s that meant for the firm’s culture?

(CEO) Jim Rudd was an all-american at Northern Iowa. (Founder) Norb Wellman pitched in the College World Series (for Oregon State). Sports for our firm has been a big deal. Many people here played in high school or college. I would say teamwork comes from that. Teamwork and competitiveness.

Your high school drama teacher, Bette Gerberding, pushed you into participating in school plays. What’d you learn from her?

If you can imagine being a high school athlete and that was your identity, Gerb pushed me to get outside of that box. She recruited me as a sophomore to be a dancer in “Oliver,” which was not on my radar. It led to being in “Mash” and “The Wizard of Oz” and “Camelot.” All of that was outside my comfort level, but because of it I had great experiences. Any time you do something you’re not comfortable with, but it works, it helps build your confidence.

Your favorite book is “Atlas Shrugged.” Who is John Galt?“

Atlas Shrugged” is a book that Bette Gerberding gave me when I was 23 and I was moving out to Oregon. I thought a lot like people in the book. I believe in people’s ability to come up with wonderful ideas and I believe in personal responsibility. That book kind of juxtaposes that idea of man trying to succeed and oftentimes bureaucracies trying to interfere with that. It’s a fascinating book. I keep copies in my credenza. When I meet somebody who might enjoy the book, I send it to them.

When did you start collecting mechanical banks?

I started collecting them in 1999. I’m in the investment business. It’s about saving money and trying to preserve money.

Any symbolism for how the firm operates?

We appreciate history here. And we appreciate quality. These were made so well, more than a century ago, and they all work. They all have the original paint. The quality is something that’s a part of our firm.

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Steve Holwerda

Title: Chief operating officer

Firm: Ferguson Wellman Capital Management

Assets under management: $4.3 billion

Clients: 743

Minimum: $3 million

Joined the firm: 1989

Education: Bachelor’s degree from South Dakota State University, MBA from the University of Oregon

Home: Lake Oswego

Personal: Married with three children