Page 17 - Investment Advisor - December 2023

POrTFOlIO PerSPecTIveS

By Jane Wollman Rusoff

How Adding riskier Assets Can lower

Portfolio risk

Advisor David Scranton’s approach for clients includes higher-dividend

equity strategies and bond-like investments.

o David Scranton, CEO of Sound
Income Group, “the real magic”
Tis “the ability to get competitive
returns with less risk.” Scranton, in an
interview, argues that “adding a little
bit of the riskier assets to a conservative
portfolio can help increase your returns
but lower your volatility and risk.”
That’s been Scranton’s unusual
income-generating strategy for about 25
years. When he switched from a growth
approach, the advisor saw his business
“explode,” increasing “10-fold in about
six years,” he says.
Scranton, a 2023 ThinkAdvisor
LUMINARIES award finalist in “more afraid of financial death — running My theory, going back 25 years, being a
Executive Leadership, focuses on boost- out of money — than physical death.” specialist in bonds, was that if I added
ing income with higher-dividend equity Here are highlights of our interview: bond-like equities to a bond portfolio,
strategies and bond-like investments. it would have the same result as adding
That way, he’s able to offer “institu- Investment Advisor: What’s your regular equities and increase my return
tional-style money management” to his investment strategy? [via] risk. And that’s exactly what we’ve
target clients, “mom and pop” investors, david scranton: Income permeates proven to work successfully for clients.
as he puts it, who have, perhaps, about everything we do. It’s our overall theme. When I talk about bond-like equities or
$100,000 of investable assets. If you’re in the stock market, it’s higher- bond-like stocks, I mean business devel-
Scranton, who hosts a radio show dividend equity strategies. We also do opment companies and REITs. They’re
syndicated in 40-plus states and has a lot of bonds and preferreds, and real bond-like stocks because of what’s in
been in the industry since 1987, has four estate investment trusts. them. By adding a little bit of that to a
businesses, with assets under manage- If you go from stocks to bonds, it portfolio of bonds and preferreds, we can
ment totaling $2.5 billion. Sound Income lowers your risk. If you go from growth actually increase the return — the income
Group includes his own longtime prac- stocks to high-dividend stocks, it lowers payment — and decrease the risk.
tice, Scranton Financial Group, in Old your risk. So income helps lower your
Saybrook, Connecticut, and three com- volatility, but it doesn’t necessarily mean IA: What’s the main benefit for advisors?
panies that support other independent a reduced return. That’s the real magic: ds: Baby boomers need more income,
financial advisors with marketing, coach- the ability to get competitive returns but the majority of financial advisors
ing, practice management, investment with less risk. are growth-based and don’t focus on
services and franchise opportunities. income. Most of them are focusing on
In the recent phone interview from IA: How does that happen? total return irrespective of whether
Fort Lauderdale, Florida, where his ds: There’s a point where adding a little it comes from growth or income. But
group is based, Stanton says is dedicated bit of the riskier assets to a conservative baby boomers are getting older and
to helping “average” folks and is especial- portfolio can actually help increase your older, and recent studies have shown
ly eager to advise baby boomers, who are return but lower your volatility and risk. that they’re more afraid of financial

December 2023 Investment AdvIsor 15