Lead-Lag Live

Preservation Over Prediction: How Richard McWhorter Navigates Risk in Today’s Market

• Michael A. Gayed, CFA

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In my first episode hosting Lead-Lag Live, I sit down with Richard McWhorter, Managing Partner at SRM Private Wealth, to unpack how he’s advising high-net-worth clients through today’s volatile market.

We talk valuation risk, tariffs, and intergenerational wealth strategy — and why Richard is focused on preservation over prediction in a market full of noise. 

In this episode:
- Why today’s stock multiples don’t add up
- The long-term impact of U.S. tariffs and trade deals
- How SRM helps clients navigate macro uncertainty
- What younger generations can learn about risk
- How to protect and grow wealth across generations

Lead-Lag Live brings you straight into conversations with top financial minds shaping markets in real time.

Subscribe for more interviews, insights, and raw takes that go deeper than headlines.

#LeadLagLive #WealthStrategy #MarketValuations #FinancialAdvisors #PrivateWealth #Tariffs #Investing

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Speaker 1:

The tariffs are something that you know. Obviously not obviously will most likely create higher revenue for the United States. For example, we've looked at music publishing recently and that's buying music and then receiving the income that comes in from that. We've looked at media rights and investing in those types of things.

Speaker 2:

Hello and welcome to LeadLeg Live. I'm Melanie Schaefer, the new head of media strategy and business development at LeadLeg Media and your new host. As of today, I'm taking over from Michael Guyad, the founder of Leadleg Media, who you all know so well, which, of course, means I have some big shoes to fill, but I'm thrilled to carry forward the kind of insightful and no-nonsense conversations that matter to investors. Joining me today is Richard McWhorter, managing Partner and Private Wealth Advisor at SRM Private Wealth, a firm that spun out from Merrill Lynch with around $1.9 billion in client assets under management. Richard, thank you so much for being here today.

Speaker 1:

Melanie, nice to see you and thank you for having me.

Speaker 2:

Now, before we get into some broader topics, I want to start with SRM's origin story. Your team spun out from Merrill Lynch to launch SRM under the Summit platform. What drove that move and how has your business evolved since making that leap?

Speaker 1:

Yeah, so I was at Merrill for 16 years prior to establishing SRM. Prior to that, I was at Smith Barney for 16 years and actually I was at Smith Barney since 1989. So I actually was an intern and a receptionist and became a sales assistant at that time, anyway, and then in 1992, became a financial advisor. Um, anyway, uh, and then in 1992, became a financial advisor. So to answer your question directly, is that I, uh, about a year ago, I had a difference of opinion with Merrill Lynch's management in regards to how I wanted to service my clients. They thought I should stay within the scope of Merrill Lynch, and I said that, uh, that, because I thought I was over-servicing my clients and that idea didn't make much sense to me, and so I wanted to move out on my own and advise clients without any what I perceived as inherent conflicts of interest. And so, therefore, we set up SRM and discuss this with the clients afterwards and explain the reasoning, and we were fortunate enough that the clients followed and we've been in business for just over a year now.

Speaker 2:

So just a little more about that. You work with high net worth clients across finance, real estate and, I think, even entertainment, and is this kind of environment, macro uncertainty, election noise rate cut always just out of reach? And how are clients expecting a shift and how do you stay ahead with them.

Speaker 1:

There's a lot to that question. So, on the political front as well as the investment front, what we do is that life and things that they may own and those types of items Are there a voice or an advisor that helps them once again critically think through a lot of these different ideas and topics and try and come up with some type of solution that would make the best sense for that client.

Speaker 2:

Okay, so I just want to switch now a little bit to talk about the markets more generally. We're in the midst of a huge earnings season and Oppenheimer raised its year-end S&P 500 target to 7,100, up from 5,950, citing AI momentum, strong earnings revisions and easing policy risks. How are you thinking about equity positioning in this kind of environment?

Speaker 1:

Yeah, equity position is really difficult for me right now. I you know the one thing that I know these guys keep raising their price targets and those items. I really have a hard time with the multiples that we're trading at and I don't think that's discussed enough. I think you know as much as we're looking at forward earnings for the next one, two, three years, things that are trading at historically high multiples for the components of, let's say, the S&P 500, the different equities that are within that, I don't see how we're getting to these much higher levels or how we're just going to continue to expand multiples to attain these price targets. Personally, we you know we stay within our discipline of looking at historical multiples for each one of the equities that we follow and then advise accordingly whether or not it's a buy, whether or not it's within the range that we've created, or maybe even a sell if it's exceeded that range.

Speaker 2:

So are you asking investors or thinking that investors should be coming more defensive, or is that something that people can put off for?

Speaker 1:

Yeah, I don't think it's an all none question. I think. You know, I think a lot of that stuff has to do with you know we use dollar cost averaging to get into stocks and we use dollar cost averaging to get out of stocks. You know, the the idea of understanding that things that I believe are overvalued could not get more overvalued would be ridiculous on my part. Could not get more overvalued would be ridiculous on my part. And the same on the on, on, when we're buying things, to think that I'm getting it at the very bottom. You know, we just don't have, no one has that clarity.

Speaker 1:

So we spend a lot of time working our way into positions over a period of time and you know, I I listen. I always tell clients I'm a, I'm a singles and doubles hitter all day long. That's what I do for these guys. Uh, most of the people that we deal with happen to be, uh, have significant wealth and um, are not looking for someone to be hitting home runs, um, so I just continue to hit my singles and doubles and dollar cost average in and, uh, you know, we kind of just stay in our lane.

Speaker 2:

Yeah. So, and one of the biggest headlines this week was the U? S and EU just reached a major trade agreement. The U? S will cap tariffs at 15% on most EU imports, while the EU agreed to buy up to 750 billion in U S energy and invest another 600 billion in infrastructure. That's sort of a huge shift in US energy and invest another $600 billion in infrastructure. That's sort of a huge shift in tone. How do you see that impacting portfolios, especially for clients with, maybe, global exposure?

Speaker 1:

Yeah, well, you know we'll see. You know we've heard a lot of. We've had some spits and starts through this whole thing, and you know we'll see whether or not the there is, what kind of impact, first of all, the tariffs have. Right, we don't have that Vision yet. You know, one thing that people have to understand is is that it takes time for these things to be implemented. It takes time for these things to be reflected in the markets, to be reflected in prices. It takes time for these things to be reflected in the markets, to be reflected in prices, and so, when we're starting to potentially come together with some type of tariff on different products, you know it's going to take months for us to actually see those things reflected in the prices, and then we have to see what the impact of that is. Those are going to be uh on. The second part of that is is that you know the 750 billion, or if that's uh? I don't know exactly if that's the number, um, I'm assuming. So the $750 billion, though, is um, you know, uh, we'll see if they spend that kind of money, um, you know, you know these are all um ideas of what they're going to do and how they're going to do things. We'll see what actually gets implemented and then what the effect of that is.

Speaker 1:

When you, you know, when you critically think through these things, I think you have to look at what happens. You know what happens if we start to see inflation? What's what happens if we start to see this money being spent and then vice versa? What happens if we start to see no? What happens if we start to see this money being spent and then vice versa? What happens if we start to see no inflation? Maybe the companies will take the hit in their profit margins. We don't have that idea. I'm sorry. We don't have that vision as of yet.

Speaker 2:

So you're taking on more of a wait and see approach instead of predicting whether you see like a longer term. Do you see a trade agreement as a stabilizer or a disruptor?

Speaker 1:

yeah, I think. I think it depends on the what's in, what's within the trade agreements. Um, you know the, the tariffs specifically. Uh, the tariffs are something that you know, know, obviously not, obviously will most likely create higher revenue for the United States. But what's the end goal? Is the end goal to open up trading with other partners so that we can start to sell more of our products to these other countries without reciprocal tariffs or tariffs of their own? Or is it to bring back jobs to the United States?

Speaker 1:

You know, I don't know what the, what the administration's end goal is in all this thing, or maybe it's all the above. So, when you're looking at, you know if you're trying to bring back jobs to the United States, as a 15% tariff on the EU or a 30% tariff on China, enough, so that jobs will be, you know, come back to the United States. So you know, you have to go through each one of these things individually to kind of try and figure out what that end goal is in going through this. Maybe it's just to increase revenue, right? Maybe it's that simple.

Speaker 2:

Yeah. So if we switch just for a couple of minutes to wealth strategy, there's so much sort of in flux right now around taxes and broader policy proposals the midterms coming up how is SRM helping clients navigate that uncertainty when it comes to tax efficiency, say, or wealth preservation?

Speaker 1:

Yeah, you know, listen, there's a lot of things in the toolbox that we have that are great for preservation, you know.

Speaker 1:

The question is is that where do we place that money?

Speaker 1:

For example, if I'm going into fixed income to have some money that's safe and secure and just going to pay me a dividend or an interest payment of some sort, I would say to you that we are more likely to be investing in the bond market than we are the stock market currently, whether or not that's buying short-term bonds. If the Fed decides that they're going to start dropping interest rates, then I probably don't want to have a lot in short-term bonds. And then the question, by the way, in that respect, is does interest rates on the two to 30-year bonds, do they start to come down, or are those going to go up like they did the last time that the Fed dropped interest rates? And we have to kind of play with that game a little bit. Where do I place money? On the yield curve? And and then in stocks. You know, you know we're going to be looking for those stocks that are trading at reasonable multiples for that particular stock, and that's what we're always on the search for?

Speaker 2:

Yeah, Richard, and something that's central to your firm is multigenerational wealth planning when markets are volatile. So I have a couple of questions about this. When markets are volatile, how do you help your?

Speaker 1:

clients stay focused on long-term goals. Let's start with that. Yeah, listen, I happen to deal in a market that the long-term goals is to maintain their wealth and have it there for, in most situations, for the next generations. I do have some that are not interested in what happens there, but primarily, most people are interested in leaving money for the next generation. So you know we are, we're always advising these clients and each one's different right Each one behaviorally is is different in this and and we have we advise them accordingly. Everything is very customized for what we do because everybody's different. In that respect, there is no model that we use necessarily, because you know people tell me what they're looking for and what they're expecting and we see whether or not we can fill that need.

Speaker 2:

So are you seeing my next question? Are you seeing, as I mean, there's going to be the greatest wealth transfer of all time, and so we have millennials coming up who will be inheriting that wealth, and then even Gen Z? Are you seeing them looking for a different way to invest it? Do they have the patience to look way out, or how are you managing? Managing the different generations?

Speaker 1:

Yeah, no, it's a. It's a great question. You know the generations are all different as well, right, I mean there's different. You know, in our business there's a question that everyone gets asked and that is what's your risk level? And and this next generation says I want to make as much money as I possibly can, and so on and so on. The reality is that's great when things are going well. When things are going poorly, then you start to see how they're truly, or what their true risk level is.

Speaker 1:

From my perspective and and I think you we get involved with these kids and the grandkids, and now some of the great grandkids we get involved with them very early on, so we start explaining the way that we do things. They come to meetings. You start to get to know them as human beings as well, especially as they've grown and I've been in this business for 30 years. You've seen these kids grow from very young to more mature adults. So each one of them, just like the parents or the grandparents, each one of them is so different in the way that they can handle things of them go in there pretty aggressive and and uh they. They changed their tune pretty quickly when they uh, when they have a difficult moment, or or they think that they have figured out how to invest in in uh uh, you know higher beta stocks.

Speaker 2:

Have you had to change your philosophy for those generations or is it? Is it a learning curve for them where they come in and and, as you said, they realize quite quickly when we go into a, a bear cycle. Yeah, and, and, as you said, they realize quite quickly when we go into a bear cycle.

Speaker 1:

Yeah, and, and you know, to answer your question, this is yes, we have. We have not changed. We do not change the way that we do things. I'm going to tell them the same way. The question is is that what's the allocation to equities versus bonds? Or maybe there's no bonds and that's a hundred% equity? And you know, all those types of things are things that we work with them on, especially as we get to know them over a period of time. So, you know, as I have conversations with them, as they call me up, asking questions, whatever that looks like, depending on the relationship, you know we work on those types of things, once again, with each one of them differently.

Speaker 2:

Yeah, so I mean, richard, you've given me and the viewers a good idea of your firm's philosophy. What else sets you apart from the competitors, maybe in your area?

Speaker 1:

Yeah, I think you know one of the things that we pride ourselves on is the ability not to, or is to, advise always in the best interest, right, and we don't. You know, when I, when I started SRM, one of the things I wanted to get away from was any inherent conflicts of interest. So when you're at a larger firm I'm not going to specifically name names but when you're at a larger firm of any sort, you have certain products that you can sell. Outside of those products it's called selling away, and so what we tried to do when we started SRM was have none of those conflicts.

Speaker 1:

I didn't want us to be pigeonholed into a certain product lineup but literally be looking all around with our different contacts and relationships, for different investments that clients are interested in or asking for. You know we've looked at, for example, we've looked at music publishing recently and that's buying music and then receiving the income that comes in from that. We've looked at media rights and investing in those types of things. So you know we've been able to look at different things now that I wasn't able to look at when I was at Merrill and advise accordingly when I was at Merrill and advise accordingly. So we are always out there trying to find different ways that or to fill the client's needs.

Speaker 2:

That's really interesting. So one of the last questions that I want to ask you is not stock picks and maybe not bonds, since you've already talked about that, but what would be three places where you think is the best place to put your money right now for the mid to long term.

Speaker 1:

Once again, it's going to be very individualized, but I do think that all of the things that you just mentioned, I also think that looking at some alternative investments I think that you know, looking at some alternative investments hedge funds, private equity, private credit you know I come up with hypotheses all the time in regards to what I think is going to happen in the future, and for various reasons, and so I have to understand that. You know, what if I'm right? What if I'm wrong? Right, I have to go through that thought process in my head, and so when we're looking for different things to advise with clients, we are, I always have that in the back of my mind of how does, how, does that fill that gap, in case it does, and then, if it, if my hypothesis doesn't play itself out, then how does that look like? Or how's the client affected by those by that investment? So that I don't know if that answered the question directly, but that's, that's kind of how we look at things.

Speaker 2:

Yeah, and and sort of. The last thing I want to talk about is the current US administration. How do you see Trump being the president affecting portfolios over the rest of his term, and are there certain things that your firm is doing to prepare for what you think might come next or what might happen next, and even with the midterms coming up?

Speaker 1:

Yeah, no, it's once again. It's probably the most the biggest thing on my mind these days. Listen, I will tell you that, intellectually, there has been no better time in my career than under President Trump's administration, and a reason for that is is that he's doing so much so quickly that trying to figure out the ramifications from those things is what I spend most of my time doing. And so tariffs, right, I mean, we don't know if tariffs are going to be impact or what kind of impact that that's going to have. We don't know if we're going to start to see higher prices or the companies are going to start to eat in the profit margins. We don't know any of that stuff as of yet, as much as we want certainty today.

Speaker 1:

And you can go through each one of the different policies, or each one of the proposed policies that have come out in the last six months, and ultimately, each one of them has a ramification to it. You know, listen, if I look at illegal immigration, for example, right, which is a hot topic, go through the process of let's get, let's deport every single illegal immigrant in the country. Let's go through the process, and if you do that, what's the ramifications to our economy if we were to do that Is it positive or negative? And obviously there's going to be bias on that but understanding what the ramifications are and I think we've seen some of that, if we look at what happened recently was President Trump came out and said that you know, we need to keep some of the workers for the farmers because they've been with them for 20 years, and so on. Well, that was a ramification that we didn't have workers that were going to go in there and do those jobs.

Speaker 1:

You know, I was talking to someone the other day and they're like well, why don't we just make them all legal and then we can start collecting taxes and that will help? And I said you know, as selfish as this is as a country is, is that we would then have to pay legal wages to, which is going to be higher than what we're paying today for illegal wages. So you have to deal with the ramifications of that Right. And and are we ready for that Right? If we put one hundred and forty eight percent tariff on China, which was right Are are we going to hurt our economy by putting that tariff on, having those prices increase and then hoping that they're going to move jobs back to the United States to then onshore those jobs, which will then increase our economy, and in the meantime, we're collecting all these tariffs.

Speaker 1:

The reality behind that was that I think Apple Computer's response was the best right which was not the best, but the clearest was that they basically said well, we're just going to move our jobs over to India and spend $2 billion and create 150,000 jobs Don't quote me on that, but I think that's correct and once again, we have to deal with the ramifications of each one of these policies. So, for me, what I do most days now is understand, or trying to understand, what those ramifications are. And, by the way, there is no answer to any of this stuff because everything's very theoretical. There is no answer to any of this stuff because everything's very theoretical. And so, anyway, that's what I spend my day, my days, or a good part of my days, doing these days.

Speaker 2:

I mean, it's something that I think a lot of people are thinking about all the time, even if it's not in terms of financial advising. Richard, this has been a fantastic conversation and I really appreciate the time and insight today. Before we wrap up, can you let the viewers know where's the best place for them to learn about you and SRM Private Wealth?

Speaker 1:

Yeah, so I'm on LinkedIn and my website is SRM, as in Sam Robert Mary privatewealthcom, and you can reach out or see what's on our website and we'll go from there.

Speaker 2:

Well, thanks again, Richard, and thanks to all of you for watching Again. I'm Melanie Schaefer and we'll see you next time on Lead Lag Live.

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Michael A. Gayed, CFA

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