David McKinley gets a kick out of it when he is invited to speak at financial conferences throughout the country. The host introduces those on the advisory panel at these presentations and often those on stage have traveled from some of America’s largest municipalities, but not McKinley.
It proves a point about the world of finance, and it proves a point about the people in the Friendly City.
McKinley is 44 years old, and he’s a graduate of Wheeling Park High School (1988) and a 1995 grad of West Liberty University. He is the founder and a principal of McKinley Carter Wealth Services, a firm headquartered in the Centre Market area that has four other office locations in West Virginia, Pennsylvania, and Maryland. The firm concentrates on the areas of wealth management, retirement planning, and non-profit advisory services and in 2014, McKinley estimated his firm worked for clients residing in 30 different states, and the company continues to grow. In fact, he expects the firm to be managing more than $1 billion by the end of this year.
Because he followed his father’s advice, McKinley began his career in finance as a bank teller at the former Wheeling Dollar Bank (now Wesbanco), and the ladies with whom he worked taught him to respect the dollar bill. Literally. And that respect for money has traveled far past a properly organized billfold.
Today, his office contains two desks, one at which he sits when meeting with clients, and another at which he stands while researching, communicating with employees at one of the four other locations, and where he constantly refines his vision. McKinley admits he is in the wealth management business because finance intrigued him at an early age. It still does, and that is because it’s constantly changing.
He’s confident in that vision, and appreciates the team of employees the company has collected. He’s proud of his heritage, and he is quick to spread credit to his family members, his co-workers, and his clients. David McKinley is also a big believer in the people of his hometown.
Novotney: Why wealth management as a career?
McKinley: The reality is that it all started with a conversation that I had with my father back in 1987 or so, and he was and is very good friends with Ken Baber. Ken Baber was a long-time stock broker in Wheeling and was my father’s advisor, in fact.
When I graduated high school, my father gave me $1,000 to invest, and I bought Proctor & Gamble and Reebok, and that was an interesting. I can’t remember all of the specifics, but I also remember it not working out really well. And I learned some things from that experience. One of the things that I observed was that if you do this right, you are essentially engaging in all things around the world. That made me think about everything that takes place around the world and about what impact those things would have on the economy and financial markets, and ultimately, families.
It made it all very interesting to me so I began to explore it. I wasn’t exactly sure what it was I wanted to do and that’s when Dad said, “Wheeling Dollar Bank has seven different floors and there’s all kinds of different departments in there, so why don’t you just see if you can get a job there.” He thought I could work my way around the company and feel it out, so that’s what I did. I was on the teller line for six months. That was the minimum time before you could bid for a different job.
To this day, 25 years later, I still have a respect for currency that I was taught by the ladies on the teller line. They taught me how to take care of currency and respect money, and that’s something I still have in my mind today. It’s actually painful for me when I see someone at a restaurant pull out a disorganized wad of bills — I just think it’s disrespectful to treat money that way.”
Novotney: Obviously, you did not remain on that teller line with those ladies.
McKinley: That’s right. Six months later I had the chance to bid for a job in another department, and everyone knew that I had an interest in investments, and yes, an entry level job opened up in the investment department. I bid for that job, earned it, and didn’t leave the bank until 1996. I learned a lot about investment analysis and portfolio management. Jerry Schmitt was my mentor during those days and I really enjoyed my experiences with him. He intrigued me about the business so much that I knew it would be my future.
That’s also when I realized how few people really understand the mechanism of money and how it works. Earnings, savings, investing … how do you put it all together and how do you forecast its growth to ensure long term success?
My point is that most people don’t take the time to understand finance, and I realized that I could assemble a team of people that were unbiased, experienced, and unaffiliated with big investment firms to sit down and work with people. They could help people really understand their finances and their retirement goals and guide them to make the right choices for their futures. That’s when I started building the team that would ultimately become McKinley Carter Wealth Services.
Novotney: In 12 years, since the firm’s founding, McKinley Carter has grown into the top registered investment advisory firm in West Virginia managing more than $800 million in client assets, and you are doing it from Wheeling, W.Va.?
McKinley: I love being able to do this from Wheeling, W.Va. I am invited frequently to go to speak at different industry events with panels with peers from firms located in major metropolitan areas like Boston, New York, Chicago, San Francisco, and… Wheeling, W.Va.
We can do it. We can compete. Wheeling people have competed in the past, and quite frankly the way technology has been changing the world allows us to compete more effectively than we ever did before. We have offices in five different cities, and I am sure we will expand beyond that, and the reason that is happening is because of the way we connect everybody through technology.
We invest hundreds of thousands of dollars every year to stay updated with the technology, and it enables us to make the most of the people we have working for us, wherever they may be located.
When I think of growth, I look at it like this…Growth means to me that we are expanding our team, deepening our level of expertise, so we have more people who we can call upon to help advise and serve our clients. A third of our employees deals with all of the business operations – portfolio accounting, trading, human resources, finance and accounting, marketing, etc… and supports our advisory team from a centralized location in Wheeling. This “hub” of back-office operations allows the rest of our employees, the advisory team, to focus directly on the needs of our clients.
Novotney: What are your thoughts about the percentage of people who are saving for the future and not just spending for today and today only?
McKinley: We live in a consumption-oriented society, are overwhelmed with marketing messages, and there is standard or an expectation of what life is supposed to look like. Television does a lot these days to frame that up – and the reality is not everyone can afford the lifestyle that is deemed to be normal. It’s difficult, and you have to do the math to be able to know what you have to be able to save for the future, finding an appropriate balance of current and future needs.
At least half of the population has never done any planning and it troubles me. After observing for 25 years national statistics on saving, investing, and retirement preparedness, it is clear how important our work is to clients. We try our best to allow people to see models for how to achieve success as they define it and give them the tools, showing them how they can build sufficiently large portfolios to support themselves and their family through retirement.
But, we also realize we can’t individually counsel everyone in our communities, so we invest a lot of our time and energy in designing effective group retirement plans like 401(k) plans which allow us to help thousands more people.
Novotney: Are there pressures which you must handle because of your family name, and because there happens to be a David McKinley in the United States House of Representatives?
McKinley: I am eighth-generation West Virginian. I joke with people that my roots are so deep that I can’t imagine leaving here. I think that my family’s history here in Wheeling, in Weston, and in Parkersburg is important, and I think people see us as stable, reputable, trustworthy people who are committed to our community. As a whole, I think it’s very positive.
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Novotney: McKinley Carter has become the largest wealth management firm in West Virginia and your company is close to an important landmark.
McKinley: If not this year, next year we will break through a billion dollars under management, and that’s awesome. In 2003, I did not quite know yet what all was possible. At that time, I just knew I had to leave the brokerage business. The inherent conflicts of interest that existed between the advisor, the firm, and clients were sufficiently large, I knew there must be a better way so I began to explore other options and established a fee-only registered investment advisory firm that operated under a fiduciary standard, requiring us to always work in our clients’ interests.
I really like the team we have assembled, but one thing I can say for sure is that the firm is bigger than any one person and I can see a lot of possibilities over the next 10 to 15 years. As we’ve grown, we expanded the “bench” with additional capabilities and, of course, capacity to service clients. With nearly 40 employees with complementary backgrounds and experiences, there aren’t many issues we can’t confidently address with our clients.
Novotney: The value of the dollar is much different today than when we were kids growing up in Wheeling. How has the value of the dollar impacted what it is you do for a living?
McKinley: There are two ways to interpret that – inflation adjustments, and the relationship with foreign currencies.
As far as inflation adjustments, I think it was Ben Franklin who said, “There are two things you cannot avoid – death and taxes”, and I might throw in inflation, too. That’s just the way it works. We must invest to produce sufficiently high returns to outpace inflation. For years now, depositing money in CDs at banks hasn’t produced enough return to get ahead of inflation. People must either save a lot more or be willing to make investments.
We are anticipating inflation to percolate again. I serve on an advisory board for the Cleveland Federal Reserve and talk frequently about what that looks like. To avoid inflation in the coming years as the economy strengthens, it is very likely that interest rates will start to rise this year and will probably rise for the next two or three years. This will be a delicate balance of finding the appropriate level for rates, allowing to remain low enough to continue stimulating the economy and not so high that they put the brakes on the economy. We need to keep growth, inflation, and employment at reasonable levels.
Inflation has been relatively modest in recent years, but if inflation returns to normal, the cost of living should double every 20-25 years.
The second thing is more concerning to me less as an investor but more as an American – the value of the U.S. dollar relative to foreign currency. When the value of the dollar declines we are better able to compete in the exporting business and is good for our manufacturing sector. But, as with current conditions, a strong dollar is great for importing and makes it more difficult for U.S. manufactured goods to remain competitively priced globally. The strong dollar is likely to put additional pressure on the already depressed domestic manufacturing sector.
Novotney: Please tell me about your work with the Cleveland Federal Reserve and with the West Virginia Investment Management Board.
McKinley: For the last 6-7 years I have been a trustee of the West Virginia Investment Management Board and an advisory council member to the Cleveland Federal Reserve. As not many people know what the West Virginia Investment Management Board does, I’ll share a short explanation:
Appointed by the Governor in May 2009, I serve as one of 10 trustees of the State’s IMB with fiduciary responsibility for approximately $18 billion of State pension and other assets. The fund is now recognized as one of the country’s best managed and performing public funds because of its well-designed structure, both through the statute and the policies which have been implemented, and its people, from trustees to staff to its vendors.
My work with the Federal Reserve began in 2009 and represents one of about a dozen people from one of the 80 targeted markets throughout the country. We meet with officers of the Federal Reserve two or three times a year sharing regional economic insights which are aggregated and shared with the presidents of the 12 Federal Reserve Banks to represent the interests of the U.S. population and influence the policies and actions of the Federal Reserve. This role, considering the level of Federal Reserve influence over our economy, has been very important and impactful in the last few years.
I am honored to serve in these roles and believe I’ve made a positive impact to both organizations and their missions.
Novotney: McKinley Carter is not your only concentration. You also founded and own a company called Willow Glen Capital. Tell me about that company.
McKinley: My whole career has centered on investments and financial advice. I, like a lot of our clients and people in our community, recognize that we have a lot of clients who would like to invest in our community and our region. My mission when I formed Willow Glen Capital about five years ago was to create a new investment opportunity for our clients and the people in this community. I wanted it to be regionally focused. I wanted to use this company to acquire, aggregate, and operate companies within certain platforms. At the moment we are concentrated on IT consulting and engineering businesses and in the last four years have acquired three under the brand Omni Strategic Technologies.
The intent in this first phase is to produce sufficiently high investment returns so we can attract outside investors who would want to be a part of our next pool. There are a lot of possibilities that would be good for our region and very good for the local economy. And it could be a good investment for our investors. That’s the mission, and I just need to do it long enough to produce that sufficient high return so that people want in.
Everything I have done has been with a focus on creating employment opportunities in our community – either founding and investing in businesses or acquiring and growing existing companies. I am tired of seeing our community’s economy and population decrease and am committed to making a difference here.
Novotney: So you are working hard for our community, as well?
McKinley: We are at a point of transition and if you think about what is happening with the demographics in our area and throughout the country, we have a Baby Boomer generation of business owners that are thinking about their next phase in life. We have the Baby Boomers, the Gen Xers, and the Millenials, and there’s a gap. We have a relatively small group of Gen Xers that are here to assume responsibility as people move through their careers. No longer is it a matter of putting it back on the Baby Boomers by saying, “You know what they ought to do.” Now we’re having to ask ourselves, “What do we need to do?”
It’s time for us, the Gen Xers, to get more involved, and I think it is a good time for that to happen. The demographics of this area, in our state, and in our country are ripe for this. On one side, we have business owners that are thinking about their exit or plans to retire, and on the other side we have investors who often have frustrations with the public markets. People recognize that direct business ownership is what really creates wealth and, in my opinion, marketable securities are tools to preserve wealth and its buying power.
Novotney: Tell me the history of Willow Glen.
McKinley: The reason I named the newest company Willow Glen Capital was out of respect for my great-grandfather, Johnson Camden McKinley. He was quite a guy. He died years before I was born, but I have spent a good amount of time studying his career and history. He was primarily a coal operator, but made a lot of other investments creating a lot of employment in our area. He had an ice plant, airplane and furniture manufacturing companies, distributed electrical signs, and others. He was invested in many companies at the time of his death at just 51. It’s so impressive what he was able to do at that time.
The house that he built around 1920 was named, “Willow Glen,” so out of respect for him, I called the company Willow Glen Capital. Five generations of the McKinley family have lived in that house and it remains in our family today.
Like my grandfather and so many in our family, I have a lot of respect for the city of Wheeling and its history of growth, success and the impact our people have had on our country in years past. I believe our brightest days are still ahead of us and am one of many in our community committed to helping us achieve it.