Podcast: Speaking of Quality: Wealth Management Insights with Hank Smith
Season 4 Episode 8 Title: Economic Drivers of Today: Closing Thoughts on Season 4

Episode Transcript:

Maxine Cuffe 00:06 

You are listening to Speaking of Quality Wealth Management Insights with Hank Smith, a podcast by the Haverford Trust Company on Speaking of Quality, Hank chats with authors, influencers, and wealth management experts to bring a sense of clarity and calm to the complexity and stress of personal finance. And now here’s your host, Hank Smith. 

Hank Smith 00:28  

Hello and welcome to another episode of Speaking of Quality: Wealth Management Insights. I’m your host, Hank Smith, director and head of investment strategy at the Haverford Trust Company. On this podcast, we explore topics ranging from quality investing, retirement resilience, stock market trends, estate planning, small business ownership, behavioral psychology, and more. 

Today marks the end of season four of Speaking of Quality, which has been full of illuminating conversations that I’ve thoroughly enjoyed. This season was centered on a core theme that is increasingly relevant today, that being the key drivers of our economy. I spoke with guests who touch various industries and play an important role in the economies of their communities, from the housing market to small businesses and arts and cultural institutions. 

Joining me today to take a look back at this season’s guests and key insights is Maxine Cuffe, our vice president and director of global strategies. She’s also the voice you hear at the beginning and end of every episode. Welcome back, Maxine! 

Maxine Cuffe 01:34 

Thanks, Hank. It was another great season with some really interesting guests. We started off the season with our 2025 Outlook with the two of us being joined by John Donaldson, Tim Hoyle and Keith Aleardi. We recorded that back on January 9th, which seems like a long time ago now. A lot has happened. 

Hank Smith 01:55  

I’m reminded, Maxine. It’s somewhat comparable, not entirely, to the spring of 2020 when at this time you could have thrown out the January Outlook due to COVID-19 occurring. While it’s not that severe now, so much has changed in the last three months. I think there were so many themes in that Outlook that are still relevant today. And even some of the observations that we made have played out as well. 

Maxine Cuffe 02:31  

One of the things that we talked about on that podcast was just the importance of diversification. We talked a lot over the last couple of years about concentration – those seven stocks. The Magnificent Seven was about 34% of the S&P 500 at the end of last year. And those seven stocks were also very highly correlated. We had been saying that we felt that that level of concentration was a risk to the overall markets and that we were more likely to see the average company or the S&P 493 perform better. And that has certainly happened so far this year. And of course our portfolios have held up much better. They’re built to withstand uncertainty given their higher quality and that cushion from dividends. 

Hank Smith 03:13  

Yes. And we finally got a helping hand from our international diversification because some of the international markets did very well in the first quarter. So, you did get a broadening out, maybe not the way we would’ve preferred with a severe correction. And in some cases the bear market, the NASDAQ is in bear market territory, but nonetheless, diversification has clearly paid off and it’s a timeless theme that needs to be reinforced all the time with investors. 

Maxine Cuffe 03:45  

One of the things I said on the podcast was the importance of not having all your eggs in one basket. There was a lot of optimism at the beginning of this year around U.S. markets and stocks had started to reach really elevated valuation levels. So, as those kind of disappointments have crept in related to tariffs and some of the new administration, investors have really pivoted to international markets, which represented really good value and on the margin look like they have a slightly better story here in 2025. So far Europe has outperformed the U.S. markets by 20% just so far this year. 

Hank Smith 04:21  

So let’s update our Outlook from January and a couple observations. One that optimism you talked about the start of the year has turned diametrically toward pessimism and sentiment is important, particularly extremes. Extreme pessimism, extreme optimism, and it’s often a contrary indicator. I’d say today we are at extreme pessimism. So, one thing we expressed was a hope that the Trump tariffs would be more about a bark and less about bite. Clearly, we and most of the rest of investors got that wrong. At least so far, the president is taking a big bite if you want to use that expression with the respect to tariffs. But our expectations from this point is what’s really rattling the market is the uncertainty. And that uncertainty is being fed every day with different tweets and different messages from the administration. And our expectation is by the end of the spring, early summer, we’ll have much more certainty with respect to tariff policy, trade policy. 

And yes, there’ll probably be some level of tariffs, but nothing as extreme that what was reported on Liberation Day on April 2nd. But what we’ll have is again, a degree of certainty replacing a high degree of uncertainty, and this will be very beneficial combined with the passing of the reconciliation bill that will extend the 2017 tax cuts, might even include some additional pro-growth tax cut measures, a federal reserve that will begin cutting interest rates most likely in June into the second half, but maybe even as soon as May. You could see a very different business climate in the second half leading to faster GDP growth into 2026. Politically, that would line up very well for the 2026 midterm elections. So, we think there are a lot of ifs in that scenario, but we also believe there’s a lot of plausibility to it. 

Maxine Cuffe 06:50  

Yeah, great points. Hank, as Tim Hoyle always likes to say, right now we’re getting the spinach, but the candy is coming next. So, it’s definitely not a foregone conclusion that we’re going to be in recession this year. Despite all of the headlines. Think back to 2022, our economy was really resilient even as we had the Fed raising interest rates at the fastest pace in decades and everybody talking about recession. And yet our economy did super well for a couple of years after that. And some of that is because we’re just less sensitive to that cyclical boom bust cycles. And a large part of our GDP is really driven by services. So, we’re not seeing any huge deteriorations in any of the economic data yet. Even in the jobs market still continues to be strong, and that’s a really, really strong indicator for the overall economy. 

Hank Smith 07:44  

The weakness Maxine has been in, what is referred to is the soft data. That’s surveys like consumer confidence surveys, manufacturing surveys, et cetera. And yet the hard data is still supportive of an expanding economy. And I would just point out there is no historical correlation between consumer confidence and consumer spending. So even though we’ve had five straight months of a decline in consumer confidence, the consumer is still spending. So it’s very interesting that on one hand the consumer is responding to a survey in one way, on the other hand is still reaching into their wallet and purchasing goods and services. So this is important as you alluded to, because our economy is driven by consumer spending and services that make up some 75% of GDP. And again, the labor market is still pretty strong, and the consumer has a job and is making more money than they made a year ago, two years ago, three years ago. 

Maxine Cuffe 08:54  

Increasingly, a lot of this soft data, particularly around consumer sentiment, has this political bias that has set in to the numbers so that if you’re a Democrat or a Republican, you feel completely differently about what’s going on out there, which is making some of that data almost worthless. 

Hank Smith 09:16  

Well, Maxine, I think we could probably spend another half hour on this podcast just on our economic outlook, but perhaps we should move on and highlight some of the other interviews that we had. 

Maxine Cuffe 09:27  

So our next episode was the State of the Union with the Haverford CEO Joe McLaughlin, and he highlighted so many of the successes that Haverford had in 2024. Our assets under management hit record levels, we added new colleagues. Now we’re at 145 people, and it made me think when you started with Haverford Hank, how many people were there? 

Hank Smith 09:49  

Well, that was back in the summer of 1991, nearly 34 years ago, and I believe I was the 27th employee. We grew over the next six years to about 115 employees, and then we sold a major piece of our business to the John Nuveen Company, and I stayed with what was then referred to as the Rittenhouse Trust Company, now Haverford Trust Company. And all of a sudden, I’m back working with 18 colleagues, a similar size company that I started with in 91. And here we are from that point in the fall of 1997 to today where we’re 145 people. So, it has been a marvelous journey, and I think the most important aspect of that State of the Union really is we have done a great job of maintaining the culture of this firm. And a lot of that culture is servicing our clients and respecting our colleagues. And when we hire people, the most important criteria is will they fit into our culture? Because if you have fire brands that don’t fit in, it can be very destructive to an organization. 

Maxine Cuffe 11:16  

And that all comes through in Joe’s talk when he always likes to brag about how high our client retention is. We’re extremely proud of that. 

Hank Smith 11:25  

Our employee retention is remarkably high at 92-3%. And we’ve been keeping these statistics for the past 12 plus years and they really haven’t changed. So very, very high level of client retention and employee retention, and it’s just wonderful for clients to be able to work with the same individuals during their lifetime and in many cases multi-generational, again, working with the same team. And I think that’s a secret sauce to our success. 

Maxine Cuffe 12:00  

Absolutely. The next episode was about small businesses and entrepreneurship with Kim Wright, the owner of five Nothing Bundt Cakes franchises, and she’s also the co-founder of Wright Commissioning. 

Hank Smith 12:15  

I didn’t even know what a bundt cake was until I interviewed her and I had no idea what commissioning was. So it was an educational podcast for me, and it’s just great to be able to talk with people that grow their business, have the business be part of the community, and in being part of the community, not only is she giving back, but the community is helping her grow. I think she’s now up to seven franchises for Nothing Bundt Cakes and it’s a remarkable story. 

Maxine Cuffe 12:50  

So you talked to Kim about some of the challenges that she’s facing as a small business owner. The statistics say that about a quarter of all new businesses fail in the first year, and it’s really shocking. It’s so hard to find good people. So she talked a little bit about that and her experiences with COVID.  

Hank Smith 13:06  

Yeah. Well, COVID was so unique. So for her business, they were literally shut down for two months, but in order to keep her bakers and frosters employed, they kept baking and they kept frosting the bundt cakes and she gave them away to hospitals, to police departments, to little leagues, to any organization. And the joy that brought during an incredibly emotionally challenging period of time – it cost her – but it has paid back so much in how she’s thought of in the community. I’m sure it was a very hard financial decision to keep people employed when you’re getting no revenues, but it was the right decision. The other challenge she talked about was when she’s hiring for an entry level position, she can pay maybe $15 an hour, but that same job at Costco is paying close to $30 an hour. So, it’s a huge challenge in hiring, and she has to be able to offer something more intangible than just dollars and cents to create a team and grow that team. Again, that takes a strong personality. It takes someone that’s totally dedicated to their employees and the growth of their employees. 

Maxine Cuffe 14:40  

You could really hear that in her voice – her passion and her enthusiasm. They have that saying that she likes to say – “cake changes everything.” I mean, that’s just words to live by. I love it. And I’ve tried their cakes. They’re amazing.  

Our next episode was from our wealth planning team here at Haverford. Bryan Tracy, our director of wealth planning, and Gina Parissi, our senior wealth planner. This team has just really grown by leaps and bounds, providing this really critical service to our clients, really compliments what we do on the investing side. And Gina and Bryan gave a really good overview of all the different aspects of wealth planning, which is much deeper and broader than just financial advice. 

Hank Smith 15:25  

Yeah, again, I’ve been with the firm for 34 years, and when I started, we were primarily just an asset management firm with two investment products, a quality growth equity strategy, and a quality intermediate fixed income strategy. Today, we offer a myriad of investment strategies and solutions, and it was a natural evolution to evolve from just being an asset manager to a wealth manager and then include financial planning. And it’s just taken off and it’s been extremely well received by our clients. And so this is an area of Haverford that is growing. Originally it was just Bryan, and now he has a team of three people supporting him, and we’re looking for a fourth. 

Maxine Cuffe 16:14  

And I think clients have found it really enlightening to be able to look at not just their Haverford accounts, but all of their assets under one report. Just gives you better insights into your asset allocation, your tax planning strategies, and that team can also advise on philanthropy, estate planning, and we are expecting to see some tax changes under the Trump administration. So you could talk to this team about making sure that you’re positioned for any potential changes there. 

Hank Smith 16:43  

Maxine, I’m reminded that obviously we’re in the wealth management business, but part of that is we’re in the education business and if you’re not educating your clients continuously, you’re making a mistake. And financial planning also is about education and providing confidence for our clients. It’s something I think we do very, very well. 

Maxine Cuffe 17:10  

And for the next generation as well, very important. 

Hank Smith 17:13  

Absolutely. It’s about the next generation and in many cases, philanthropic goals. Sometimes they go hand in hand. 

Maxine Cuffe 17:21 

So like Gina, I love talking about financial literacy and financial education, as you say, it’s something that we do a lot of here, a lot of us do the investments 101 presentations for clients and for kids. I also do it with our interns, our Cristo Rey students, and I have them run virtual stock portfolios starting at the beginning of the school year and by the end of the year, it’s amazing how they come up with their own stock ideas and just to get their perspective about what they see is happening out in the world. So yeah, financial literacy really important at Haverford. 

Hank Smith 17:55  

Absolutely. 

Maxine Cuffe 17:56  

The next episode was Brent Celek, former Philadelphia Eagle Super Bowl winner and real estate investor. And Brent seems to have managed that transition from on the field to business career really well, and that can be such a challenge for sports stars. 

Hank Smith 18:12  

Yeah, this was a special podcast for me being a 40-year season ticket holder of the Eagles, a passionate pro football fan and Eagles fan, and Brent Celek was one of our all-time great tight ends, played 11 years his entire career with the Eagles before retiring, and brought us our first Super Bowl win in 2018 and then retired. I don’t think he necessarily wanted to retire after that, but in retrospect, it was probably as he would say the right time to do it. And segue from having the highest of successes in professional football to being an extraordinarily successful real estate entrepreneur, that is a stepping stone. Not many professional athletes, I don’t care what the sport can make, and he did a nice job talking about the challenges when you retire and only one thing in his case, football, everything is provided for you. 

Often the meals are provided for you, the training equipment, the locker room, all you’re doing is showing up with a great attitude and now you leave and all that’s taken away from you. And for a lot of people, that’s a very, very hard transition. And fortunately, he had a little bit of real estate background from his grandfather who was a home builder and his uncle who supported that, and he kind of knew that’s where he wanted to go. So, the real takeaway from that podcast was the two ethos’s. He’s lived by hard work and passion for what you do, and if you love what you’re doing, it actually isn’t work. And it’s something I counsel. Young people coming out of college don’t necessarily go for the highest paying job offer. If you can do it, go to a business where you have or a career where you have a passion and success will follow you because you’re not really working if it’s a love and a passion. 

Maxine Cuffe 20:30  

Yeah, absolutely. Great advice. He was also really bullish on the real estate market, and you guys had a good conversation about this because there’s been such underinvestment in housing since the global financial crisis. 

Hank Smith 20:43  

Yeah, bullish both on a national level and also in the Philadelphia region. Nationally, ever since the GFC, Great Financial Crisis, there has been a dearth of home building. Part of it initially was demand, but then so many contractors retired, subcontractors retired. And so now we have a situation where we have such an undersupply of homes and population has kept growing, so now this can keep going for a few more years, but at some point that trend is going to change and we’re going to see a big catch up. So, we share that bullish sentiment that Brent expressed. As for Philadelphia, it’s a city that provides very accessible suburbs, beautiful suburbs in every direction, and even farmland 10 miles outside of Philadelphia in every direction. A major city that’s really easy to navigate has an incredible restaurant scene, and so I think it’s easy to be bullish on the Philadelphia real estate market. 

Maxine Cuffe 21:51  

Yeah, absolutely agree. The next episode was with Diane Duda on the ins and outs of Medicare, and she is a long-time insurance executive. She’s retired now and she volunteers with PA MEDI, which some of our listeners might not be familiar with. It’s a counseling service that helps people navigate what is a very, very complicated challenging area in healthcare. 

Hank Smith 22:17  

Well, I admit to being very ignorant of the insurance market of Medicare. We have, Maxine, a great healthcare plan at Haverford. Even I find that a little bit confusing to navigate, so I can only imagine if this whole subject is confusing to us what it is for most people. And she was very good, but there are just so many moving parts to this subject that I had to reread the transcript several times and still have problems understanding it. But I think it brings to mind that it is really beneficial as you get near the age 65, maybe even your late fifties, that you have a counselor like Diane or someone part of the team to be able to help you navigate to make the right choices so you don’t disadvantage yourself, which apparently is very, very easy to do. 

Maxine Cuffe 23:21  

Yeah. One of the things she talked about is making sure that you’re not taking too much risk, having really high deductible and not thinking about the consequences of that or not being in the prescription plan at age 65 and then ending up older, and you need a lot of prescriptions, and then there’s penalties that come in at that point.  

Our last episode was the value of arts and culture in economies and communities with Joan Roebuck Carter, who is Senior VP of Institutional Advancement at the Mann Center for Performing Arts, and she walked us through her journey from working on the Oprah Winfrey show to the Philadelphia Art Museum and now at the Mann, and just came across with so much passion for what she does. 

Hank Smith 24:03 

Yeah, again, it was wonderful education. I mean, I’ve heard of the Mann and kind of know where it’s located. I drive by it frequently, but I had no idea how robust of a performing arts program they have. And again, you talk about challenges, and Kim Wright discussed the challenges of operating in the COVID environment. It was equally if not more challenging for her because they were completely shut down for an entire season in 2020, and then had a very minimal schedule in 2021 and then back to a full, and in fact a record season of attendance in 2022. I think there’s just tremendous pent up demand from listeners to get out and live a normal life, but the challenges of keeping that organization going and fundraising when you have nothing to offer, which they successfully did, they raised $3 million to help them survive through COVID and also the incorporation of the community. They border a neighborhood that’s not a great neighborhood, and when they perform a concert, it can be a little disruptive from a noise standpoint, but they’ve brought the neighborhood in and they’ve done educational programs, and it’s one area where Zoom education actually worked really well and yet there’s something about music that sparks a passion for many, many kids, and they had a very, very, very successful education outreach to the community, so I was just most impressed with her and the Mann and everything they’re doing there. 

Maxine Cuffe 25:53 

Yeah, it was similar to what Kim Wright said in that there was a silver lining to COVID and all of that disruption is that for the Mann Center, it really allowed them to shine a light on all this other work that they’re doing out in the community, apart from concerts that really broadened to a wider audience. And as you said, the Mann is a nonprofit, so they depend on the sale of tickets, and we would encourage listeners to have a look at the summer schedule. There’s truly something for everybody. There’s ballet, there’s movies, the Philadelphia Orchestra, and of course, lots of concerts. I’ve seen some concerts there. It’s a fantastic place to go on a warm night in the summer and sit and have a picnic and then listen to music. Hopefully you’ve picked out a concert you’re going to Hank. 

Hank Smith 26:39  

Not yet. You might be able to call me a procrastinator, but I will. And perhaps we will go with a couple other colleagues together, Maxine, which would be a lot of fun. 

Maxine Cuffe 26:48 

Well, it’s a great night out. 

Hank Smith 26:50 

Yeah. I also found very interesting her comparison and similarity of being an executive producer on the Oprah Winfrey Show and all of the pressure on a daily basis that producers face and doing a lot of media on CNBC and Bloomberg TV. I can relate to that. The producer’s job is an incredibly hard job, and she found becoming head of development very similar in terms of the pressure because they’re not raising money, they’re not in business, so development is a vital job and non-easy job, and she clearly has a skill, which really means she can connect with people and create relationships. 

Maxine 27:40  

Yeah, absolutely. That wraps another season of Speaking of Quality, and of course this podcast would not be possible without our listeners. And thank you to each and every one of you for turning in, sending suggestions, sharing your feedback, keep sending us your thoughts and ideas, and we’ll try to incorporate them in our upcoming season. 

Hank Smith 28:00 

Maxine, thank you for helping me close out another successful season of Speaking of Quality. I also want to take a moment to thank all of our amazing guests once again for sharing their unique experiences and insights with me and all of our listeners. To our listeners, thank you for tuning into Speaking of Quality: Wealth Management insights. We already have an exciting lineup of guests for season number five, so stay tuned for new episodes in the near future. In the meantime, please send suggestions or questions for me or the Haverford Trust team to marketing@haverfordquality.com. And don’t forget to subscribe, rate, review, and share this podcast. Until next time, I’m Hank Smith, stay bullish. 

Maxine Cuffe 28:49 

Thanks for listening to this episode of Speaking of Quality Wealth Management Insights with Hank Smith. To hear future episodes of speaking of quality, please subscribe on Apple Podcasts, Spotify, Google Podcasts, or wherever you listen to podcasts. To learn more about the Haverford Choice Company, please visit www.haverfordquality.com.

This podcast is provided as general commentary and market overview and should not be relied upon as research, a forecast or investment advice and is not a recommendation offer or solicitation to buy or sell any securities or to adopt an investment strategy. Any opinions expressed are as of the date this podcast was recorded and may change at any time. And are the opinions of that commentator not Haverford, any opinion or information provided are believed by Haverford to be reliable at the time of this podcast recording, but are not necessarily all inclusive or guaranteed for accuracy. Before making any financial decisions, please consult with an investment professional.