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Taking a Risk Led Rea ’77 to Manage Top-Rated Financial Firm

Forty-five years ago, David Rea ’77 graduated from Wabash and went to law school at Wake Forest University. Since then, the political science and history major and earned an MBA from Indiana University and transitioned to a career in financial advising.

Now president of Salem Investment Counselors in Winston-Salem, North Carolina, Rea has helped Salem grow into an entity that manages $4 billion in assets and has rated among the top two financial advisory firms in the country in the last three CNBC Financial Advisor 100 Listings, including two years at No. 1.

We asked the native of Portage, Indiana, about being ranked No. 1 and what he’s thinking of early in 2022:

Q: What effect does being named No. 1 in the nation have on a firm like yours?

We’ve been here for 40 years doing this just working – blocking and tackling – every day slowly building. All of the sudden, an independent review through CNBC in 2019 said we are the no. 1 financial advising firm in the United David Rea '77States. Things really have changed. You feel better about what you're doing. Our existing clients are thrilled, and then new business comes in. We never lost our focus: a reasonable fee, very good returns, and tons of personal service. Our growth has been steady. We were kind of a boutique and I guess we still are in a lot of ways, but we now have clients in 35 states and the $4 billion we manage is a fair amount of money for a business of our size.

Q: When you started at Wabash, did you envision a career in financial advising?

The short answer is no. I always thought I would be a lawyer. Wabash changed my life. I went to a big public high school in Northwest Indiana and I really didn't know how to study, write, and think clearly on my feet. I simply didn't have to in high school, but I really did when I got to Wabash. Dr. (Ed) McLean [political science] and Dr. (Jim) Barnes [history] taught me how to write clearly. I was a relatively shy student back then and I forced myself to take speech and debate with Dr. (Joe) O'Rourke because I wanted to go to law school and I needed to learn how to speak and think on my feet.

It turns out Wabash was absolutely perfect for what I do. I had to take classes in physical science, a lot of math classes, and of course, history, political science, music, and art. Those courses you take in the liberal arts are perfect for what I do. Our bread and butter is picking stocks. You are having to learn about new technologies every day so you rely on the study habits, the work habits, the logical thinking, and the broad thinking. That approach helps with picking stocks, and it's perfect for running an organization.

My Wabash education really changed me, catapulted me, and enabled me to go on to law school and then get an MBA from IU. It enabled me to have the qualitative skills to think on my feet in law school and the quantitative skills to pass the CPA and CFA exams.

Q: How did you transition from someone who thought that law was going to be his future to finance and wealth management?

It's a bit of a long story, but it was pretty quick when it all happened. I graduated from law school in December and had nothing to do for nine months until I could take the boards. I'm not one to sit around, so I applied quickly to the IU MBA program. Once I finished that, I went to work practicing international tax accounting with a big eight CPA firm and was enjoying it when the guys who ran this firm got in touch with me and said, ‘we're looking for somebody like you.’ My initial reaction was, ‘I'm not doing that. That's kind of crazy. My path here is clear.’ Six months later, they convinced me to give it a try. Money management was real and fun and interesting. That was 40 years ago. I took a risk and absolutely loved it.

Q: Let’s talk about relationships. Certainly, they are the foundation of what you do. What do you do to forge longstanding relationships with your clients?

You do the work every day. When somebody calls, you pick up that phone. If somebody emails, you respond. It's blocking and tackling every day, much of which I learned from growing up in a steel mill family. Relationships are absolutely crucial. Until very recently, the only way we got new business was through referrals.

Q: For who you are and what you do, what areas or factors have your greatest attention here in 2022? As a leader and builder, what happens when you sit down and think about what’s next?

This moment is a little unusual because I'm thinking about how to keep everybody safe. Beyond that, we regularly get together and ask, ‘what’s on your mind?’ Is it the Federal Reserve, interest rates, inflation, the market, P/E ratios? We're taking stock of all that and we do it constantly. A calendar turn doesn’t affect that. It's an ongoing dialog.

I read long ago a seminal piece by the Harvard Business School on the folly of stock market timing. You just can't guess it. Maybe three times in my career I've been able to say it's really expensive or it's really cheap. Most of the time, it's like it is now, it’s okay. I can find some good investments, but it's not earth-shattering. Sometimes, you get blindsided, whether it’s COVID, an ’07-08 financial crisis, or a war somewhere in the world, those are the things that keep you on your toes. And, to be honest, that’s what makes it fun.