The Next 60 Years: 4th Quarter 2024 Commentary

The Next 60 Years

As Bragg Financial marks its 60th year in business, I’m reminded of a particular lecture delivered by Dr. Ram Baliga, my marketing professor in business school back in the mid-nineties. Yes, it was at Wake Forest. Our class was discussing corporate messaging, good and bad. With all due respect to Professor Baliga, I don’t remember everything I learned in his class, but one moment has remained with me for the last 30 years. That was when Professor Baliga singled out a marketing strategy wherein a company touted how long it had been in business. Like it was yesterday, I can hear Professor Baliga’s curt and confident words as he harshly criticized the practice.

“Who cares how long your company has been in business?” he asked. “Why is 25 or 50 years of existence as a company important to a prospective customer? It is not important. A marketing message should highlight the value your company will bring to the customer in real terms. If I am your prospective customer, how will you make my life better today if I do business with your company?” At the time, I had been at Bragg Financial for just two years and was proud of the fact that my father’s firm had been in business for more than 30 years. But as Professor Baliga made his case, I realized that he was right.

In a competitive market, no company can expect to survive if it is looking to the past; looking forward, embracing change and investing in the future is the only path forward. In 1942, Austrian economist Joseph Schumpeter, in his book Capitalism, Socialism and Democracy, used the term “creative destruction” to describe capitalism, under which the innovation and new technologies of newcomers disrupt, displace and destroy existing economic structures including industries, companies and jobs. This paves the way for more newcomers, creates new jobs and ultimately drives economic growth. Examples of this abound during our lifetimes and indeed just in the last decade.

Perhaps you enjoyed streaming a classic movie such as It’s a Wonderful Life, The Grinch, Elf or even National Lampoon’s Christmas Vacation (one of my favorites) over the holidays. Call me old but it seems like just the other day when we paced the aisles of Blockbuster Video in person, searching for these titles in VHS format. It was always a bummer when the popular new releases were all checked out and we went home with something like RoboCop 3, The Next Karate Kid or Rocky V. Blockbuster’s business was disrupted and ultimately destroyed by Netflix, initially in 1998 with Netflix’s DVD mail-order subscription service and finally by the gradual shift to streaming as more Americans acquired high-speed internet. According to Netflix founders Reed Hastings and Marc Randolph, the CEO of Blockbuster, John Antioco, was vocal in his denial of the new business model. Antioco declared in 2000 that “this dot-com hysteria is overblown.” In the same year he declared that the $50 million price demanded by Netflix to be purchased by Blockbuster was ridiculous. Finally, in 2010, his company declared bankruptcy. Today Netflix has a market value of $375 billion.

To be sure, consumers are the beneficiaries of the creative destruction of capitalism. Out with the horse-drawn carriage and the steamship, the icehouse and the outhouse, with wash tubs and clothes drying lines, splitting cord wood or loading the stove with coal, along with land lines, cameras, alarm clocks, typewriters and encyclopedias, with navigating with a folding paper map (fold it back ‘n forth, back ‘n forth) or worse, navigating by “asking directions,” with hailing taxi cabs or shopping in brick-and-mortar stores. Yes, out with all of that and in with, well, you get my drift.

But back to marketing messages. As I struggled to write this letter, I called Frank Bragg, my 85-year old father and the founder—sixty years ago—of Bragg Financial Advisors. I asked him for some perspective on having started and built a company that has lasted 60 years. “Tell me about life in the sixties, Dad. What did it feel like to be starting out on your own with all of the turmoil in the country … civil rights, Vietnam, the Cuban missile crisis and the assassinations of JFK and MLK, Jr.? How did you feel at the time?”

As I expected, Frank Bragg, more practical than nostalgic, more plain-spoken than poetic, didn’t think much of my questions. He said, “What? I don’t know. Yes. Sure. Yes, it was a tough time in America … the news was terrible … people were out there marching and protesting the war. Yes, it was a difficult period in our history for sure. But I didn’t pay much attention to all of that. Kathy and I had the four of you children and a mortgage, and I had to go to work. I just worked. I was driven by fear of failure. I worked very hard. Lots of people were wringing their hands like the world was going to end, and I just figured that if by chance it didn’t, we needed to be in a position to survive. So, I went to work.”

That all sounded very familiar to me; my father talking about hard work … a recurring theme in my life. He once told me, “I wasn’t an academic all-star like some of the guys I went to school with, but I figured I could outwork any of them.” How’s that for competitive? My children, nieces and nephews grew up hearing their grandfather’s tales about the many different jobs he had when he was “their age.” Poor kids. The bar is high for all of them.

Trying a different angle, I tried to get Dad’s competitive juices flowing by telling him about my marketing professor’s criticism of any company which touted its long history in its marketing messaging. I figured Dad would get riled up and push back, making the case that our long history demonstrates our dedication to our clients and our depth of culture. But he surprised me, saying, “Yep, your professor was right, Benton. Maybe that ridiculously high tuition was worthwhile.” He went on, “He was right. We can’t live in the past. We’ve got to stay focused every day on being better than our competition and making sure that our clients and prospects know what we can do for them.” And then, he added with emphasis, “It is important that we know how to tell them how we add value.” Classic Frank Bragg—always teaching. “Let me tell you how I would have said it … how I would have done it.” Frank Bragg, the first and only pure salesman to work at Bragg Financial Advisors. Where would we be without him?

Before we got off the phone he said one more thing. “There are some things that don’t change and shouldn’t change, you know.” “Yes,” I said. “I know, Dad.”

I do know. Those are the timeless things that haven’t and won’t change. Those are captured in Bragg Financial’s Mission, Values, and Behaviors document which defines our reason for existence as a firm, identifies our beliefs and values, and names the behaviors we will expect of one another as we work together. As most of you reading this letter have hired and entrusted us with managing your hard-earned assets, I thought you might be interested in snippets from that document.

Our Mission

At Bragg Financial, we believe financial well-being is achievable. Trusted relationships, diligent planning and prudent investing lead to great rewards, including understanding and peace of mind. This will be our pursuit.

Our Commitments

• We work for our clients. We believe our clients deserve informed, objective advice, unsurpassed service and clear communication.
• The people on our team make us successful. We will invest in them, encouraging excellence, growth and a commitment to each other.

Our Values

Humility, Competence, Hard Work, Preparation, Transparency, Fairness

Our Behaviors

• We will embrace change, growth and constant improvement, adapting to a constantly changing market where success is fleeting and disruption is the norm.
• Our company will make mistakes. We will shine a light on them, fix them and improve our process going forward.
• We will embrace optimism and confidence. The future holds great promise. Our team will be educated, prepared and well-positioned to serve as a resource and leader for our clients and community in the days ahead.

As a second-generation owner of a family-owned business, I am sometimes asked about my family’s future plans for the company. My family has discussed this at length and we are in agreement on this subject. While of course things could change, our sincere hope is that our company remains independent forever. Now, last time I checked, forever is a long time! But that is what we tell ourselves. And this has enormous implications for the way we think about and operate the firm. It’s like buying instead of renting, or committing to marriage rather than just dating. We’re able to make decisions and investments that affect our clients and our employees based on the very long term.

This is quite different, and better in our view, from the way many companies are run, especially large, publicly traded companies or investor-owned private companies which by design must focus on short-term profits. We are able to grow our firm thoughtfully and conservatively; we don’t use debt, and to date, we’ve carefully maintained our culture by growing organically and avoiding acquisitions. We make long-term investments in our employees and long-term commitments to clients and our community. As for the family members who work in the company, as we see it, we are here to serve the company; the company is not here to serve us.

The Bragg Financial Team, November 2024

Today I’ve departed from my usual commentary about the market and the economy, but you can find some great insights from Matt DeVries. If you are still reading, thank you for indulging me as I shared some “inside information” about the people you employ and trust with matters of great importance to your family or organization. Employ is the right word, we think. We’ll never lose sight of the fact that we work for you. And one final thing: Marketing strategy be damned, we’re proud of our sixty years of service to our clients. We think our history does mean something to you and to others who might consider our firm. Along with pride, there is an equal share of gratitude for our clients. We certainly wouldn’t be celebrating our history in business without you. Thank you for your trust. Here’s to the next 60 years!

This information is believed to be accurate at the time of publication but should not be used as specific investment or tax advice as opinions and legislation are subject to change. You should always consult your tax professional or other advisors before acting on the ideas presented here.