Money Management Success

The Statons have built a mini-empire, one client at a time, from their Charlotte home

By Andrea Cooper

The executive with E! Entertainment Network thumbed through an investment book at an airport
bookstore. Most books on investing didn’t do much for her. But this one was different. The tone was
easy to understand and friendly. The advice made sense. When she got home, she called the author,
Bill Staton, and asked, "Can you help me?"

That was ten years ago. The executive, Fran Lauson, became president of The E! Entertainment
Network. Lauson is still a client of Bill Staton and his wife and business partner, Mary. And that story
illustrates how the Statons have built a mini-empire, one client at a time, from their Charlotte home.

The Statons run Staton Financial Advisors LLC, which provides money management services to clients
with $250,000 or more (sometimes significantly more) in investable assets. Many clients are
entrepreneurs who want assistance with the wealth they’ve accrued, or executives who aren’t happy
with their companies’ retirement plans and want to try an approach that works. The Statons have about
$50 million under management currently, with the goal of tripling that within a few years. They also run
The Staton Institute, which creates newsletters, books, and other products to teach the average Jon
and Jennifer how to manage their money themselves.

In a difficult economy when stock market performance has put off plenty of investors, the Statons’
businesses are thriving. McGraw-Hill has just published their new book, Worry-Free Family Finances:
Three Steps to Building and Maintaining Your Family's Financial Well-Being. The Statons’ guided
portfolio, tracked in their weekly e-mail newsletter, is up 93.4% since its inception in June 2000.

Their "America’s Finest Companies," an annual directory of companies with ten or more consecutive
years of higher earnings, dividends, or both, has turned in results that would have made it one of the
top performing stock mutual funds nationwide over the past ten years, with a compound annual return
of 14.64% through June 30. Wrote James Glassman in the Washington Post last year, "What
distinguishes Staton's list is moderation. With few exceptions, the businesses (he picks) just keep
growing, slowly but surely, year after year."

The Statons’ own businesses are growing, too – through two periods when lean times forced the couple
to re-invent their companies, and even through the recent death of the couple’s close friend and
business partner, Gordon Williams.

From Securities Analyst to Entrepreneur

Following an MBA in finance from The Wharton School, University of Pennsylvania, Bill Staton joined
Interstate Securities as a securities analyst. "I had absolutely no idea what I was doing," he admits now
with a laugh. "I had a good education, but it didn’t apply to my first job."

He lived through his first bear market, 1971 to 1974. Those years were tough. "Our research
department made some lousy recommendations," he recalls.

In 1974, he was promoted to research director and set about making changes. Brokers would tell
clients when to sell, not just when to buy. The firm would start tracking how its picks performed versus
the market as a whole. The tracking report, published several times a year, gave the firm credibility.
With Bill Staton’s research, the firm’s choices were now beating the market. From that first report on,
Staton documented his record.
He left Interstate in 1985 to begin Staton’s Stock Market Advisory, his first subscription newsletter. The
newsletter steadily gained subscribers until the crash of 1987, when 80% of them quit. It took five years
to rebuild his readership, years he describes as "well beyond lean."

In 1990, he published the first "America’s Finest Company" directory, the listing that would introduce
him to the national press and become the cornerstone of his philosophy: Buy sound businesses with
slow, steady growth. He also began dating Mary Tunstall Jackson, a strategic marketing consultant he
had hired to help him expand the business. They married in 1994.

Re-invent once, re-invent twice

Staton kept publishing his newsletter, but also began self-publishing books, producing tapes, and giving
speeches on money management. He has always been an active volunteer, teaching single moms and
even prisoners in jail the basics of money management so they could build a better future. With a
background in advertising, marketing, and business development, Mary directed those aspects of the
company.

Then came the Internet.

"We’d been based on a business model of a monthly print newsletter. But suddenly you could get
financial information on the web all the time," Mary Staton says. "The competition overwhelmed us."

A handful of newsletter subscribers had been pestering Bill for years to manage their money. He had
always turned them down, insisting he could teach them to do it themselves. But he began to realize
some executives just didn’t have the time, or the interest, to fool with it on their own. This time he said
yes. The Statons would become money managers, billing on a fee-only basis.

Ty and Pat Boyd of the Excellence in Speaking Institute in Charlotte became one of their early clients.
The Statons oversee the Boyds’ personal investments and their company’s pension/profit sharing plan.
"Bill is instinctively knowledgeable about stocks," says Ty Boyd. "He’s so approachable and easy to talk
to, and he’s a good listener. That’s critical for what he does."

In 1997, the Statons joined forces with another money manager who had a proprietary timing model.
Neither Bill nor Mary were proponents of market timing, but they believed this model would work with
their philosophy.

They were wrong. They split from their partner in 2000. But the experience wasn’t all bad, Mary Staton
believes. "It gave us the opportunity to thoroughly learn the money management business, including all
the rules and regulations you have to deal with. We also learned to stick with what we know."

The Statons turned to broker Gordon Williams, Bill’s best friend. They had met at Wharton, waiting in
line to register for courses. Williams joked about that guy ahead of him with the eastern North Carolina
twang, and from that moment, a friendship was born.

Williams handled all the actual buying, selling, and paperwork for Staton clients. He and his firm,
Raymond James in Clearwater, Fla., provided research support. The Statons talked with Williams every
day.

So it’s impossible to underestimate the blow from an early morning phone call just before Labor Day.
Gordon Williams had died in a motorcycle accident, returning from the mountain home he’d just
purchased with his wife.
 Deepening the Team

The Statons were devastated. But over time, something beneficial came from the tragedy. They met
others at Raymond James and learned about the depth of research and support services the firm
offered. They also saw a new opportunity.

Previously, they had concentrated on clients with investable assets of more than $1 million. But Mary
believed plenty of others needed their help. They developed a division of Staton Financial Advisors
through Wachovia Securities for clients with $250,000 to $1 million in investable assets.

The Statons are proud of the fact they have never lost a money management account – something of a
feat, giving the personal nature of their business. When Joey Lamb, chief financial officer for Twin City
Knitting Co. in Conover, agreed to become a Staton client, the Statons liquidated several low-
performing stocks Lamb was emotionally tied to. That was a little challenging for Lamb and his wife
Carolyn, but "we decided to see where it would go," Lamb says. "It’s done nothing but grow."

Says one other client, a Texas entrepreneur who owns a real estate investment trust, "In my view,
transparency and integrity are absolutely essential. I’ve known Bill for several years. I believe him to be
a man of unquestioned integrity."

The Statons anticipate doing even more work with entrepreneurs in coming years. Mary, who holds an
MBA from The McColl Graduate School of Business at Queens University and will become a registered
investment advisor next year, will handle more of the research for future editions of "America’s Finest
Companies." The couple has developed a company web site to offer an array of products and advice.

For at least the next decade, the Statons expect to produce annual returns for clients in the area of 8%
to 9% per year in an overall weak stock-market environment. And that suits them fine. "Our first focus is
not losing money. If we aren’t losing, we’ll gain," Mary says.

They have no plans to slow down. "I can do this business anywhere in the world," Bill says. "It’s fun for
me to talk with clients and mull over portfolio decisions. I like getting notes from them, hearing about
their families and their communities. The day I die is the day I retire -- around 105." #

SIDEBAR: WHY GIVING MORE CREATES WEALTH

Excerpted from "Worry-Free Family Finances: Three Steps to Building and Maintaining Your Family’s
Financial Well-Being" by Bill and Mary Staton:

Giving your time, talents, and money is one of the secrets to building wealth. Great men and women
throughout the world have proved it over time. In the broadest sense sharing your wealth is an
opportunity to change things for the better, including tremendous internal gratification from helping
others. It really is true that what goes around comes around....

Years ago as teenagers we read a wonderful story in Guidepost magazine about Joseph Colgate,
founder of the forerunner of Colgate-Palmolive and Colgate University. Mr. Colgate’s business was so
successful, he quickly became a multimillionaire and decided he had far more money than he needed,
and so he started giving it away.

He first gave away 10 percent of each year’s income, but after he started, his income multiplied. He
then upped the percentage to 15, and the same thing happened again. Next, he gave away 20 percent
of his income, but money poured into his coffers like water through a broken dam. After studying his
"problem," Colgate finally chose to turn his money over to a foundation and let others figure out what to
do with it. Giving away his money created a giant hole, which was refilled with more money than ever
before.

In our business roles as money coaches and in our personal lives too, we operate under an amazingly
simple formula:

100 percent of your monthly after-tax income

Less: money for you and your family’s financial future

Less: money to give to causes and organizations you want to support

Less: money for fun

= money to pay all other expenses

Not only do we believe in paying ourselves first, we also believe in paying others first who need it. If we
set aside five percent of our pretax income for ourselves, we also set aside five percent for charities,
the church, organizations, and causes we believe in. Joseph Colgate proved this works. Many others
have proved it too.

SIDEBAR: SOME RECENT STOCK PICKS

Bill and Mary Staton publish a weekly e-mail newsletter tracking The Baker's Dozen, their guided
portfolio. As of November 10, they report the portfolio was up 93.40% since its inception in June 2000.
In comparison, the Standard & Poor's 500 was down nearly 30% for the same period, and NASDAQ
was down about 51%. The Statons track the portfolio's progress each week. Stocks in the portfolio
change from time to time, depending on their performance. In November, these stocks were included:

ALLTEL Corp. - telecommuncations

Atmos Energy Corp. - natural gas

Bristol-Myers Squibb Co. - pharmaceuticals

Cedar Fair L.P. - amusement parks

Federal Realty Inv. Trust - real estate

Frisch's Restaurants Inc. - restaurants

Haverty Furniture Cos. Inc. - furniture

Health Care Property Investors - real estate investment trust

Myers Industries Inc. - manufacturer

NUCOR Inc. - steel

Quaker Chemical Corp. - specialty chemicals

 Washington REIT - real estate investment trust

Weingarten Realty Investors - real estate investment trust

Staton Financial Advisors LLC

The Staton Institute Inc.

Top officers: Bill Staton, Chairman; Mary Staton, CEO

corporate address: 2431 Hartmill Court, Charlotte 28226

Number of employees: 3

In business (how many years): 17 years

# of customers: 75 managed accounts worth more than $50 million, about 5,000 on mailing list
(worldwide) including email newsletter