Cashing in on a “winning-by-not-losing” philosophy

When it first started, Tim Chapman didn't have a goal for how big he wanted Stadion Money Management (headquarters pictured here) to get. “We have just focused on doing things the same way, with discipline and objectivity,” he says.

Tim Chapman has built his company on a delicately choreographed number that balances caution with risk. As CEO and founder of Stadion Money Management, a billion-dollar investment company boasting long-term returns that far exceed most indices, Chapman has proven his trademark method works. Here, the seasoned investor shares with Profile how his Georgia-based firm achieved such success with this winning model.

“We didn’t have a particular goal of how big we wanted to be. We have just focused on doing things the same way, with discipline and objectivity, since the beginning. And the “winning-by-not-losing” philosophy has guided us since day one.”—Tim Chapman, CEO & Founder

Our winning-by-not losing philosophy is the cornerstone of our success. For the first 10 years, I was your typical neighborhood financial planner. In 1991, a longtime friend, Don Beasley, and I decided to focus on only managing money for investors who wanted a decent return over time but couldn’t stomach the volatility and downside risk that comes with a buy-and-hold approach in the stock market. At that time, investors were still feeling the heat from the market crash in 1987 and the bear market in 1990. We wanted to create a strategy that would bring them back and allow them to enjoy the long-term returns that only equities can provide, but at the same time, put a safety net under the portfolio to protect their nest egg from the devastating losses.

It is never our goal to “beat” the market. But our long-term returns have far exceeded most indices like the S&P 500, Dow Industrials, or NASDAQ by a significant margin. We achieved those returns, not by hitting home runs when the market was good, but by avoiding striking out when the market was bad. It’s like a meteorologist who measures lots of factors to determine the probability of rain. Most of the time, they don’t know for certain it’s going to rain, or when the rain will actually start to fall, but they can at least let you know to keep your umbrella handy so you can “react” to the rain and avoid getting soaked. Our risk model lets us know when the dark clouds are gathering overhead. It doesn’t mean there’s a bear market on the horizon, but it does allow us to adjust our stop-loss measures so we can react more quickly if prices do turn down.

Branching out into other areas actually started with my father. Dad worked for Delta Air Lines and in 1994, Delta moved its 401(k) plan to Fidelity and added a host of new funds to the lineup. He and his coworkers didn’t know what to do with all those choices so I started writing a newsletter just for Delta employees. The newsletter was a hit but there were lots of subscribers who preferred having us manage the money directly instead of just telling them what to do. Eventually, we were managing more than $100 million for individual participants inside Delta’s 401(k) plans.

In 2001, we entered into a collaborative marketing agreement with Lincoln Financial that allowed financial advisors who were selling the Lincoln Director group annuity 401(k) product to include our 401(k) Toolbox managed account service. That began our evolution to working only through financial advisors instead of dealing with clients directly. Then we developed our Stadion Funds and Stadion Select accounts.

We didn’t have a particular goal of how big we wanted to be. We have just focused on doing things the same way, with discipline and objectivity, since the beginning. And the “winning-by-not-losing” philosophy has guided us since day one. We’ve experienced lots of growth as more and more people hear the Stadion story because our strategy makes so much sense to investors, particularly as they get closer to retirement.

Other than our philosophy on managing money, I think our corporate culture sets us apart. We have a positive impact on people’s lives by taking care of their hard-earned money and also enjoy having a positive impact on our community. Our team cares about helping others and, ultimately, that’s why we manage money the way we do.