Scott J. Whalen

Scott J. Whalen is primarily responsible for providing strategic investment advice to help ensure Verus’ clients meet their long‐term investment objectives. He is also a Verus shareholder and a key member of the Verus leadership team.

Prior to joining Verus, Whalen built a distinguished career in management consulting at McKinsey & Co. and Ernst & Young, where he led corporate and public sector institutions to increase efficiency and improve operational performance. Whalen has extensive experience working with multiple stakeholders across industries and has honed his ability to foster effective decisionmaking in challenging environments.

Whalen earned a B.A. in economics from Wake Forest University and an MBA from the University of Southern California, and he has earned the CFA and CAIA designations.

CIO: What issues do you expect to dominate financial decision making and the economy in the next 18 months to three years?

Whalen: The key issue is the state of the U.S. economy over the next 18 months. Will the Fed be able to maintain a soft landing with inflation normalizing, the economic growth remaining stable and interest rates slowly coming down; will we experience a stubborn inflationary environment where rates stay high, which risks a more significant economic slowdown; or will we see inflation reigniting with the Fed hiking again, risking stagflation?

CIO: What actionable thing have you learned over the course of your career that has proven itself this year?

Whalen: Over the span of my multi-decade career, I have learned that experienced, institutional investors are just as susceptible to behavioral biases as inexperienced investors and that those biases can lead to poor decisions. As markets continue to reach new highs and break records on a daily basis, many investors are happily following the trend and piling into risk, seemingly forgetful of the fact that fundamentals matter, corrections happen, and diversification is the only “free lunch” in investing.

CIO: What macro themes will drive the most volatility for institutional investors over the short term? Over the long term (next 10 years)?

Whalen: Over the short term, there are a variety of low-probability but high-impact risks that investors should monitor. These include:

• A shock to confidence in the U.S. dollar, given large government deficits with very little willingness of either political party to rein in spending; higher debt servicing cost; and evidence that the international community is seeking alternatives to the U.S. dollar as the global reserve currency.
• Direct military conflict that leads to U.S. engagement, including:
  • A Chinese invasion of Taiwan is possible, given the resources this would allow China to acquire, specifically microchip technology;
  • A war between Iran and Israel if proxy battles escalate into something larger; and
  • A broader European conflict extending beyond Ukraine.
• A more market-specific driver of volatility, such as a delayed resetting of asset prices to higher interest rates or a re-thinking of the prospects for a highly concentrated set of market leaders.

Over a 10-year timeframe, I have no reason to believe volatility will not approximate long-term average levels.