So Brinker Capital called me today. Basically, they want some of my business.
I don’t know anything about them or what they do. Does anybody here work for Brinker Capital? Does anybody know why they are particularly preferable to Vanguard or Morningstar? (They are the two that I have tentatively decided to work with.)
If you want to PM me, that’s fine, too.
Just for the record–these are the other managers that are available to me on the Cambridge CAAP platform.
And here are the money managers that we have direct access to (without going through the CAAP platform. I have no idea what the difference is between direct vs. CAAP.)
Wow. The number of Third Party Managers has tripled in the last six months.
Anybody lowly hacksawed FA’s (or intelligent, ivory-tower CFA’s) please tell me your opinions.
What would you like to know? Brinker is the third or fourth largest TAMP depending on how you measure such things. Since you’re at Cambridge you’re a prime target for third party money managers so it’s not surprising you got a call. They’re a solid firm. I work with them a bit. Just like any TAMP they can provide a wide range of services from completely building your investment models to just making suggestions to offering tech support. If you feel like you can build your own portfolios, tell them to take a hike and save your money.
^but first have them treat you to a steak lunch
Basically, I’m trying to figure out what they offer that you can’t get from a basket of mutual funds, whether that basket is provided by American Funds, Morningstar, or Vanguard.
To your point, yes, I do feel like I can build my own portfolios. Basically (I know you’re going to laugh at me), I think that the famous Boglehead 3-fund portfolio is about as good as any professional one designed by billion-dollar Harvard grads. But HNW and UHNW people don’t want to see a three-fund portfolio (right, wrong, or indifferent). Also, the “story” is better when you have your own dedicated “account manager” and the “award-winning client service team”. Again–I don’t know that this translates into better investment returns, but some clients want to see all the “Wall-Streety stuff”.
Also, they are touting “trust services” and “banking and lending” and “estate planning”. What can an investment management firm have WRT to this stuff that I can’t get from my local trust officer/bank/attorney? Why trust the people from Philadelphia rather than the people from Midland?
I’m not trying to be derisive or negative. I’m genuinely trying to find out the best way to serve clients–be they the Millionaire Next Door or the Glittering Rich (a la Ohai’s article).
Greenman all big shot now. People are lining up to service him. Now it’s Hennessey Velociraptor 6x6 or hacksaw.
http://hennesseyperformance.com/vehicles/ford/f-150-raptor/2017-ford-f-150-raptor/velociraptor-6x6/
Greenman, how about you and I do business instead?
lol dude if u want to be really lazy, just put them in a target date fund and call it a day.
i pay nerdy to manage my monies
What’s your service model?
What’s your investment philosophy?
What’s your approach to financial planning?
Do you sell insurance?
We know you do taxes - how to do articulate how you incorporate tax planning into clients investments and financial planning?
Does not compute. Can you explain?
Investment philosophy - Read the book “The Investment Answer Book” by Dan Goldie and Gordon Murrary. You can read the whole thing in less than two hours. But basically, I like low cost, low turnover funds (doesn’t have to strictly adhere to an index), pick an allocation, stick with it through thick and thin, and rebalance only when absolutely necessary. In fact, if you rebalance with cash flows, you should rarely, if ever, have to recognize taxable income. (To be honest, I think the famous Three-Fund Portfolio touted on the Boglehead’s website is a perfectly good portfolio.)
Financial planning - I have a subscription to MoneyGuidePro, but only one client who’s using it right now. The goal is to have all the clients do a financial plan. In fact, I was listening to a Kitces podcast where the advisor ($250mm AUM) refuses to accept any assets unless the client has done a comprehensive financial plan. I think this is the best way to go, because you can use the financial plan as a the cornerstone to everything else you do, including tax planning.
Insurance - I have a life & health license, and I’m studying for a Property & casualty license. After that, I’ll be licensed to sell every kind of insurance available in Texas. In practice, I refer clients to the local Marsh & McClennan office, because they’re in the same building as me, and I go to church with the branch manager. I’m not interested in developing a really big insurance business (I have too many other balls in the air to try to do all the envelope stuffing and premium collections, etc.) but it’s nice to get paid on the things I refer out. (The exception is variable life & variable annuities. I have to go through my B-D to sell those. Can’t refer them out.)
Tax stuff - In short–if there were no taxes, investment advisory would be so easy that any idiot in the world could do it. Just buy an asset allocation fund or glidepath fund. And that is literally the only thing that you need to do. However, in the presence of taxes, investment advice takes on a whole different level of understanding (that most retail FA’s don’t have).
IMHO, 80% of financial planning is a combination of tax + investments. (Investments, in this context, is not necessarily limited to publicly traded securities.) IRA’s are nothing more than an investment product with a tax-protected “shield” wrapped around it. 529’s are also an investment product with a tax wrapper. Ditto 401k’s, 403b’s, 457’s, SIMPLEs, SEPs, Roths, DBP’s, cash balance plans, variable annuities (although they do have an insurance component to them), 409a deferred comp, golden parachutes, Crummey trusts, etc. -------------- Of the remaining 20%, 80% of that is estate & elder planning, which may be tax-sensitive, but not normally a driver (nor a problem) for most estate plans. Given that the lifetime gift & estate exclusion is $22mm, you can pretty much create an estate plan without generating taxable income. (Now, if somebody has a taxable estate, that gives us a whole different set of problems. But out of 950 tax clients, we probably have maybe a dozen who have taxable estates.) And for most people (99.9%), basis management is more important than estate tax management.
i love all the tax deductible accounts! they minimize taxes now! and inflate your net worth! bitcoin btw sells insurance on the side! lol. he wants to be an investment guy without a college degree.
Doesn’t sound like you really need Brinker or any other money manager. Cambridge is just a weird B/D. Instead of partnering with asset managers (they do, but it’s a very different setup than Cetera, LPL, Ameriprise, etc.) they chose to partner with these third party managers. Basically they’re outsourcing their research. Most firms employ research analysts to build rec lists and model portfolios. Cambridge wants you to use a firm like Brinker instead.
There’s no harm in listening to their pitch, but I don’t think you’ll find them of much value. Not because I dislike Brinker, but because I think you can manager your own practice just fine.
Your service model should illustrate how you service your clients including meetings, communication and reporting. If you don’t have one, you could go onto any number of other advisory team websites to get ideas and then build your own. I’ve found it to be highly effective as a visual in communicating my process and service offering to clientele.
Meeting structure for clients: i.e. periodic reviews including face to face meetings, calls, emails and the frequency
How you communicate: in person, skype, email, setting agendas for each meeting, follow ups after meetings (tasks that need to be done by you/client), other resources available (website, communication letters, online access to accounts).
Reporting: Wealth Summary, IPS, net invested capital summary, personal financial plan
I agree that all clients should have a financial plan and this is actually where you start - not directly with investments. Start with the plan and then construct the portfolio that fits into the plan and focus more on the planning process. All the other points you have made suggests to me that your doing a lot of the right things.
For insurance, I have a license as well but refer it all out to our specialist and we split the commission. I don’t really have the time, interest or expertise in this area and your right, you can’t do everything.
The good thing about your investment philosophy is that you have one. I think I recall you indicating that you weren’t a big fan of DFA - but you should at least attend their introductory conference. I recently went to one and it was really good. It really fits well into your overall model.
^I actually like DFA, but I can’t get sell DFA funds directly. I have to go through Symmetry or Loring Ward for that, and it adds an extra layer of expense.
And I haven’t developed a service model yet, mainly because I’m still an employee of a tax practice. (On a partner track, though. I think both partners want to retire in the next few years, so this beast will be all mine to do what I want with it.) And so I have to do what the partners say, 99% of which is tax compliance. In fact, even now, in the “offseason”, we have so dadgum much tax compliance to do (amended returns, answering IRS correspondence, doing late returns for people who didn’t bring their stuff until Oct. 14) that we may have to keep plowing thru until February, when the next season begins.
dangggggg. Greenman capital!!!
Ideally–this the practice I would have: (this is still under construction. I would welcome any comment or criticism)
20-30 clients, each with $2-5mm under management. I do their tax returns, including business returns, if necessary, and have a free once-per-year financial planning meeting where we talk about the plan and whether it still fits with their financial life. If we have to make changes to the plan, there’s probably a charge for that. But there’s no charge if it’s just a meeting to make sure they’re still on track to meet whatever goals they set.
If we determine that the client needs some work done, we can either 1. tell them what to do (at little or no cost to them), 2. help them do it (hourly rates, but not very many hours), or 3. do it for them (hourly rates, many hours).
Once upon a time, I toyed with the idea of a yearly/quarterly retainer, offset by the AUM fees. But I abandoned that idea, because I don’t want the client to pay for something they’re not getting. And I’m not interested in working for free, either. It seems like this is the most fair way to do financial planning.
Some of you may ask, “Greenie, you only want $75mm under management? That’s pathetic!!!” But again, in my perfect world–I’d be a one man show. I think I can handle 20-30 clients with no employees. And if I’m charging a 1% fee, that’s $750k. After all my expenses, and based on my payout, that’s still $500k per year, and that doesn’t include the income from the tax practice.
Well its your practice so you get to decide how many clients you want to work with, AUM minimums, fee structure. And if your making revenue in preparing the tax returns, in addition to charging on AUM this could work. I wouldn’t use the hourly rate though; I would include the planning in as part of the AUM fee.
We have done some financial plans only, charging a flat rate and then its up to them to implement the recommendations on their own.
Have you gone through an exercise to identify the characteristics for your “ideal client”? (i.e. those 20-30 clients that you would want to work with)
NOOOOOOO!
DFA is a god damn cult. Screw them and their “camp” advisors have to attend. They’re the Scientology of asset managers.