The traffic in Atlanta is notoriously bad, but nothing had prepared me for how long it took to get around the city. Admittedly, things weren’t made easier by the raging fire that had collapsed a portion of Interstate 85.
Luckily, my first meeting of the day, with Greg Silberman, chief investment officer at Atlanta Capital Group (ACG), was a five-minute walk from the hotel.
ACG is a $2 billion RIA. It’s a bit different from other advisory shops because it is in the business of acquiring wealth management practices. For example, ACG bought the investment management business of Texas group Stark Capital Management in October 2015. Stark runs a value stocks portfolio, supplemented by bonds according to a particular client’s risk profile, which ACG is now able to use with its clients.
There are five members on the investment committee, three in the Atlanta office, one in Boston and one in Houston, a legacy of the Stark acquisition. Silberman heads up the committee, deciding on asset allocation and how that is implemented in portfolios.
With varying asset allocations for different risk appetites, ACG’s focus is currently on moderately aggressive profiles as most of its clients are at, or near, retirement.
Silberman would like to get more clients into its model portfolios, but given the acquisitions it has made, and the clients it has inherited from this, tax consequences mean they can’t be moved straight over from their legacy investments.
ACG is on its 13th acquisition, having made its first when it was founded in 2004. Recently, the group established its own broker-dealer for financial advisor teams that have recently left wirehouses to set up their own shops. For smaller foundations and endowments, which do not have the resources to have their own in-house investment team, they also offer an outsourced CIO function.
Silberman is sceptical of liquid alternatives, despite having a background in alternative investments from his time in the multi-manager business at Wilmington Trust. With low beta and high fees, he struggles to see how they can outperform, preferring a more traditional method of dampening risk: ‘just do 50% long and put the other 50% into bonds.’
On the active versus passive debate, Silberman believes the ascent of index-tracking funds will at some point slow, or go into reverse. As a former institutional buyer of funds, he sees active management gathering strength from the trickle-down of institutional strategies into the retail space or, as he puts it, ‘private equity for the masses.’ Another big trend Silberman points to is crowdfunding: he believes it has huge potential to disrupt mainstream initial public offerings.
Robo-advice is unquestionably on the rise, but it’s not something ACG dabbles in. Demand for such services is coming from younger clients, Silberman said, while ACG’s more mature clientele has substantial wealth with tax and estate issues that could threaten to short-circuit even the best robot mind. ‘It’s something a robo-advisor wouldn’t be able to solve,’ he said.
While I was busy seeing Silberman, my colleague (OK, my boss) Marissa Lewis, who joined me on this trip, dropped in on Ric Mayfield, who heads up the manager research team at SunTrust Advisory Services.
She takes up the story...
I have known Mayfield for a number of years but it was great to see him in his hometown and office.
Mayfield’s team is responsible for traditional due diligence across SunTrust’s three primary platforms: the retail brokerage business, the traditional trust business and family office GenSpring. All three include both US and international clients. Mayfield has five analysts on his team but may look to expand in the future as his team takes on the oversight of more strategies.
Mayfield said he had seen client demand for all types of strategy – active, passive and separately managed account – but that growth had been most pronounced in passives, particularly factor-based strategies.
Back to Amelia...
Blue Current is the fund management division of RIA Edge Capital Partners, founded in Atlanta in 2006 with an emphasis on wealth management for HNW individuals and families. The firm was fortunate to attract the right mix of clients who stayed loyal as the financial crisis hit in its early years.
In the midst of the financial crisis chaos, one of Blue Current’s founding partners, Harry Jones, saw an opportunity to launch the firm’s Global Dividend Growth Strategy. As global stock markets tumbled, he still managed to secure seed capital to launch the strategy, believing the conditions were ripe for an investment approach focused on quality businesses with growing cash flows.
In 2010, Sabo joined the Blue Current team as co-portfolio manager and after several years of strong performance, Edge Capital launched the strategy as a mutual fund in 2014. Today, total strategy assets are approaching $300 million, of which approximately $55 million is invested in the mutual fund. If the managers keep up their record of 10% cash flow growth per year since launch, the fund is likely to attract a lot more assets.
Keelan manages the firm’s ultra-short fixed income strategy, offered to clients as a separately managed account (SMA). Keelan believes president Donald Trump’s agenda could prove positive for the bond market, pointing to his plans for one-off offers to companies to repatriate cash in the US at a low tax rate. ‘If they entice corporations to bring cash back and de-lever a little and not issue as much debt, it could make corporations stronger as well, which will be good for us,’ he said.
Keelan also uses his fixed income expertise to select bond managers for the Edge Capital Partners wealth management business, which manages around $3 billion.
The majority of wealth management assets are invested in third-party managers, selected by a team of individuals specialized by asset class, with roughly 70 external managers on its platform. Each client is built their own individual customized portfolio.
By midday, southern comfort food was calling my name and I was able spend the hour with Trey Prescott, who heads up business development at Advisory Services Network (ASN). Trey's role at the $2 billion Tamp includes recruiting, branding and advisor retention.
ASN is a spin-off of regulatory consultants Mainstay Capital Markets Consultants. Mainstay has a broad financial services clientele including fund groups, insurers and banks, while ASN has a specific focus on the investment advice market.
From its work with advisors building their own business, Mainstay had found that many would come back asking for more help with compliance, technology and operations. So ASN was born in 2008, founded by Mainstay principals.
ASN aims to help advisors setting up their own firms, offering branding and technology services together with outsourcing to allow advisors to maximize the time they have available to spend with clients. ASN focuses on teams between $15 million and $200 million and can accommodate both smaller and larger groups. Prescott believes the advisor market is moving in ASN’s favor, with an increased regulatory burden created by the Department of Labor fiduciary rule.
After over-indulging, I went to meet Adrian Cronje, CIO at Balentine, an RIA running $2.5 billion of assets. Founded in December of 2009 as an independent firm, Cronje leads the nine-member investment strategy team (including Ben Webb, who heads up manager research, and is pictured below), half of whom have worked together for more than a decade.
Balentine’s clients are primarily based in the southeast, and the focus is on entrepreneurs and business owners in transition, alongside select endowment and foundation clients. Only clients with more than $5 million in assets need apply, and they receive a customized portfolio based on their risk tolerance and liquidity needs. The firm also has a focus on global asset allocation, running the public market potion of large institutional mandates.
Before heading to the airport for my next trip to Charlotte, I popped in for a quick meeting with Ian Clemens, who heads up due diligence at Brightworth. It’s all change at the RIA, which last month merged with Charlotte peers McGill Advisors, creating a firm controlling $2.9 billion of assets.
My name is Amelia Garland and I am a relationship manager at Citywire. My aim is simple: to get to know the professional buyers across the US and engage with heads of manager research and due diligence, directors of investments and anyone who selects third-party products for their platform.
I am constantly on the road, if you would like me to pay you a visit, please don’t hesitate to get in touch at firstname.lastname@example.org or give me a ring at 646-532-6301. Don’t forget to tweet @GarlandGoesWest if you would like me to visit your city. Next stop Charlotte!