The January cold snap may have caught some by surprise, but I was well prepared, having already braved the chill of Milwaukee in my quest to meet the best pro buyers around. Honestly, the bomb cyclone felt positively warm by comparison!
My first stop was the offices of Cleary Gull Advisors, to meet with Joe Guerin. The RIA was founded in 1987 by Michael Cleary and was acquired by Johnson Financial Group in 2016, taking assets for the combined group to around $10 billion.
Guerin is an investment analyst on the manager research team, working alongside six others. The team puts together buy lists, which are then used for the high-net-worth, retirement and brokerage business lines.
In total, there are around 150 mutual funds and 50 ETFs on the firm’s approved lists, but Guerin said the team had been working to reduce these numbers.
The team also runs model portfolios, which are populated with funds from the buy lists. Most clients are in model portfolios, but portfolio managers are able to add a layer of customization if needed. Cleary Gull’s clients are based across the country, but are primarily concentrated in the Midwest.
In the next few months, Guerin is trying to incorporate factor analysis to assist in manager selection and monitoring. The team is also evaluating small-cap managers, as well as long/short equity, international small caps and emerging market managers.
My next meeting was with Eric Nohelty (below) at Marshall Street Capital, a family office responsible for managing the assets of the Hauske family. Nohelty sits on the investment committee at the $700 million shop, along with Marshall Street’s chief investment officer and chairman. The firm also works with consultants Monticello Associates for extra due diligence.
Marshall Street runs four funds of funds for the family portfolio, while also investing in separate vehicles for its pension and charitable accounts. Across the funds of funds, it uses 45 managers, plus around 24 for its pension and charity arms. The team typically seeks out smaller, boutique managers but is willing to tap the expertise of larger shops for its more complex investment strategies, Nohelty said.
Regarding the firm’s plans for 2018, Nohelty said: ‘Our focus is largely on the real assets space. We are likely to rebalance back into master limited partnerships and are evaluating other managers in the energy and natural resources sectors.’
It was tough saying goodbye to such a great view of Lake Michigan from the office, but I had to head off to my next meeting with Garrett Aird and Peter Sauer at Northwestern Mutual.
Aird, the director of manager research, and Sauer, an investment research consultant, are part of the due diligence team at the broker-dealer. The firm has roughly $68 billion in advisory assets, with $23 billion of that in its discretionary model portfolios.
The research team has nearly 240 mutual funds and 90 ETFs on its approved list, but advisors are not restricted to their recommendations. The manager research team is made up of generalists who use proprietary research supplemented by Morningstar to analyze potential products.
In total, there are 30 members of the investment team, with seven focused purely on due diligence. The team’s efforts support the 86 models used by Northwestern Mutual’s advisors.
My final meeting of the trip was literally across the street at Robert Baird Wealth Management, where I met Kathy Blake Carey.
Blake Carey heads up manager research at the broker-dealer, and we were joined by Aaron Benson, David Manke and Joe Lorbert, who are all due diligence analysts on her team.
In total, there are 10 members of the team, split by asset class, who analyze roughly 100 mutual funds and close to 80 separately managed accounts for Baird’s recommended list, which is used by 800 advisors.
Overseeing roughly $6 billion in discretionary assets through Baird’s model portfolios, the team’s due diligence efforts focus on ensuring their picks are high conviction. To do so, they deliberately keep their approved list small.
On her plans for 2018, Carey said: ‘Two things we are working on in the upcoming months are enhancing our offerings around ESG and assessing the active share in our recommended strategies.’
Before heading back to a slightly warmer New York, I grabbed a quick photo in front of the lovely Lake Michigan.