Touching down in ‘Bama, I was greeted by the warm weather and a Chevy pick-up truck (below), which was there to take me to my first meeting of the trip with Matt Sampson at Highland Associates. They do Uber differently down south.
Sampson (below) is the vice-president of research at the $24 billion institutional consultant. He joined the firm in May 2017 from Regions Bank, where he had been a portfolio analyst in the investment research group. Highland Associates primarily caters to non-profit healthcare entities and mission-based organizations, but it is also growing its retail presence. It provides research, consulting and customized portfolios to clients across the country.
The nine-member consultant team, which is client-facing and also helps in business development, reports to chief executive Trey Echols and managing director Michael Lytle. When constructing custom portfolios, Highland’s consultants use a focus list of 160 investment strategies put together by its research team of 11, led by Hunter Craig, director of manager research. Analysts are split by asset class, with Sampson focusing on alternatives.
Scott Graham is chief investment officer and leads the seven-member investment committee, which sets capital market and asset allocation strategy, while also approving manager hiring and firing decisions.
The research team has recently added the DF Dent Mid Cap Growth strategy to its focus list and is now exploring the option of creating an interval fund for discretionary clients, Sampson said.
Sadly, my next Uber was a Toyota Prius so I didn’t get another chance to ride pick-up style, but at least I lowered my carbon footprint!
My next meeting was with Strauss Financial Group’s Josh VanFleteren (below), whom I had previously met at the TD Ameritrade National LINC Conference in Orlando. This time, though, I had the chance to learn more about the RIA in VanFleteren’s hometown of Birmingham.
SFG was founded in 1988 by John and Heidi Strauss, after they decided to leave their brokerage firm and establish a full-service investment advisory shop. SFG has now been serving the Birmingham community for 30 years and is working with second- and third-generation clients. With John and Heidi’s son Arthur serving as vice-president, SFG has plans in place to ensure that it continues to serve these families for many generations to come.
Most of SFG’s clients are women and young medical professionals. That’s largely due to Heidi Strauss, who began her financial career working alongside 22 male advisors and no other women. She realized that the industry lacked a focus on women and their financial security, especially those women who are going through a divorce or who have lost a partner.
The young medical professional niche is down to the fact that these clients are often underserved and have a unique set of needs, VanFleteren explained. Despite their impressive skills, medical professionals often have little time or experience when it comes to dealing with financial matters, he added. SFG works with these clients to navigate student loans and insurance, draw up budgets and create long-term investment strategies.
The firm offers five model portfolios based on risk tolerance and other parameters, ranging from conservative to capital appreciation. These models serve as general guidelines, but plenty of drift is allowed, VanFleteren said.
Many of the firm’s clients have substantial legacy positions that require some manipulation of the models too. For larger, established accounts, custom portfolios are utilized. The models typically contain up to 10 core funds and ETFs, between four and six core individual stocks, and some rotating satellite positions. For clients who are in the accumulation phase and who contribute regularly, the firm will offer more basic portfolios. Some of the fund managers that SFG uses most frequently are T. Rowe Price, Vanguard and Cohen & Steers.
Over the past six months, the team has been making allocation shifts across its model portfolios. ‘We have continued to increase our international exposure, primarily in emerging markets,’ VanFleteren said. ‘We have also increased our small-cap allocation for 2018, specifically in small-cap growth, and we have reduced our exposure to intermediate and longer-maturity bonds.’
Next, I had the chance to sit in on my first cover star photoshoot. You saw the results of that shoot last issue, with Alan McKnight (above, left) and Brandon Thurber at Regions Bank (above, right).
After the interview, Thurber, director of Regions’ investment research group, touched on the team’s focus for the year in international small caps. He took the view that emerging market equity is going to be a top-performing asset class over the next 12 to 18 months.