Far gone was the time when a businessman turned to a stockbroker, an insurance agent, AND a handful of other professionals in his/her search for financial guidance. Fast forward to today – this financial advice landscape has spectacularly evolved. Such an evolution has turned the “stockbroker industry” into the “financial advisor industry,” where financial guidance seekers, including now-digital-savvy baby boomers, prefer a comprehensive and hassle-free experience to fragmented advice.
The ever-expanding landscape represents a waterfall of possibilities for every player therein. To capitalize on these possibilities, it’s a “must” that the new age financial advisors uniquely position themselves to win new clients and establish deeper relationships with those they serve. Should you remain vague on how to leave your mark within the spaces, let’s go explore a handful of top-ranked financial advisors and figure out their key secrets for sustained growth momentum.
#1. Salem Investment Counselors – An Unwavering Focus on Relationship Building
Based in Winston-Salem, North Carolina, Salem Investment Counselors is a fee-only financial advisory firm, whose clients include a nearly even mix of average individuals and high-net-worth individuals, plus a small number of institutional clients, all of which are charitable organizations. With a proven 40+ year track record to wealth management services, the firm has secured steady growth amidst ups and downs as well as emerged as a leading voice within the spaces as the #1 Financial Advisory firm in the country for the second year in a row on the CNBC Financial Advisory 100.
So, how has Salem managed to flourish and ride on the crest of a wave?
It’s the client-driven and customized service that matters the most. “At Salem, the client is always first. We build custom portfolios placing special attention on the needs of each individual and family, while providing the highest level of personalized service. This is done with a focus on keeping fees reasonable and transparent,” shared David Rea, President of Salem Investment Counselors. “Through this focus, we have built long-term relationships with our clients. We feel our research methodology and portfolio construction is an advantage for Salem and [directly] benefits each client. Our advisers collectively have more than 300 years of investment management experience with many academic and professional distinctions.”
When it comes to client relationships, David Rea did emphasize the importance of referral to Salem’s significant and sustainable growth. “From our beginning, referrals from existing clients have been the foundation of growth,” he added. “We are focused on giving the greatest attention to our client’s goals and ensuring the best service possible. This creates opportunity for good performance and low client turnover, all at a reasonable price.”
Besides, independence as a privately owned financial advisor without any conflicts of interest allows Salem to gain trust from clients from the very first start. “We are privately owned and do not have any affiliations with other companies. We also do not sell any financial products or insurance.”
#2. Richard C. Young & Co. – Comfort-Driven Philosophy
Founded in 1989, Richard C. Young & Co. works towards the hassle-free philosophy of empowering “investors to reduce the emotional stress that comes with day-to-day investing.” Since its inception, dividend and interest-paying securities have been its primary focus as this company realized “cold, hard cash in the form of a steady stream of dividend and interest payments is a comfort to conservative investors.”
“At Richard C. Young & Co., Ltd., we are committed to helping our clients achieve long-term investment success with comfort,” stated Matthew A. Young, President & Chief Executive Officer. “We are not traders or speculators and do not offer strategies for either approach. Our primary focus is to invest in securities that pay interest and dividends.” Managing uncountable portfolios for individuals, families, and also SMBs throughout the United States, this Naples-based juggernaut has been ranked by Barron’s as one of the Top Independent Financial Advisors throughout the nation for the last 9 consecutive years.
As a fee-only advisor, Richard C. Young & Co. has differentiated itself with robust in-house investment programs that are concentrated on individual government and corporate bonds, closed-end funds and dividend-paying stocks. “We consider ourselves to be a conservative financial advisory firm. We diversify the money our clients entrust to us globally, and across asset classes, and with few exceptions, we invest in securities that generate a stream of cash for compounding. A typical client portfolio includes both international and domestic stocks and bonds, funds, commodities, and even currencies.”
Remarkably, instead of outsourcing the management of clients’ portfolio to a third party or a computer algorithm, Richard C. Young & Co.’s financial advisor team perform proprietary research to drive all of their own investment proposals. “Every security we purchase is vetted by our in-house team of investment professionals. If you want to know why we purchased a security in your account, or if you are looking for an update on our global economic outlook, our seasoned financial advisors are here to help.”
Whereas “diversification is a cornerstone of our investment strategy, we don’t believe in over-diversification as practiced by the massive index funds. Matthew A. Young further explained, “We include in our client portfolios a sufficient number of securities to gain the benefits of diversification without diluting exposure to our highest conviction investment ideas.”
#3. Check Capital Management – “Bizarre” Leadership
Based in Costa Mesa, California, Check Capital Management has a notable long-term track record of serving individual and institutional investors to protect and grow their assets. With a strong aversion to loss, this giant pursues consistent strategies to acquire stocks of exceptional businesses, run by first-class management teams, when those firms are selling at bargain prices. In practice, persistently approaching investment decisions in this manner have proven to open greater opportunity to maximize upside potential and minimize downside risk. Rooted in simplicity and common sense, its strategy has successfully delivered solid investment results to clients for over 33 years.
Formally educated as an engineer (plus coursework in accounting), Steven Check, President and Chief Investment Officer of Check Capital Management, believes he owns the most unusual investment firm in Southern California. That’s because whereas many financial investors charge the standard fee of 1% for fund management, he takes a 10% cut of the investment profits. “If we have a down year, we don’t get paid,” shared Steven Check. “It’s a tough business strategy as a money manager. There’s a reason why other money managers don’t take this strategy.”
Holding a Master in Engineering, Check eventually demonstrated to other fellows his own investment style, stressing that “I back-engineered my way into what our strategy was.”
Whilst this business model is undoubtedly “tough” and risky, it has worked well for Check Capital Management that reported to return an average annual increase of 8.7% after fees, beating the 5.7% average annual increase of the S&P 500.
After all, “Clients would say, ‘I like the idea of hiring you, but I don’t like the idea of paying you if I don’t make any money,’” he said. “Here’s a manager who gets paid only when he makes money. That strikes a chord with clients.”
“It’s a very Midwest philosophy. Buy good quality at good prices. Be patient. Let the stock market serve you. That’s resonated,” concluded the Midwesterner Steven Check.
#4. Gofen & Glossberg– Hyper-Personalized Approach
Established in 1932, Gofen & Glossberg has marked its name as a trusted provider of custom-tailored investment guidance to individuals, families, foundations, endowments, companies and pension plans. Managing more than $5.5 billion in assets, the Chicago-based advisor has its wealth management approach solidly shaped by the personal and collaborative relationships it has formed with clients and its families across generations.
Gofen & Glossberg’s highly personal approach to investment management – where personalized attention and service are always the hallmarks – perfectly blends disciplined strategy, insightful research, and active oversight, which allows the firm to yield decades of stunning success.
Speaking of some challenges that kept financial advisors up at night, Charles Gofen, Gofen & Glossberg’s Principal, highlighted that, “One of the biggest challenges facing investment advisory firms today is disintermediation. People can invest by themselves rather than hiring an investment professional to manage their money. They can use exchange-traded funds to achieve diversification at a low cost, and sometimes, they don’t even have to pay trading commissions anymore.”
In response to this tough challenge, personalization remains the most crucial key. Specifically, Gofen & Glossberg’s strategy is “to continue to address the specific goals and needs of each client.” He added, “How much portfolio risk should a particular individual take on, given her unique circumstances? Which savings strategies are most efficient to put money away for future college tuition payments? What’s the optimal asset allocation for a nonprofit that needs to withdraw 5% from its investment portfolio every year just to make budget?”
Charles Gofen affirmed, “We can offer wisdom on a wide range of financial issues that most people don’t have the inclination, energy and expertise to determine for themselves.”
#5. D.F. Dent & Co. – Strong Corporate Culture
D.F. Dent & Co, or DF Dent for short, is an employee-owned firm focused on quality growth equity investing that manages concentrated, low-turnover portfolios for its clients. Since its inception in 1976, the Baltimore-based advisor has been offering independent investment advice for a national clientele of endowments, pensions, corporations and individuals. Thanks to its well-disciplined performance, without formal marketing or distribution channels, the firm’s asset base has grown almost entirely from appreciation and referrals to staggeringly $9.7 billion in equities and fixed-income securities as of March 31, 2021.
“We believe that wealth is created by long-term investments in successful and well-managed companies. We place great emphasis on the quality of management and spend significant time getting to know and understand the people who run these businesses.”
Along its course of 45 years in operation, DF Dent’s advisor team has grown to sixteen investment professionals who come from various investment backgrounds with diverse professional experience. Diverse and inclusive corporate culture, together with responsible working ethics are also what DF Dent prides itself on.
“The values, work ethic, and commitment to our clients are shared by all of our employees. Our client’s success is a result of a true team approach, where each voice is heard and every opinion matters. Every employee is treated with respect and given the tools they need to succeed,” shared Daniel F. Dent, Founder & Chairman at DF Dent.
“Teamwork at DF Dent and Company, as on the trail, is the blending of individual strengths to achieve a common goal.”
#6. Sol Capital Management – Collaborative & Trusted Advisory Experience
Quite different from other financial advisors, Sol Capital Management established itself as “serenity for complex wealth needs”, working on the principles of providing high net worth individuals with a consistent, transparent and disciplined approach to asset management.
“SOL is experienced in navigating the ever-changing landscape of new and expanding financial products. We are continually called upon by our high-net-worth clients to distinguish instruments currently in vogue from what we consider to be sensible investment solutions, helping to discern which investments are of real value and which are not.”
The Rockville-based giant has been well acclaimed for its prudence and vast expertise gained from 33 years of constructing disciplined and comprehensive investment plans. Notably, as an investment partner, SOL does put strong focus on delivering collaborative and comprehensive advisory experience, providing each of its clients with an experienced team of professionals including the Chief Executive Officer/Chief Investment Officer, the portfolio manager, the lead portfolio reviewer, a business development adviser and a client relationship manager.
“With extensive collaborative experience in high-net-worth portfolio management, the SOL team is poised to honor clients’ best interests,” stated Rajmiel Odinec, CEO & Chairman of The Board, Former Chief of Division of the Operations Department, Former Advisor to the President and most currently a member of the Inter-American Development Bank (IDB).
#7. WCM Investment Management – Unique Bottom-Up Investment Approach
Motivated by a spirit of broad-based employee ownership, WCM Investment Management is a top quarter global equities manager from Laguna Beach, California, managing $85 billion (as of 30 June 2020) and “boasting” an outstanding investment track record across multiple strategies. The Laguna Beach-based giant is well known for its innovative growth equity solutions that go beyond borders and benchmarks to seek the best investment opportunities with long-term growth potential.
Since its inception, WCM has consistently adopted a bottom-up investment approach that seeks to identify companies with attractive fundamentals, such as low or no debt, rising returns on invested capital, and reasonably predictable free cash flow generation. Notably, what sets WCM’s investment approach apart from other competitors is its unwavering focus on assessing the trajectory of a company’s (durable and growing) competitive advantage – so-called “economic moat” – as well as the alignment of its corporate culture with this economic moat.
Regarding “economic moat”, Ryan Quinn, Client Portfolio Manager, WCM Investment Management, explained that, “As long as the moat trajectory is positive, meaning the business is taking share, it means the business is growing, it means the business is getting better rather than worse in any given period, and that’s a business that we want to own. We utilize that moat trajectory to help us make all of our decisions, whether it’s buying a name, adding to a name during different periods, trimming from an existing holding or selling it outright.”
On the other hand, “WCM realized very early in our own success story that the culture internally here has been a significant factor in our success. So, we came to the epiphany that why not turn that lens onto our businesses? Why not take the culture of each enterprise that we’re looking at and view it as the DNAs of that business?” Ryan Quinn added, “Corporate culture is going to be a challenging factor to point to, but it’s really the defining factor – a sink or swim moment for businesses when they either have tailwinds at their back, or they have a headwind in front of them. An accurate assessment of corporate culture is something that sets us apart from our peers because it takes quite a bit of time and repetition; and we’ve invested that time and repetition and personnel to focus on that factor for our investment holdings”
Such a combination has undoubtedly empowered the financial advisor to sustainably yield long-term excess returns and mitigate downside risk for its concentrated portfolios – whether in emerging markets, global equities or international small caps. Up to now, WCM remains a profitable, financially sound investment company with no debt.
The Bottom Line
It comes as no surprise that the financial advisor world has dramatically evolved, accelerating at a faster pace particularly over the last year or two “thanks to” the unprecedented advent of the COVID-19 pandemic. Irrespective of whether you are well-entrenched and perfectly content with the status quo or hell-bent on making a move, as a financial advisor, it’s more than critical to understand this ever-changing landscape and draw your own lessons from other spectacular success stories.