It takes extraordinary vision to launch and grow a successful business. Stephen Huxley and Brent Burns are those types of visionaries. Starting as a research project in the late 1990s at the University of San Francisco's Graduate School of Business, where Huxley is a professor, Huxley and Burns formulated a revolutionary investment approach: engineer custom retirement income portfolios for individuals using liability-driven investing. The cornerstone of this idea is using individual bonds to match a retiree's income stream.
In 2002, they formed Asset Dedication, LLC and put the investment strategy into practice. From the very beginning, they had a long-term vision for the business: become a sub-advisory firm that offers turnkey portfolio management services for investment advisors based on their proprietary investment approach. But, building a technology platform to support the investment approach posed distinct challenges. Some of these challenges are apparent. What might be less apparent is that the calculations required to find the most efficient portfolio could take up to an hour to complete. This limitation in technology made it impossible to build individualized portfolios in a cost-effective way. As a result of the limitation in technology, the company focused solely on consulting with investment advisors that were interested in its strategy.
In 2008, thanks to substantial advances in multi-processor technology, calculations that previously took several hours to complete could be completed in less than a few minutes. These advances removed all technology roadblocks and allowed Burns and Huxley to transform the business into a turnkey portfolio management sub-advisor.
Finding the right partner for technology
As a company with a solid reputation for delivering high quality service, Asset Dedication needed to ensure that it could bring best-in-breed applications to its customers with high reliability and at a competitive price. To create the virtual portfolio management platform they envisioned, Huxley and Burns consulted with Joel Bruckenstein, virtual office technology consultant and publisher of Technology Tools for Today (T3).
"Joel really understood our business," Burns recalls. "He knew that we would experience significant growth in the next few years and that we needed a virtual office platform that would enable us to scale our business in a very cost-effective and timely manner without increasing staff. He had expertise to make that vision a reality."
With the understanding that integration was critical to the success of the technology platform, the team searched for CRM and portfolio management software that would seamlessly share functionality and information across the applications, without manual intervention. In anticipation of rapid growth over the next few years, they also needed a holistic platform for automating their operations and business systems; this strategy would make it possible to seamlessly scale up the business without increasing staff. At the time, a .NET solution with deep integration and a high-level of automation didn't exist.
But when the company contacted Tamarac, they discovered that Tamarac preparing to release its Advisor platform, which combined industry-leading rebalancing software with performance reporting and a highly customized version of Microsoft Dynamics® CRM. This solution was exactly what Joel Bruckenstein and Asset Dedication were looking for because it would integrate with the best-in-class applications they had already selected.
"We were one of the first companies—possibly even the first—to adopt Tamarac's Advisor platform," recalls Burns. "It was the only back-office solution that met all of our business requirements – particularly those around integration and automation, which were key elements of our business strategy. While there were some risks in being an early adopter of technology, Tamarac delivered everything they promised and have truly exceeded our expectations."
Asset Dedication understands its areas of expertise. That's why an important technology consideration was choosing Software-as-a-Service (SaaS) in a cloud environment. Investing in a cloud-based solution instead of the company's own datacenter provided scalability without hiring a massive IT department. Sensitive customer information is hosted at a world class SAS 70 II compliant data center and is backed up nightly, which is an SEC requirement. Leveraging a SaaS solution allows the company to dedicate its resources on the customer-facing areas of the business.
"All of our servers are in the cloud, which has greatly reduced our IT expenses," says Burns. "With the cloud, Tamarac and Rackspace manage the infrastructure, set up fault tolerance and redundancy, and develop the disaster recovery plan, which is much more robust than anything we could have developed. We don't own a single server and we can access all of our systems and documents from any computer that's connected to the Internet."
For Asset Dedication, the virtual office has translated into 24x7 availability of its technology platform, and the peace of mind of knowing that its IT infrastructure can scale to meet unpredictable demands such as substantial growth or unexpected spikes in web traffic.
The elegant solution
For Sheila, Tamarac's web-based aspect is integral to her practice. "We have our document management system on a server. After an executed trade, we output the trade order onto the server, client administration-based in Texas-confirms it and makes notes in the contact management system. With Advisor, I can even see training our administrative support to execute trades-faultlessly-while we apply the brains to the business. We like to do research; I will offload trade execution if I can."
Tamarac's focus on tax effects, the software's automated screens of trades, looking for tax penalties and benefits, struck a chord with Sheila. "The four key areas affecting our clients are wealth enhancement, wealth transfer, wealth protection, and charitable giving," she said. With her high net worth clientele, it's crucial for her to find the most effective tax effects when trading.
Provided with an allocation model, Tamarac can factor in tax efficiencies, client preferences, risk tolerance, and restrictions on legacy positions. Tamarac includes the ability to automate margin positions (including separate margin and non-margin cash positions in the same account) and family account reallocations-via three different methods.
Improving on the Human Touch
The Asset Dedication investment approach requires the management of a mountain of paperwork. Because the strategy is directly linked to the client's lifetime financial plan, it requires gathering more information than most investment approaches. By integrating Advisor CRM with Laserfiche® and Microsoft SharePoint®, the company was able to automate, manage and track the entire customer lifecycle and the required paperwork.
All customer contacts—regardless of whether they're initiated via the web or the phone—are tracked in Advisor CRM. From Advisor CRM, employees can access all customer documents that are stored in SharePoint and the documents that have been signed with DocuSign® and are managed by Laserfiche. Directly within Advisor CRM, employees can also access key portfolio information, run performance reports using integration with Advisor View, and initiate a rebalance in real time via its integration with Advisor Rebalancing.
Advisors working with Asset Dedication benefit from this deep level of integration as well. When they log in to the AdvisorSpace portal, a custom application that Asset Dedication developed to manage client proposals, bond inventory, and investment policy statements, advisors have instant access to marketing materials, proposals, and dozens of other documents that are stored in SharePoint. Documents can be signed electronically in DocuSign, which is managed by Advisor CRM's integration with SharePoint and Laserfiche. When a document is signed by a client, it triggers an automated workflow in Advisor CRM that notifies clients and employees of required tasks at each stage of the process. The deep level of automation and integration significantly reduces reliance on resource intensive manual processes and creates a seamless experience for the customers and employees alike.
"As an early adopter of the Advisor platform, we spent some time working with Tamarac to make all the pieces fit together and fine-tune the system. Throughout the process, the entire Tamarac team was outstanding in helping us get things to work the way we wanted them. All the pieces work together with a single sign-on, which creates a seamless experience for our employees as well as the advisors who use our strategy. Now advisors can seamlessly bridge over to Tamarac's Advisor View system so that they can run customized reports real time," Burns explains.
The possibilities ahead
By integrating and automating its portfolio management platform, Asset Dedication now has the level of productivity and customer service it has always imagined. But like most visionaries, Asset Dedication is always looking for new and innovative ways to get the most out of technology.
"We never rest on our successes," Burns says. "We're always looking at ways to leverage technology and refine our processes and automated workflows. We constantly ask ourselves, 'This is how we've done things historically. How can we do it smarter? How can we use technology to do that?'"
Asset Dedication and Tamarac share the same vision for innovation. "We really look at Tamarac as a strategic partner to our business. We think of Tamarac as thought-leaders because they are always looking for innovative products and solutions to better service clients. And that's exactly how we view our business."
The Mutual Fund Store Selects Advisor Rebalancing for Scalability and Productivity, Later Adds Advisor View for Performance Reporting
Financial advisors are working hard to keep up with an ever-expanding number of client portfolios. Additionally, they must be prepared to respond to the ever changing, dynamic expectations of their clients, while dealing with tax effects, market volatility, and regulatory compliance. What these advisors are seeking is technology that can standardize operations over multiple accounts but remain flexible enough to incorporate essential client customization.
Nobody understands this new world order better than Jon Bentz, former Chief Operating Officer of The Mutual Fund Store, an investment advisory firm representing more than 125 Registered Investment Advisors in over 95 locations nationwide. Founded by mutual fund expert Adam Bold, the company has more than $7.4 billion in assets under management and is set to grow in the years to come.
Bentz knew his company's RIAs were clamoring for more time to spend advising their clients, while still exceeding due diligence requirements for account management. What The Mutual Fund Store had to have was a rebalancing platform that did the necessary back-office work so the company's advisors could excel at the front end. With Tamarac's help, The Mutual Fund Store has transformed the time-consuming, labor-intensive chore of rebalancing into streamlined, efficient, peace of mind.
Bentz approached the search for a new system with the attention to detail you'd expect from an investment firm. He spent six months reviewing and testing the leading software options on the market, and when he was done he decided to make Advisor Rebalancing his system of choice.
"Our business model is based on volume," explained Bentz. "Some of our advisors have 600 or more clients. What they needed was a way to do in five minutes what used to take five hours. Advisor Rebalancing is fast, efficient, and easy to roll out in office after office. It was absolutely the best fit for us. The savings in time spent rebalancing means they can spend more time on trading, keeping current clients informed about their investments, and conferring with new clients on their goals. The true winners are our clients."
Scalability Meets Productivity
Advisor Rebalancing is a web-based, rebalancing platform. Regular rebalancing of a portfolio—to maintain the desired asset allocation for an investment strategy—reduces risk and improves returns.
What sets Advisor Rebalancing apart is an RIA's ability to integrate customized data for individual accounts or across a family of accounts. Advisor Rebalancing factors in tax efficiencies, client preferences, risk tolerance, and restrictions on legacy positions. It quickly and accurately produces trade orders ready for advisors to review and execute.
One of The Mutual Fund Store's differentiators is its willingness to advise clients across a wide range of investment capabilities, starting with clients who may have $50 thousand to invest, a category ignored by many investment firms. That means more accounts to look after.
"I have 1,100 accounts and more than $90 million in assets under management," said Scott Capace, a The Mutual Fund Store RIA. "If I didn't have Advisor Rebalancing, I would have to either reduce my client load or not fulfill my obligations to my clients. My promise to my clients is that I will manage their accounts individually and on an ongoing basis. With Advisor Rebalancing, I can provide more personal help to more clients and protect them from market volatility."
State-of-the-Art Technology: Mass Customization
While the feature-rich, web-based software provided the scalability The Mutual Fund Store needed, Advisor Rebalancing's customizable rebalancing platform put it in the lead. "The mass-customization of Advisor Rebalancing was the deal-maker," said Bentz. "Rebalancing is smart, but automatically calling out all accounts with a short-term trading fee—that's genius. Tamarac is smart technology."
The software offers speed—simultaneously rebalancing individual accounts or households of accounts at the same time, up to 1,000 accounts in less than a minute—and strategic power: each account or family is rebalanced in the most advantageous way possible according to advisor preferences. Advisor Rebalancing provides RIAs with optional scenarios based on factors such as risk, tax effects, and fees.
"Advisor Rebalancing helps our business model work because the advisors can set whatever parameters they want to meet client objectives, whether they want steady long-term gain or need to grow their investment quickly," said Bentz. "With the versatility of Tamarac, our advisors can hear where our clients want to go and help them get there safely. If anything changes, we change the parameters in Advisor Rebalancing, and we have a whole new set of options to give them."
The Mutual Fund Store is continuously evolving and discovering new and efficient ways to improve its products and services. In 2006, the company implemented Advisor Rebalancing to streamline its rebalancing and trading process. In mid-2012, The Mutual Fund Store identified two new technology driven projects in its ongoing effort to ensure that investors receive best-in-class service. First, The Mutual Fund Store believed that it should modernize its quarterly statements. Second, The Mutual Fund Store expressed strong desire to engage its clients with an online client portal where investors can view online quarterly performance reports and other investment information.
“We really wanted to update our existing quarterly reports with a more modern look and find a flexible product that would allow us to easily build custom reports going forward,” explains Barb Blauw, VP of Support Operations for The Mutual Fund Store. “We also committed to delivering statements and invoices online. Seeing that Advisor View has great performance reporting and built-in client portal functionality, it was a real win-win for us.”
After analyzing proposals from several technology providers, The Mutual Fund Store once again turned to Tamarac as its technology partner. “We loved the look of the reports, the clean user interface, and that advisors could create custom reports on the fly,” Blauw recalls. “In the end, we had such a great partnership and trust with Tamarac because we’re using Advisor Rebalancing, it just made sense.”
The Mutual Fund Store set an aggressive schedule to implement Advisor View in its headquarters and use it to send their Q3 quarterly reports – all in less than eight weeks. This required a lot of hard work from both parties to ensure the information was accurate and up-to-date.
Implementation was a tremendous success. In less than eight weeks, The Mutual Fund Store and Tamarac successfully implemented Advisor View in its headquarters. Blauw attributes the speed—in part—to the flexibility of Advisor View. “We made it very clear that we wanted to use Advisor View to send out our quarterly statements for Q3,” Blauw says. “Tamarac pulled out all of their resources and made it happen. It was very impressive—for both parties—that we made it happen so quickly.”
For the second phase of implementation, The Mutual Fund Store and Tamarac rolled out Advisor View to 125 advisors – all with a unique database for each of its 95 locations nationwide. This time, The Mutual Fund Store set an even more aggressive goal – just six weeks. Again, the implementation was a huge success. “The roll-out to our advisors was very smooth,” Blauw says. “We had aggressive goals and once again both parties met the challenge.” And through a combination of in-person and remote trainings, all advisors were up and running with Advisor View in no time.
With Advisor View now rolled out to over 95 The Mutual Fund Store locations, The Mutual Fund store is now delivering modern PDF reports and will soon engage its clients online with a document vault and client portal. “The feedback from our clients and advisors has been overwhelmingly positive,” states Blauw. “Advisor View has been flexible enough to meet our unique needs and we love the new look of our quarterly statements.”
Blauw is excited about the things to come. “Tamarac is incredibly innovative and very responsive to the needs of their clients,” she says. “They’re always improving their products and it played a big part in our technology decision.”
Scott Capace agrees.
"My job as a financial manager is to help people to succeed in life," said Capace. "With Tamarac, I am able to give more people the help they need. I can realize the full potential of my management ability for each and every account. That's good for my company, and it's good for my clients."
Growth is a key measure of business success - one that relies on innovation and scalability. Infrastructure barriers can hinder productivity and impede growth, as Jim McGehee knows all too well.
When Jim founded McGehee Wealth Advisory Group in 2010, he planned for significant growth. Jim realized that as his business grew it would become harder and harder to continue to deliver the superlative level of service that has earned his business an outstanding reputation in the industry.
To avoid any potential growing pains, Jim began exploring options for implementing systems and processes that have the capacity to meet the current and future needs of the business.
Jim undertook an initiative to analyze all facets of the business where he could benefit from additional resources. He determined that he could use assistance with back-office operations, such as daily position reconciliation, performance calculations, and uploading data from Schwab Performance Technologies® PortfolioCenter®. While he currently spends about two and a half hours a week working on back-office processes, he knew that this amount of time would only increase as his customers grew in number.
"When I started my business, my goal was to build scalable processes," says Jim. "If there are days when I'm not physically in the office—like today's huge snowstorm — I want the peace of mind that all day-to-day activities will be handled when I'm not there."
Now, Jim found himself at a crossroads: Should he hire employees or explore outsourcing solutions.
For a company that's likely to balloon in the next few years, outsourcing became the most viable option because it better supported Jim's goal of building scalable business processes. With outsourcing, McGehee Wealth Advisory Group could double overnight and the rapid growth would not affect back-office operations. Jim also felt that outsourcing would help to minimize the fluctuations in staffing that occur because of changes in demand for service, ensuring that resources aren't underutilized. He also liked that he wouldn't have to spend unnecessary time performing tedious tasks associated with hiring new employees, such as payroll, training, benefits, etc. and he could spend more time on marketing and other revenue-generating activities.
So, Jim then began exploring outsourcing solutions for his business.
Finding the Right Partner
As Jim embarked on this initiative, he knew that outsourcing selection was only one facet of a successful project. As part of this process, he wanted to explore options for adding scalable systems for portfolio rebalancing and CRM. During his search, he found that only Tamarac offered an entire integrated suite of web-based products and services for RIAs.
"I was looking for a partner to handle as many services as possible, and one who had the most comprehensive suite available," recalls Jim. "What really won me over with Tamarac was when I saw AdvisorServices, Advisor Rebalancing, Advisor View, and Advisor CRM all working in concert. It was truly impressive."
As soon as the Tamarac suite was in place, Jim seamlessly transitioned his back-office operations to AdvisorServices. Within days, AdvisorServices was downloading, posting, and reconciling his positions from PortfolioCenter. Each morning when he arrives at the office, all performance calculations are completed, and all accounts, account holdings, and trade data is imported into the Advisor X suite.
Reflecting on business before and after partnering with Tamarac AdvisorServices, Jim says, "Before AdvisorServices—no matter what—when I came in to the office in the morning, the first thing I had to focus on was downloading, reconciling, occasionally fixing, and uploading PortfolioCenter® data. Now I can concentrate on spending more time with my clients."
Jim is also impressed with the service he has received from Advisor Services and everyone on the Tamarac team. He's confident that he is backed by a highly experienced team of professionals that will work with him every step of the way.
"While the technology is excellent, what's really important to me is the people," Jim says. "Everyone I have worked with at Tamarac is extremely knowledgeable, good at what they do, easy to work with, and they make my life easier."
After partnering with Tamarac, Jim has an infrastructure in place that will allow his business to scale for years to come - without having to change systems or hire more people. He"s in an excellent position to handle rapid growth, and he has the scalability to accommodate the increased demand.
"I feel very confident with the reliability and scalability of the Tamarac Advisor X suite and outsourced services," Jim reflects. "I"ll never outgrow what Tamarac offers."
Advisor X Pays Big Dividends For YellowWood Financial Advisors
In today's fast-changing business environment, standing still is rarely a recipe for success. Successful enterprises are agile. They evolve, adapt, and innovate. As an early adopter of outsourced services, Maryland-based YellowWood Financial Advisors was one of the first to realize the tremendous advantages of outsourcing back-office operations. And, for nearly five years, their outsourcing solution worked: data uploads were completed and positions were reconciled each day. In 2009, YellowWood undertook an initiative to innovate once again by transforming its technology platform into an integrated solution.
"It just made sense to look into a complete solution," recalls Dave Walker, Director of Operations at YellowWood. "We understood the impact that integration would have on our bottom line. It would help to streamline our processes and make more efficient use of our time."
YellowWood had been an Advisor Rebalancing customer for years and was already impressed with the service Tamarac provides. While they spoke to a number of vendors, after reviewing the different solutions, the company selected Tamarac AdvisorServices as its outsourcing provider for portfolio management.
Because of its experience with Advisor Rebalancing, YellowWood felt extremely comfortable adding services from Tamarac. "What led us to Tamarac AdvisorServices was our confidence with Advisor Rebalancing and the history we had with them," Dave explained. "If it wasn't for our experience with Tamarac and Advisor Rebalancing, we would have been uncomfortable with bundling multiple products and services with a single vendor. But their quality of service eliminated those concerns."
AdvisorServices began managing many of YellowWood's back-office tasks. Portfolios were updated daily with data from the appropriate custodians, data was being downloaded, missing prices and cost basis was filled in, and data was uploaded into Advisor Rebalancing. The service was consistent and the data was accurate.
Information when you need it
By partnering with Tamarac AdvisorServices, YellowWood has the flexibility to access its fully hosted database via a Citrix connection.
"On our previous platform, I could make some changes, but I couldn't do everything," says Dave. "Thanks to the speed of the Citrix connection, I feel like I'm running a locally installed version of PortfolioCenter. Now, I can just do the quicker things, like entering basis information for a new account, myself. By the time it would take me to write an email, I can just have it done. It has been a huge time savings."
Users who aren't familiar with PortfolioCenter access client and portfolio reports using Advisor View, Tamarac's web-based dynamic performance reporting application that runs on daily performance intervals. YellowWood's previous solution ran on monthly performance intervals, which meant the information wasn't always up-to-date. With Advisor View, YellowWood creates custom reports for any custom date range, and Advisor View instantly displays the most current performance data.
"Before we switched to AdvisorServices, if a client wanted to see some information for the previous day, I couldn't do it on-the-fly," Dave recalls. "With Tamarac, I can get the information I need from Advisor View, and I have the flexibility to log in to the PortfolioCenter database."
The future looks bright ahead
Over the years, YellowWood has been continually impressed with the quality of service delivered by Tamarac AdvisorServices, and is assured of prompt, reliable support. "Tamarac is readily available and really knows PortfolioCenter inside and out," Dave explained. "With our previous partner, I sometimes felt that I knew the software better than they did."
After realizing the value of Advisor Rebalancing and AdvisorServices, YellowWood has begun implementing additional components from the Advisor X suite. They have rolled out Advisor CRM and are working with Tamarac to integrate it with MoneyGuidePro. YellowWood is also increasing its value-added service by implementing the Advisor View Customer Portal. With the Customer Portal, customers can access their information securely from any location at their convenience. "We are always looking for ways to deliver the best possible service to our clients," Dave says. "Tamarac provides a foundation for that vision."
Partnering with Tamarac has greatly improved the level of service YellowWood provides. YellowWood feels confident about relying on Tamarac because they continuously improve their products and listen to client feedback. "We've had a great partnership with Tamarac," Dave attests. "They listen to our needs and incorporate our product suggestions. Tamarac is by far the best vendor we've worked with. We count on Tamarac as a thought leader who has our back in providing first class client service."
Creating customer service that is unique in the eyes of the consumer is becoming increasingly difficult in today’s competitive environment. For successful enterprises, clients have to be the center of attention. That’s why forward-thinking companies such as Blue Chip Partners no longer solely focus on a strong foundation of customer service; they rely on delivering unparalleled customer service by continuously managing the customer experience.
Make no mistake about it, customer service is as important as ever, and delivering great customer service is one of the most visible methods for improving customer retention and driving more assets under management. But customer service is only a single component of the customer experience.
Customer service is generally limited to human interaction with the client: a phone call, an in-person meeting, or a personalized email. While human interaction is one of the most visible methods for improving client retention and increasing the rate of referrals, consumers are increasingly leveraging self-help tools via the Internet, such as web portals, frequently asked questions, and website content. In contrast, the customer experience is the sum of all touch points that starts with the first impression and extends throughout the entire customer life cycle.
For Blue Chip Partners, the customer experience for prospects and existing customers can begin on its newly enhanced website; people can find out about investment philosophies, learn about the team and its extensive qualifications, and sign in to a secure document vault to view important documents.
In most cases, the customer experience begins with a phone call. When an existing client contacts Blue Chip Partners by phone, he or she will speak directly to the advisor who is responsible for daily management of his or her portfolio. If the primary advisor is out of the office, the client can speak to a secondary advisor who is familiar with the portfolio and investment situation.
Blue Chip Partners aims to anticipate and address every imaginable question and need of the customer. The result is an experience that—to the customer—seems effortless. But this type of experience doesn’t happen automatically; it requires planning and the right technology. And, as we all know, it’s often difficult to make something look easy.
Making the right investments
To help create this seamless experience and improve company communication, Blue Chip Partners recognized the benefits of CRM software. With the right CRM, the company can benefit from improved client satisfaction, better marketing insights, and increased customer loyalty and advocacy. When it came to CRM software, no vendor could match the integration features and efficiency of Advisor CRM, which is a highly customized version of Microsoft Dynamics® CRM for investment advisors.
Before making the switch to Advisor CRM, Blue Chip Partners chose Junxure® as its CRM provider, but the company quickly realized the additional investment associated with a locally installed CRM. Managing a local CRM was increasing IT overhead because it required the staff at Blue Chip Partners to install and update the CRM and back up the data each night. As a true software as a service (SaaS) solution, Advisor CRM provided the scalability that Blue Chip Partners was looking for. Because Advisor CRM is a web-based application, there’s no hardware or software to install or maintain. All data is securely backed up at Tamarac’s SAS 70 II compliant data centers, and the CRM is available at any time from any device with an Internet connection.
"One thing that really attracted us to Advisor CRM was the fact that it’s a web-based offering," recalls Daniel Seder, Advisor at Blue Chip Partners. "We wanted a CRM that didn’t require us to channel our resources into buying hardware or maintaining software. Advisor CRM gives us the flexibility to focus our resources on the needs of the business."
The ability to group clients and prospects based on related information was a key consideration for Blue Chip Partners. For a more personalized service, the company groups its customers into households and then tracks activity based on the groups. "We household all of our customers," says Cynthia Steinberg, Office Manager at Blue Chip Partners. "We looked at a few competitors, but they didn’t provide the same level of household functionality that Advisor CRM does."
Another key consideration for Blue Chip Partners was the capability to centrally capture and track responses to marketing campaigns. Advisor CRM provides marketing functionality that is easy to use and engineered to fit the needs of investment advisors. The company can create on-the-fly campaigns with the Quick Campaign Wizard and distribute the campaigns and communications instantly.
The user adoption
The success of the CRM relied upon devoted user adoption of the solution. With the integration between Advisor CRM and Microsoft Outlook®, users at Blue Chip Partners quickly became productive with the new tool. The high level of comfort with Outlook helped to drive user adoption and success.
Integration with Outlook means users spend less time continually switching between several disparate applications, which improves productivity and user adoption. With Advisor CRM’s integration with Outlook, users can send email to anyone in the CRM, and the conversation can be tracked on a message-by-message basis. This ability to track conversations greatly elevates the customer experience because users can reference the notes in the CRM for more personalized service. The seamless integration between Microsoft Outlook and Advisor CRM also means users have personalized email marketing capabilities and streamlined mail merge functionality.
"Our previous solution had several usability issues that interfered with our productivity," Cynthia recalls. "For example, you couldn’t open multiple windows at once, and there were so many open source fields that it was really difficult to organize data. The user interface and integration with Outlook makes Advisor CRM easy to work with."
Unlocking the full potential
Since deploying the Tamarac solution, Blue Chip Partners has strengthened its marketing efforts, boosted productivity, and enhanced service delivery to clients. By leveraging automated workflows, the company has reduced its reliance on manual processes for many of its core business functions.
The efficiency of Blue Chip Partners has also improved as a result of implementing Advisor CRM. Advisor CRM stores information on every prospect meeting, phone call, and email, and tracks where the potential client is in the sales cycle. The staff is confident and more productive now that key information from Advisor Rebalancing can be seen from directly within the CRM. By having key portfolio information at their fingertips, employees are able to resolve customer questions, issues and requests quickly for a high-quality customer experience. Overall, implementing Advisor CRM has greatly improved the customer experience as a result of having a complete picture of all customer touch points.
Blue Chip Partners is continuously evolving and discovering new and efficient ways to improve the customer experience. The company feels that it has only begun to leverage the powerful automation features of Advisor CRM that will automate many of its manual processes. It is also looking to take advantage of the marketing features of Advisor CRM that will help transform customer touch points into intelligent marketing opportunities.
"Advisor CRM has had a tremendous impact on the customer experience, but we’re always looking for ways to build upon our successes," says Cynthia. "As we continue to refine the customer experience and adapt to meet the needs of the market, we’re confident that Tamarac will give us the tools we need to succeed."
WHM Capital Advisors Trade Spreadsheets for Instant Insights from Tamarac
No two businesses are the same. No financial advisor can afford to treat business clients in blindly similar ways. Each must be advised according to specific strategies geared to particular goals and objectives. Successful advisors take the time to get to know their clients' needs inside and out.
This seemingly simple concept turns out to be one of the hardest to implement in the field of wealth management. Who has the time?
WHM Capital Advisors, a Columbia, South Carolina, investment banking and wealth strategy firm has found a way to make time. Their client list consists of a range of small cap companies, a blend of legacy businesses and start-ups, all with different requirements.
They've reduced time wasted on inefficient back-end client support, while refocusing on diversification. A key ally in that effort has been Tamarac Advisor®.
A web-based portfolio monitoring and rebalancing solution, Advisor automates critical back-office functions such as; portfolio monitoring, rebalancing, cash management, tactical trading, tax-loss harvesting and trade order generation. The dramatic efficiencies gained translate to time found for business growth activities.
"We firmly believe that we would be doing our clients a disservice if stocks were all we did," says John Barnes, the firm's financial analysis director. "Besides equities, we deal in managed futures, commodities, natural resource plays, and foreign currencies." But diversification used to mean less time was available for strategy, because more time was devoted to bleary-eyed spreadsheet reviews.
"Literally, we were using Excel," recounts Barnes. "It was painstaking. We would shoot for monthly rebalancing, but we only managed to do it quarterly. With the amount of data entry needed for our models, rebalancing took a full week: data entry, double-checking the work, and arranging trades."
Then, at a 2007 industry conference in Chicago, Barnes stopped by the Tamarac booth. At first, he couldn't believe what he was seeing and hearing. "They were listing off everything Advisor can handle: stocks, bonds, mutual funds, ETFs, alternative investments. This was the technology I'd been dreaming about!"
Barnes asked representatives of Charles Schwab, WHM Capital's custodian, about Tamarac and their Advisor software, and got an emphatic green light. WHM Capital's clients didn't know it yet, but their investment lives were about to be transformed.
More eggs in more baskets
Part of WHM Capital's need for more robust technology was due to a widespread issue with small and family-owned businesses. When entrepreneurs start a business, they support it with everything they've got. Pretty soon, all their financial eggs are in one basket, and they may feel guilty about diversifying.
According to a recent nationwide survey of family business owners, conducted by Laird Norton Tyee, 93 percent of respondents across the country have little or no income and asset diversification outside of their business.
It's a story that WHM Capital knows only too well.
"We only work with business owners and their families," says Barnes. "Our practice is built around three things: analyzing the value of their business, planning for the transfer of that value to future generations, and designing investment strategies to hedge against risks."
In almost every case, clients turn to WHM Capital because, after having invested their lives building their company, owners suddenly realize the huge risk they're running. And, as start-up entrepreneurs evolve into CEOs of established companies, they face difficult decisions about everything from operational and expansion capital needs, to supplementing their retirement income.
One of the first tasks with a new client, explains Barnes, is to gauge their level of investment in their own company.
"We determine what the capital structure is, both what they take out of the business as salary and what they should expect as a shareholder," Barnes says. "Typically, they don't approach valuation from a shareholder's perspective. Shareholders have a basic equation for judging return: income plus capital appreciation. Owners tend to focus just on income."
Because legacy often is front of mind, Barnes says, "We talk with them about strategies for estate planning and taxes. We sit down and do income needs analysis with them. Generally, they're looking for 8-10% return per year, so we look for ways to generate that alpha."
While stressing the need to create value through capital appreciation, Barnes warns that family business owners often have a portfolio that runs heavily to investment in businesses they know and do business with. "If they're too heavy in their own sector," Barnes points out, "they're doubling down on their risk."
Tamarac's spotlight on alpha
Risk management is the primary concern of WHM Capital's clients, says Barnes. "Especially for business owners who have transitioned out of their enterprise, their risk tolerance has decreased markedly. They've given twenty, thirty years of their lives to risk. As investors they expect a return, but they demand risk management. So we craft the kind of portfolio that grows assets without undue exposure."
Barnes had been introduced to the concept of "opportunistic rebalancing"-a look-before-you-leap method of rebalancing that watches for alpha-boosting market noise. By building in tolerance limits to asset class bands, the need for rebalancing is reduced to times it's absolutely necessary to avoid portfolio drift-or to take advantage of swings.
That made sense to Barnes, but it was beyond the limits of his technology before he found Tamarac. He was looking at the massive staff time needed to track asset classes, check drift within bands, make calls on tolerance levels, and if needed, actually generate trade orders. That valuable time was needed to get smart about client needs.
Advisor, with its ability to quickly preview rebalancing's effect, changed the way he did business.
Getting up to speed with such powerful software, Barnes says, took "at least 60 days, practicing in the office, familiarizing myself with it. We're now 90 days into using it live. We have more advanced questions these days; we just get on the phone with them. Tamarac has been with us every step of the way."
He's already seeing the early benefits. "Tamarac has saved us the equivalent of a full-time employee" says Barnes.
A model of forward-thinking investment
Once the firm inputs a new portfolio's data into Advisor, they model virtually every aspect of a portfolio's performance before action is taken.
"With Tamarac we can model portfolios and experiment with different blends," adds Barnes. "We have a complex in-depth, multi-tiered model, and Tamarac lets us manage at all the various levels: stocks, families, classes. We're not in the market every day, but that's what we really like about Advisor-when we need to move, we already know where we're going."
That versatility is vital in a market that is going through rapid changes on a daily basis. In early 2008, the firm was using Tamarac to track the S&P's response to the subprime mortgage fall-out. Once heavily weighted in financials, the index was undergoing a reshuffling. Tamarac allowed WHM Capital to quickly adjust to the new bias in a seamless fashion.
"We've also been getting much better information about bonds from Tamarac," adds Barnes. "We have a model with bands set up, and as bonds have appreciated over the last few weeks, Advisor has notified us. We sell to get back to our position, and roll that cash back into the portfolio."
As the icing on the cake, the software also tells Barnes when it's better to wait on a trade. "You can adjust the tax sensitivity for trades that are suggested by the platform. It won't just trade automatically and that's significant," emphasizes Barnes. "Sometimes if we hold off 30 days on a trade, our client might end up paying at a 15% rate versus 35%. Tamarac lets us pull those levers, to see if we've got it right before we trade."
For WHM Capital Advisors, a key piece of the puzzle has fallen into place. Their diverse-as-possible investment philosophy, risk-wary clientele, and legacy-building all led to Tamarac Advisor.
The decision to support the firm's core strategy with technology paid off almost immediately in savings in staff time, but even more importantly, in the satisfaction of promises made and promises kept. You can hear it in John Barnes' voice as he talks about how WHM Capital, with Tamarac Advisor, is delivering just what its clients ask: "It's been phenomenal."
Steele Capital Management Sharpens their Client Focus with Tamarac Advisor
The secret to advisor success is finding the time to get to know the goals, dreams, and outcomes that each client desires—and then staying in touch with news on the progress being made.
Members of the Baby Boom generation love this kind of collaborative bond. As they edge closer to retirement, they are more focused on managing their wealth than any previous generation, and advisors are learning to be responsive to their hands-on approach. But an advisor's time, of course, is always at a premium.
Steele Capital Management, an independent, Iowa-based wealth management firm, has a large number of clients aged 40 to 60. With five investment advisors, the firm has built a solid business in the region by assuring their clients of timely, personal service, something Baby Boomers particularly appreciate and respect. To give their advisors the time to work and plan with their clients, Steele Capital has begun working with a dynamic, feature-rich rebalancing platform: Tamarac Advisor.
"For many years I looked for a rebalancing solution that could aid us in the management of our accounts, but never found anything sophisticated enough until Tamarac," said Kevin Timmerman, president of Steele Capital. "We have $750 million under management in individual and qualified retirement plans. We're also a Third Party Plan Administrator, and act as a turnkey asset management program for other financial advisers. What we needed was a system powerful enough to rebalance everything—individual accounts and families—at the same time."
Timmerman was impressed with Tamarac's ability to incorporate the full range of factors that impact an individual account while performing a mass rebalancing.
"A particular client may have invested in a fund that we wouldn't have picked, but we may need to maintain that position because of a tax penalty," Timmerman explained, "while the majority of our clients' investments should be directed toward our preferred funds. With Tamarac, that's automatic."
Steele Capital focuses on no-load mutual funds, individual bonds, and equities, but personal client care is where they prefer to invest advisors' time. Tamarac's modeling capability allows the firm's advisors to get perspectives on impacts to their clients' financial pictures, and then spend time discussing alternative strategies with clients.
For instance, several clients in their fifties have recently lost their parents, a life passage that many of today's Boomers are confronting. Each of these clients needed to add a substantial inheritance to their portfolio. But to make the decision about how best to do that, advisors needed to "look around corners" at tax effects and other factors, and then discuss all the possible outcomes with their clients.
That work used to be done by hand, an arduous task. Now Tamarac produces trade order scenarios that factor in taxes, fees, and risk. What used to take hours now takes minutes. That savings in time can then be used to work personally with a client determining the best moves to make.
"It's really a time-saving machine," said Timmerman. "With Tamarac Advisor, there are a variety of models to choose from: we can look at raising cash, screen for tax effects, or maintain margin positions. And it has been a revelation for rebalancing. Rebalancing has always been an issue for us because we believe it's a necessity to do regularly, but it's very time-consuming with traditional methods. Now I can rebalance all our clients' accounts in the same day."
At times, Tamarac Advisor's customized rebalancing pulls double duty. Timmerman explained: "I had a client who needed to withdraw $50,000 to help his parents pay off their mortgage. I told Tamarac Advisor to raise the cash in a way that restored his original asset allocation." The results display Tamarac's attention to every ramification of the trade order. "It recommended pulling only $2,000 from one fund because of fees, and $10,000 from a fund that was overweighted."
Timmerman clearly relishes the number of scenarios he can confront with Tamarac's aid. "Let's say a particular fund or investment falls out of favor—I can go into Tamarac Advisor and take it out of everyone's account, then go over a preview of what that action will entail. Tamarac puts all those decisions on a platter for me, and I just scan the spreadsheet. And let's say one client is a 100%-equity investor and another is a 50/50 investor—Advisor will show me what will happen for each of them. It's just the kind of robust application we needed."
While Tamarac's results are generated incredibly quickly, it's not genie-in-a-bottle magic. Advisors are in the driver's seat when it comes to the thousands of calculations that Tamarac performs. As Timmerman put it: "The program doesn't replace decision-making by our advisors, it makes recommendations based on our models and alerts us to factors like capital gains, short-term redemption fees, or transaction fees before we process the trade order."
From another perspective, the gains Tamarac represents in capacity and productivity have made definite impact on the firm's efficiency. "For my business, it's as essential as Morningstar and Advent," Timmerman said. "In fact, because of the performance benefit, I foresee Tamarac reducing our need to hire another portfolio manager."
The list of Tamarac's performance benefits, according to Timmerman, includes the Internet itself—"I really like the web-based platform for two reasons: it upgrades by itself and it follows me. I could be at a conference and rebalance right there."
Given the Steele Capital obsession with client care, it's not surprising that they expect superior customer service from Tamarac, too: "Most software companies are a pain, you know. They put you on hold for 45 minutes," said Timmerman. "Tamarac makes me feel like I'm their only client. They're phenomenal."
When choosing between the time advisors spend tweaking spreadsheets versus cultivating their relationships with clients, it helps to remember one thing: it's in sharing their dreams that clients commit to achieving them. Kevin Timmerman and his team, with the help of Tamarac, have found the high ground where long-term customer relationships rise from the foundation of meticulously managed accounts. Their success is proof that, in the financial sector, time saved means money earned, and more.
Minneapolis Portfolio Management Group Decides on Tamarac
The carrying capacity of any investment strategy automation software is measured by its ability to support specific needs and fulfill differing business objectives. For many registered investment advisors, Tamarac Advisor's breadth of utility makes it an outstanding purchase.
A fast, efficient Investment Strategy Management platform that allows investment advisors to integrate customized data for individual accounts or across a family of accounts, Tamarac also factors in tax efficiencies, client preferences, risk tolerance, and restrictions on legacy positions. The latest feature upgrade includes the ability to support margin positions (including separate margin and non-margin cash positions in the same account) and automate family account asset allocation and location—via three different scenarios.
But when the Minneapolis Portfolio Management Group* (MPMG) chose Tamarac Advisor, they took a narrower focus: Were Tamarac's trade order generation capabilities robust enough for their needs?
"The capabilities Tamarac Advisor has are immense—we knew we'd probably use less than 20% of its full potential," said Harrison Grodnick, MPMG principal and senior portfolio manager. "But that 20% was going to be critical to our business operations and to our success."
A Laser-like Focus on Value
"We're always trying to buy a dollar's worth for 50 cents," said Grodnick. "With our investment model, we operate more like a laser than a shotgun. We're looking for where the particular bargains are—in asset classes, in world markets, and especially in individual companies—because at a low enough valuation, excess market risks may already be minimized. We're poring over Price-to-Sales, Price-to-Cash Flow, Price-to-Book and Price-to-Future Earnings ratios. That's where our focus is, not on managing a complicated order process. Tamarac factors in all our preset parameters, gives us a trade order to review, and then it's go or no-go."
MPMG has over 1800 accounts, relying on a staff of seven. Its portfolio managers, who have more than 50-years of combined Wall Street experience, have an impressive track record. MPMG has made a positive difference in the lives of its clients through professional and effective portfolio management. The firm manages assets for high net-worth individuals and families, as well as corporations and institutions.
"We have a single product: an All-Cap Value composite," Grodnick explained. "We needed to find a platform that could generate complex trade orders quickly and efficiently. We're paid to find opportunities, and in this business, windows open fast and close faster. We needed technology that had the speed to keep up with us. We found it in Tamarac."
When new clients arrive at MPMG, there's an initial rebalancing of their portfolio, allocating their previous investments into the 20–25 companies that MPMG is investing in at any given time. After that, the MPMG portfolio moves as senior portfolio managers Phillip and Harrison Grodnick direct.
Since its 2004 founding as an independent entity, the firm has seen tremendous growth, moving from $190 million under management to more than $700 million. Grodnick expects to surpass $1 billion later this year.
"When we move to take a position, our whole portfolio moves," said Grodnick. "It's that simple. I have to have perfect confidence in my technology, because so much is riding on each trade. With Tamarac Advisor, I have that level of certainty."
Once one decision is made, Grodnick and his team are on to the next opportunity. With an account minimum of $500,000 per client, MPMG is expected to set a higher standard with ROI and client care. That fast-paced decision-making and front-end service is made possible by efficiencies on the back end, provided by Tamarac Advisor.
The Business Sense Behind the Buy
Before selecting Tamarac, MPMG conducted a two-year search for a software solution that supported their existing operations, could add to their efficiency, and, naturally, was a good value.
"We shopped around," said Grodnick. "Schwab Institutional recommended that we look into Tamarac. We did our due diligence, spoke with other customers, and talked with the management. We liked that they were a smaller, nimble company, like us, and could deliver a more hands-on, personal touch—again, like us."
Compared to their previous software platform, said Grodnick, Tamarac is "faster, easier, more user-friendly. We didn't have to change the way we did business to use Tamarac Advisor. During the set-up, they customized their system functionality to meet our needs."
Most importantly, Tamarac allows MPMG to spend more time on their portfolio. With Tamarac, they can focus on what to buy and sell, and when, rather than the process of buying or selling itself.
"It's frictionless, which I think is key," concluded Grodnick. "Look, if you've got software that's complicated, that slows you down. Over time, that time and effort erects a subconscious roadblock to running the numbers one more time, a different way. With Tamarac that customization is automated—when we want to take action, we move."
How Tamarac Advisor Earned a "Buy" Rating from Encompass Advisors
For Jon Randolph Green, 61, owner of Encompass Advisors, good values make for good business.
A Wall Street veteran with 40 years in the securities industry behind him, Green "retired" to the mountains of Brevard, N.C. Wanting to keep busy, he became a registered investment advisor in 1992 (another hat added to that of CPA, CFP and attorney). He managed $100 million in investments at a commission-based brokerage, but he decided commissions didn't suit him and hung out his own shingle.
Green's business is based on trust. His clients' portfolios are generally worth a minimum of $1 million, and average $2–$5 million. Green specializes in retirees, typically husband-and-wife couples between 60 and 70 years old, sometimes managing the investments of their grandparents or children, too.
Green appreciates the fact that he's dealing with life's savings. "My investment objective is a secure revenue stream," he explained, "but my goal is for my clients to live today with trust in the future."
Early Riser, Early Mover
Stable, streamlined business operations help support that trust. Working for larger companies, Green too often saw growth pulling infrastructure along after it. Having been through that process, he knew he didn't want to be creating an ad hoc infrastructure driven by client complaints. His new firm is paperless, using a centralized contact management system and Schwab Portfolio Center. Knowing that regular rebalancing of a
portfolio—to maintain the desired asset allocation for an investment strategy—reduces risk and improves returns, he began researching rebalancing platforms before he felt the pinch of time-management.
"It's nice when you can put the infrastructure in ahead of the game," said Green, who gets up at 5:00 a.m. to read and research before the office opens. "It's easier for me to put in a system like Tamarac while I have a smaller client-base."
Tamarac Advisor, a web-based, investment strategy management platform, allows an RIA to integrate customized data for individual accounts or across a family of accounts. The advisor sets the allocation model, and Tamarac factors in tax efficiencies, client preferences, risk tolerance, and restrictions on legacy positions. The advisor reviews and executes the trade order generated.
Green loved how responsive the system was to his preferences: "I set it up exactly how I wanted it to work. Now with Tamarac, we could quadruple our business and I doubt that I'd need to add another person."
Shopping for Product, Price & Service
First, Green became convinced it was too inefficient to rebalance using spreadsheets, and besides, he was concerned about accuracy. Schwab, he knew, had rebalancing software. "That was the first thing I tried, but I'm a CPA and I wanted more control, more customization. In researching, I read tons of stuff about Tamarac Advisor and iRebal, so that's who I approached."
What Green learned was decisive. "I just started talking to them, and listened to how they answered my questions. I'm not listening to the technical product specs, I've already looked that over—I'm listening to who they are, who I'm doing business with. Tamarac cared, they followed up, they responded. iRebal was just the opposite."
Tamarac Advisor's features—fee tracking, tax loss harvesting, restrictions for legacy positions, cash raising or investment—and price point helped win Green over. "Like Schwab, it's just what you need at the right price." And he had the level of control he was after: Green could define the asset allocation model and set the rules, just as he used to do with spreadsheets, but with the assistance of Tamarac's automated calculations. After the brief set-up, Green kept tabs to see if customer service was as good post-sale. Tamarac's staff delivered: "I was just so impressed with them in that set-up phase, I was sold."
"It's not sizzle. It really, really works."
Again, for Green, it comes back to trust. His idea of good service is not just a friendly phone conversation. As an RIA, he depends on Tamarac Advisor's speed and accuracy. "For instance, Schwab has a transaction fee that can be included or excluded as part of a trade. It works better if it's included. Now, that becomes an issue if the whole position is included in the trade. Tamarac's accuracy is such that we can trade up to the limit with transaction fees calculated in. I've been in crunches, it's 3:30 p.m., the market closes at 4:00 p.m., it could be fatal if a trade busted. It's such a critical tool."
Of Tamarac Advisor's web-based platform, Green said, "You would never even know that it's not desktop software, except when they say they'll fix something for you or they alert you to an upgrade. At one point I had glitches with my uploads of trades to Schwab. I called Schwab, they said it's us, we're working on it. But Tamarac temporarily modified their trade order system, working with Schwab, until Schwab could get their fix done."
Tamarac's latest feature upgrade includes the ability to support margin positions (including separate margin and non-margin cash positions in the same account) and family account reallocations—with three ways to reallocate the family to its model: complete reallocation, reallocation using the current allocation to meet the model's asset class goals, or reallocation based on account type preferences.
For Green, the last word is that Tamarac is simply the kind of company he prefers to do business with. "Sometimes you buy software, it works fine, it's a good product, but the company is miserable to deal with, you can't trust them. But not only is Tamarac Advisor an outstanding product, the Tamarac team is caring and competent from top to bottom."
Savant Capital Management Tackles Growth With Help from Tamarac
In 2003, Savant Capital Management, a wealth management firm based in Rockford, Illinois, faced what is commonly known as a fork in the road.
The 21-year-old, SEC-registered investment advisory firm was seeing strong growth that would only get stronger. Assets under management would reach $1 billion in early 2006, and one year later, $1.5 billion. Where once a typical, individual client might hold $250,000 in investments, that number would head north of $800,000.
Savant had successfully negotiated diverging paths before. A financial planning firm for its first six years, by 2001 Savant was firmly ensconced on lists of the nation's top wealth managers-offering investment management, financial planning, and family office services to individual clients, trust funds, retirement plans, non-profit organizations, and fiduciaries.
Their brand of wealth management-relying on systematic, disciplined passive, structured, and indexed investment strategies to prudently maximize wealth-raised a question that went to the heart of the firm's operations.
"Think of it this way," said Savant's Amy Barrett, a portfolio manager within the Investment Services Team and a financial advisor on the Advisory Team. "We're wealth managers. Our primary goal is to deliver the highest quality 'integrated' wealth management service. We work on a fee-only basis so that we're free to make the best choices for our clients. That includes decisions about what is a core function and what we can outsource to support client-centered work."
Specifically, the firm needed to decide whether to keep its portfolio management services in-house or outsource them. As passive investment specialists, it's not surprising that Savant weighed the associated in-house and outsourcing costs carefully.
"We considered Parametric and State Street as outsourcing options, but we found outsourcing assets was more expensive," noted Barrett. "We discovered there were also very few products where you could pay for the software and run it yourself. That's when we looked into Tamarac Advisor."
A Purchase that Pays Back
Created by Seattle-based Tamarac, Inc., Tamarac Advisor is a fast, web-based Investment Strategy Management Platform that automates portfolio rebalancing, cash management, and directed trading.
While Tamarac's cost structure first caught Savant's interest, the firm chose Tamarac for its robust capabilities. With Tamarac, investment advisors can integrate customized data for individual accounts or across a family of accounts. The software also factors in tax efficiencies, client preferences, risk tolerance, and restrictions on legacy positions.
As a web-based platform, new feature upgrades are continual-the latest includes the ability to automate margin positions, including separate margin and non-margin cash positions in the same account, and household reallocations-via three different scenarios.
Tamarac's scalability, automation, and customization were just what Savant needed. "One way we use Tamarac is to manage U.S. Large Cap and Large Value asset classes," Barrett explains. "From a marketing perspective, we wanted to tell potential clients that we absolutely can separately manage these asset classes." Thanks to Tamarac's ability to select and trade stocks that effectively mimic an index or asset class, while accounting for each individual client's preferences, Savant has the technology to meet the needs of their target clients.
When new clients come on board with concentrated stock positions, Savant has options on bringing these portfolios into the fold. "We had to be able to incorporate new clients into a model without telling them that they had to sell everything," said Barrett. "Tamarac Advisor allows us to keep legacy positions as long as necessary, and incrementally merge them into an investment model."
Tax management is a key feature. "Clients may come in with cash and need to do some tax loss harvesting and Tamarac does that very effectively," said Barrett. "There's no question more companies should do tax loss harvesting and separate accounts. The question is whether they will bring that capability in-house or outsource it. With Tamarac Advisor, we didn't have to compromise with a less hands-on approach."
A Firm Grasp on Value
A 24-year industry veteran and past member of the Chicago Board of Trade, Barrett's role at Savant Capital Management includes monitoring investment strategies and new product development. For Barrett, the key is broad, global diversification. Savant clients are not speculative or high-risk investors. They want to preserve their capital, grow assets, and avoid unwarranted risks.
Savant's solution is a disciplined buy-and-hold strategy.
"Our philosophy is that it's a zero sum game," said Barrett. "For every active manager that makes gains, there's one that loses. Then too, very few active managers add alpha consistently. Research shows that 70-80% of active managers fail to beat index returns; if you add in taxes, it's 85-90%. Those top managers are either hard to identify or not accepting new clients."
Savant's product lines lean toward passive indexing and ETFs. "I'd say 95% of our investments are in mutual funds, with 5% in our product, SISTEM." For SISTEM, Savant combines the U.S. Large Cap (S&P 500) and U.S. Large Cap Value (S&P 500 Pure Value) indices into a single blended index, creating a benchmark index that is three-quarters S&P 500 stocks and one-quarter S&P 500 Pure Value stocks.
Tamarac produces a portfolio of 100 to 200 stocks to track the performance of the blended index and allow for tax loss harvesting opportunities - furthering Tamarac's unique position as the most powerful rebalancing and trade order generation platform available.
Thanks to an intensive education in Savant's process, their clients know what they're signing up for and indications are that they're happy about it. This year, the firm added a fifth office (in Madison, Wisconsin) to their four Illinois-based offices.
Adding Another Dimension to Fund Insight
Thanks to Tamarac's unique access to Dimensional Fund Advisors fund activity, advisors can look through DFA funds, all the way through to the underlying securities, which helps to expose overlap and determine risk exposures.
Currently, Tamarac is the only rebalancing software that has the capability to review DFA funds. This functionality is not a stand-alone feature; Tamarac Advisor can look through to over twenty indexes from specific sector to broad market.
Savant appreciates the competitive edge such capability offers. The firm's AUM are split among a range of mutual funds; about 43% of Savant's assets are invested in DFA asset class funds, with much of the rest in Vanguard, the index fund specialists. "We bought into the DFA philosophy from the beginning," said Barrett, "and they offered very good funds in areas where they had no competition-for example, Vanguard doesn't have an international small-cap value fund."
Helping Clients Become Overachievers
Tamarac's clients agree that the software truly is "user-friendly." They also consistently rate Tamarac's client support as above and beyond. Barrett's response was no different. "Their help desk is really there for you," she said. "They are available on the phone whenever we need them. We're very happy with their support system."
Though comfortable with Tamarac, Barrett knows there is a lot more to learn about Tamarac's ever-expanding capabilities, and is ready to put those capabilities to good use for Savant's clients. An unwavering philosophy, productive strategy, and streamlined technology have combined to make the firm a repeat success story in industry news pages. A partner in that success has been Tamarac, an innovative software company that shares the firm's dedication to client satisfaction.
Balasa Dinverno & Foltz Trust Tamarac to Manage Tax Effects
For many investors, taxes arrive as either surprisingly large penalties or a recurring, annoying bite out of annual gains. But Mark Balasa, of Balasa Dinverno & Foltz LLC, argues that taxes are an effective tool in portfolio management. That is, as you long as you have the expertise and the technology to leverage tax effects.
"Tax management is our differentiator," said Balasa. The majority of the Illinois-based firm's $1.5 billion in assets under management are taxable-only 40% is made up of tax-deferred pension and Profit Sharing Accounts.
"With our core portfolios matched to indexes, our clients know their money is being invested most efficiently," explained Balasa. The firm's tax-managed core portfolios are primarily indexed to the S&P 500 or the Russell 3000. "Then with Tamarac Advisor, we create tax alpha."
Tax alpha is the value gained because of the different ways tax can be applied to a portfolio's earnings or losses, and it can be a powerful tool for those who use it well. According to the Journal of Wealth Management, long-term, a top-performing manager might reach an alpha of 1% on average over a given market benchmark. But that rare market genius can be matched by an index fund managed on an after-tax basis.
Balasa came by his expertise in tax harvesting through years of experience. "When we started the firm in the late 1980s, we began with an active management approach, picking actively managed mutual funds," he said. "But by the mid-'90s, we turned to passive management, a buy-and-hold philosophy, to avoid market blow-ups and downturns." Though successful, the firm was getting typecast as strictly a "mutual fund shop." Balasa needed a differentiator.
"We knew we had the expertise to take on more sophisticated accounts," continued Balasa, "but to start generating those kinds of referrals, we needed to market that kind of capability. That's when we came across Tamarac at a conference and they showed us a way to stand out."
A web-based, investment strategy management platform, Tamarac Advisor offers advisors pure number-crunching power-simultaneously rebalancing individual accounts or households, up to 1,000 accounts in about 10 minutes. For busy RIAs juggling SEC compliance regulations, client communications, and account management, Tamarac has the kind of speed, utility, and accuracy that enable advisors to spend more time with their most valuable asset - their clients. Tamarac also provides RIAs with optional scenarios based on factors such as risk, fees and tax effects.
It was that ability to automatically chart tax effects as part of Tamarac's modeling process that made Balasa's eyes light up when he was introduced to Tamarac in late 1999. When he learned the details of Tamarac Advisor's fully automated, tax-aware trade management, including tax loss harvesting, he knew he'd found a perfect match with Balasa Dinverno & Foltz's tax-managed core portfolios.
"A technological edge is critical for a small business," said Balasa. "When we started, we signed up with Advent, we moved through different CRM systems, we had trading software developed for us. Then we found Tamarac. Most investment advisors know Tamarac simply as a rebalancing engine, but we were more interested in its portfolio-modeling capabilities and getting good use out of its tax-harvesting features."
Today, Balasa employs 26, of whom 12 are professionals: attorneys, CPAs, CFP®s, and MBAs, and offers comprehensive financial planning, for retirement, taxes, estate, and philanthropic and family gifts. They are fee-only advisers; account minimum is $1 million (or a $10,000 annual fee). Their team has sat on advisory panels for Morningstar, The Alpha Group, The Financial Advisory Board of TIAA-CREF Institute, The Charles Schwab Institutional Advisory Board, and the FPA's Investment Committee. Both the Bloomberg and Mutual Funds magazines have listed the firm among the nation's top money managers.
Commented Balasa, "Tamarac Advisor has been a very useful and important tool in how we've grown our business." About 25% of the firm's taxable accounts are managed via Tamarac; they are also the most significant accounts. Tamarac is Balasa's tool of choice "because it streamlines what we need to do. Within those asset classes, it's difficult to out-perform the market-our concern is making sure we're accurately tracking whichever index is the model. With its speed and accuracy in matching indexes, Tamarac reduces our risk."
Where talk ends and results begin
Balasa Dinverno & Foltz LLC promises clients that their globally diversified portfolios are extremely tax-efficient, thanks to cutting edge financial service and wealth management technology. For proof, clients can review their investment performance online, updated every Friday.
"Tamarac Advisor is particularly valuable for us," said Balasa, "because you're talking about gaining efficiencies that-without the right technology and infrastructure-would devour your manpower. And while it's true that tax effects are not as overlooked as they were in the late '90s, many firms just don't have the bandwidth. We were just referred one account that had had nothing done for it on a tax-management basis over the past two years."
Taking tax management positions can require strategic endurance, too. Balasa gave an interesting example: "We had a gentleman come in about four years ago with a substantial amount of Boeing stock, which has a very low basis. We wanted to diversify his holdings, but minimize the tax costs resulting from the gains. Over four years, we used Tamarac to find and harvest tax losses, sell that amount of Boeing, and reinvest in his portfolio. That entire time, his portfolio has been tax-neutral."
Market swings tend not to ruffle indexed funds' feathers. But in the case of extreme market volatility, Balasa can change weightings within Tamarac while keeping the basic index model match. Tamarac's mass customization capability allows him to make those kinds of adjustments across portfolios while retaining personalized portfolio behavior.
"Tamarac just gets better and better over time," reported Balasa. (Tamarac Advisor is a web-based solution, and upgrading is continuous.) For him, Tamarac is about spreading peace of mind, one tax-efficient trade at a time. Clients at Balasa Dinverno & Foltz LLC expect no less.