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Thursday, Jun 8, 2023

Money Managers Are Multitasking for Clients

LIST: Job has become much more than investment advice as Gen X makes it demands.

The volatile investment market of 2022 has pushed money management professionals to compete by providing more holistic advice for their clients.

That’s the opinion of Jeff Sarti, chief executive of Morton Wealth, a Calabasas financial management firm.

In the past, wealth management firms provided investment advice and only occasionally gave financial planning advice. Now, a management firm provides not only investment advice but also tax advice, insurance information and estate planning, Sarti said.

That’s because customers are becoming more sophisticated, and in the case of Gen X and millennials, they value their time more and want a one-stop shop for their finances, he added.

“It is putting more pressure on the money management industry to provide that one-stop shop solution where a client can come and meet with their advisor and not only get investment advice but in addition partner with them on other aspects of their financial life, including such things as tax, estate and insurance, etc.,” Sarti explained.

Morton Wealth landed at the No. 3 spot on the Business Journal’s Money Management List as ranked by assets managed as of Dec. 31. Last year, Morton managed $2.2 billion in assets. 

Morton has an estate planning attorney on its staff of 54 employees. So when a client comes in to meet with an advisor, this expert on trusts, wills and powers of attorney can sit in and answer any question the client has, Sarti said. 

The firm also has a strong partnership with area accountants so that the “right hand knows what the left had is doing,” he added. 

The financial advisor will work with these other third-party providers to keep potential conflicting advice at a minimum. “That is what we are trying to avoid,” Sarti said.

Upward climb

Randall Sanada, chief executive of Alliance Advisory& Securities Inc., in Westlake Village, said that the state of the industry is simply the status quo.

Assets under management continue to climb and with the volatility in the stock market, there is a greater recognition of the need for wealth management and investment advisory services, he said. 

“This is when good firms have a significant increase in new clients as people reconsider their investment strategies, said Sanada.

Alliance Advisory ranked No. 18 spot on the list with $357 million in assets under management last year.

Alliance has seen an increase in new clients this year, Sanada said. 

Oftentimes people find themselves stressed about the stock market because they have an over-allocation in stocks rather than a disciplined balanced approach, which prepares them for a time like the current market, he added. 

“Now they find themselves dissatisfied with their current money manager and are looking for someone with a more disciplined approach,” Sanada said. 

The markets have certainly caused plenty of stress. 

Through June 13, when the Nasdaq closed at 10,809, the market had decreased by 23 percent over the previous 52 weeks. For the Dow Jones, it was no different with that market losing about 11 percent of its value in the 52-week period ending June 13 when it closed at 30,516. 

And the S&P 500 lost nearly 12 percent of its value in the 52-week period, with a close of 3,749.

“This set the index more than 20% below its recent record high from January, meaning it had officially fallen into a bear market,” according to a Yahoo Finance report on June 13. 

What money managers and wealth managers need to do is rethink their discipline around portfolio management and “really look for asset classes outside of stocks and bonds that will protect clients against these macro risk we are now seeing,” Sarti said.

He recommends illiquid investments, or private investments such as real estate, or lending to companies based on their hard assets, such as manufacturing equipment, a truck fleet or a royalty stream, he added. 

“Our industry tends to be biased against illiquidity and I think that’s not the right approach and enhances the risks with client portfolios as a result,” Sarti said. 

Real estate is a good example of an illiquid investment, Sanada added. A client cannot just sell a piece of real estate because he or she is getting ready to spend some money on vacation next week.

“A good investment portfolio will have not just stocks and bonds and cash but also some real estate to help protect the portfolio from substantial fluctuations especially in times like this,” Sanada said. 

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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