Reducing Fees and Improving Tax Efficiency

Service: Investment Management
Client Type: Individual Investor
Former Service Organization: Do-It-Yourself with Separate Account Managers

This client owned a number of individual stocks and, on his own, hired a number of individual money managers. In our analysis, we discovered that the one manager had more than 300% turnover in a taxable portfolio. The after-tax returns, in the late 1990’s, were significantly impacted by this strategy. Further, we found that some of the managers owned many of the same stocks (significant overlap).

Initially, we offered to simply monitor the managers and individual investments for this client for a small fee. This allowed us to gather information on how the managers were performing and carrying out their individual mandates – the client was not tracking performance and activity on their own.

While some managers were retained, many of the managers were replaced over time. The manager with high turnover was replaced due to after-tax performance over time being unacceptable.

Eventually, we served to manage and oversee all of the investments for this client and their family. We proved ourselves by reducing fees, improving performance, improving tax-efficiency, and proving our complete independence and “blank canvas” mentality.