There are internally developed 'model' portfolios as well as access to outside leading portfolio strategists such as Frank Russell and S&P. Through its partnership with CRA Rogers Casey, USF offers research on managers, funds and other investment vehicles, as well as economic and market commentaries and training to keep advisors on the leading edge.

Thrown into the mix are account administration, portfolio accounting, model rebalancing, performance reporting and billing calculations to assist advisors who need back-office support, as well as help with regulatory and compliance issues.

The firm's principals have taken a cue from the way the separate accounts industry was formed in the late '70s and early '80s. In that era, innovative thinkers such as pioneers Jim Lockwood and John Ellis offered institutional managers (minimums too high for most retail investors) a way to capture conglomerate retail assets without taking on high-maintenance accounts. They made a deal with the managers, offering to manage the retail relationships for a fee and take over administration of the accounts in return for lower minimums from the managers.

USF has built a similar model with hedge fund managers. With their model, advisors can offer hedge funds to those clients who normally would not meet the minimum account requirements for certain well known and successful hedge fund managers. US Fiduciary screened managers to find the best, most consistent performers in the marketplace, and created a model. "We approached a number of the most sophisticated hedge fund-of-fund managers, with long track records and industry credibility," says Weissbluth, another divisional president and former executive at CRA Rogers Casey, "and said, 'Look, you don't want to deal with our average $250,000 client-you may even be unhappy with your own $2 million client. You'd probably like to have everyone at $5 million, right? Why don't you sell us access to one slot in your fund and we'll take care of all the legal, compliance, auditing and the very time-consuming client-service activities. We'll build a fund and hire you as a subadvisor. You'll then be able to consolidate all of your smaller investors, and we'll be able to take our fund out through our platform to advisors wanting to invest in smaller increments.'"

The fund-of-funds managers jumped at the opportunity to gather assets and outsource client service and regulatory responsibilities for investors with less than $5 million to invest. USF assumes client service, sales, compliance, legal and audit up to its level of compliance, and the hedge fund manager has a new institutional-level client-USF-who is low maintenance.

"It's an extremely compelling business proposition for some of these fund of funds managers. We're not competing with them, we have credibility going in and it makes sense economically," explains Weissbluth. As with the advent of SMAs, fees with hedge funds of funds managers have been negotiated down. Instead of the typical 1% and 15% of profits (a total of anywhere from 250 to 500 basis points, or bps), the fee is negotiated downward allowing the manager to layer on additional fees as a platform fee. The advisor can then layer his or her advisory fee, but the total fee to the client is still significantly below market due to both the removal of the performance fees and a reduction in the management fees at the fund-of-fund level. We took a fresh look at conditions in the marketplace, to see what is important to high-net-worth brokers and advisors," adds Weissbluth.

They conducted the analysis with  "a clean slate" and found that money, while important, was not the Number One or even the Number Two driving factor with high-level advisors when considering a move to another firm. "Having control over their own destiny, their clients and their work environment were themes high-end brokers and advisors found very attractive," he says. The second revelation was a high degree of interest in alternatives, spurring the unique hedge fund model described above.

The USF offering eliminates the filter imposed on manager access by the wirehouses, and allows advisors to continue to receive their stream of trailing income when they make the move to independence. "There is a desire on the part of high-level advisors for an environment that is the antithesis of a major wirehouse, but consistent with being independent. However, many do not have the skill set to simply walk out and start their own businesses," Weissbluth continues.

Technology
The NFS Streetscape platform allows stock, mutual fund and open orders to be entered from any Internet connection. Real-time quotes, research, real-time news updates and market data are available to clients on demand, along with monthly statements and 1099s with reporting features. Clients have personalized access from their PCs, handhelds or phones.
Account activity can be viewed as far back as inception. Advisors can create their own customized brand. Says MacKillop of the NFS platform, "As far as the platform goes, any advisor who clears through them will have access to those services within the offerings. We emphasize it, however, because brokers who are contemplating a move from a wirehouse will want to make sure that the offering is significant and they will be receiving everything to which they are already accustomed."

The Advisors

It's that flexibility that attracts the quality advisors USF wants. The "right" advisors for USF are willing to step up to the plate and admit, "Yes, I am a fiduciary," according to Graubart. "The irony is that every broker in this industry, every financial advisor, has a fiduciary duty," he explains. "It's all about accountability and core values." Advisors are viewed as partners in the firm and are encouraged to leverage the firm's resources as if they were their own.

Late last year, the firm attracted its newest senior managing director, Curtis Lyman Jr., to the South Florida region by opening an office in Palm Beach, Fla. Lyman, a 13-year veteran serving a high-net-worth practice, says,  "I was particularly attracted to the boutique culture of US Fiduciary," he adds. "Unlike the large national banks and brokerage firms trying to serve many markets and sell their products, US Fiduciary is focused on advisors like me who are interested in wealth management, not in selling products."