Controlled Growth
At Accredited Investors in Minneapolis, the strategy for growth is kept simple. It starts with providing clients with a comprehensive array of wealth management services and sticking to asset allocation in good times and bad.
But it also depends on being prudent when it comes to recruitment, says founding principal Ross Levin. "Our objective is not recruitment at any price," Levin says. "We want the right clients, at the right speed."
So far, Levin and his partners, Will Heupel and Kathy Longo, are pleased with the pace they've set for themselves. Over the past five years, assets under management have gone from $100 million to $240 million, and in 2001 alone the firm's gross revenues were up 20%.
Much of the gains have come as a result of client recruitment and existing clients adding new dollars to their portfolios or utilizing one of the firm's fee-only wealth management services, which include tax, insurance and estate planning.
It is those services, in fact, that have really fueled the growth, as the firm has made an effort to emphasize the planning side of the business over asset management. Of the firm's 225 clients, only 45 utilize just the firm's asset management services. The firm, in fact, tries to avoid clients who are interested only in asset management, Levin says.
The firm is also expanding its wealth management services. In the area of mortgage refinancing, for example, the firm worked out a deal with a mortgage company that will reap clients a half-percent discount. Another deal with a local bank provides clients with a guaranteed 3% money market rate, and accounts insured up to $100,000. "Our clients are coming to us, I think, because they know that by working through us, their lives will be better," he says.
As for asset management, the firm has benefited from sticking with asset allocation even through the booming 1990s, Levin says. Average client portfolios, he says, were up 2% in 2000 and flat in 2001, he adds.
"Our most difficult year was '98, when the markets were going straight up and international and small-cap value dragged returns," he says. "In that environment, it was harder to justify asset allocation."
The Humpty-Dumpty Factor