The Road To Success
Referrals have driven growth. "New clients have always come to us from existing clients or their advisor. We want to make our clients not just satisfied, but so enthusiastic about their relationship with Federal Street that they will tell their friends," LaPann says. Since the firm doesn't prepare taxes or draft documents, accountants and estate attorneys are happy to refer clients who need help with investments and family-office services.

"Probably the closest set of true competitors-our peers-are the individual consultants who work with high-net-worth clients on a fee-only basis and don't sell products. That's a really small number," LaPann says.

According to Murtie, the client-turned-employee, "At the foundation, when we left our previous investment consultant and hired Federal Street, it wasn't just about investment performance. It was really the relationship. That's why I was so impressed with Federal Street and wanted to come work here. As a client, you feel like you are their most important relationship."

Federal Street's approach works in critical ways, starting with how the work is organized.

Each client has a designated firm principal who orchestrates, coordinates and delivers the advice. As LaPann describes it, "The principals work for the clients-they actually take client calls-and everybody else here supports the principals. We've set ourselves up so that we can spend most of our time working on client matters-not traveling, not sitting in internal committee meetings, not writing memos to the boss."

The model has lured seasoned advisors with large-firm experience to the boutique. "If our principals were still at the large institutions they came from, they would be supervising the person delivering the advice, who in turn is often a relationship manager with a great golf game who belongs to the client's country club," LaPann says. "We have attracted top professionals who want to get away from the big firms in order to work directly with clients."

Having the right people doing the right things is one way Federal Street exalts the client. A second is by listening closely. The delicate process of uncovering client needs begins with touchy-feely conversations about childhood experiences and the like. The firm then ponies up resources to satisfy those desires. The idea is to produce satisfied customers happy to do the firm's marketing for it.

Take socially responsible investing (or "mission-related investing" as it is known in the foundation world). It's popular these days, but Federal Street has been at it since the early 1990s, when LaPann recognized that clients wanted to align their investments with their ethical beliefs. Their yen to make their contributions more effective also made Federal Street an early entrant in the now-vogue field of "high-impact philanthropy," where the objective is to assess the results of charitable actions.
As Hustvedt explains, "You're not just giving and then moving on, but also considering whether the gift is going to make a difference and how you will define that success." The idea is to encourage clients to look under the hood before giving. As Hustvedt told one client who wanted to fund micro-finance institutions, "There are some great micro-finance organizations that you can give to, and some not-so-great ones."

To Serve Foundations
One novel staff position born of client desire is the director of foundation services, created in 2007 when Murtie was promoted into it. "Our foundation client base was growing and consistently asking for services beyond investment advice," she says. "We decided that to really offer those services correctly we needed a full-time person doing things consistently across all the foundation clients," rather than continue to have each principal handle his or her own clients' requests.

Murtie does much in this capacity. She hunts for articles to share with clients and looks for conferences they might find interesting. She also stages seminars, such as her half-day program on basic investments for foundation boards, staff and family members. "I developed this training program because I knew what it was like to work at a foundation and not understand investing or how it applies to the endowment," she says. "That was one of the first things I did when I started this role."