The outbreak has prompted a few changes. For example, Smith has implemented weekly communications from the firm’s senior management discussing achievements and happenings so that information keeps flowing while Tiedemann’s offices are closed.
Growth, Well-Timed
Some of the opportunistic growth Tiedemann has engaged in since its inception helped prepare it for the crisis. Over the first 16 years of its history, the firm grew organically by recruiting, training and grooming younger talent and garnering referrals from clients and a growing network of centers of influence. That work has continue during the Covid-19 crisis.
“We’re still active in meeting new prospects and continuing discussion with existing prospects,” said Smith. “A lot of movement is still happening. Even with the shutdowns, there’s money in motion, surprisingly.”
When it comes to inorganic growth, Tiedemann has proceeded cautiously. In 2016, it merged with Presidio Capital Advisors. A year later it merged with Threshold Group, which brought impact investing expertise and female leadership to Tiedemann. Last year, Tiedemann opened a new Portland, Ore., office with two advisors from its Seattle location after opening its Aspen, Colo. office in 2018.
Tiedemann says he looks for deals with strong alignment of interests, a lot of equity involved in the transaction and a long-term orientation. “We don’t want to just pay people to retire,” he said.
Also in 2019, Tiedemann Constatia was created as a partnership between Tiedemann Advisors and Zurich-based Constantia Partners AG. Tiedemann believes that a European footprint can help the firm capture the growing number of international assets moving into the U.S. As Switzerland reformed its financial laws to create more transparency, the Delaware-domiciled Tiedemann Trust Company’s offerings have become more attractive to Europeans, he said. The firm’s growing focus on impact investing also creates a synergy with an extant demand from Europe.
Responding To The Opportunities
Moving into the crisis, Tiedemann had already positioned client portfolios more conservatively, said Tiedemann, but market movement has allowed the firm to be more opportunistic when managing client money. As equity valuations declined in the U.S. relative to the rest of the world in February and March, client portfolios were rotated into U.S. businesses with strong balance sheets.
Tiedemann said he’s taking advantage of the likelihood that businesses who are able to survive the outbreak will emerge with larger market share. He said he's also looking for similar opportunities within credit markets to capture “the largest, most robust stimulus environment we’ve ever seen.”
Another area of opportunity resides within real estate, said Tiedemann.
“For years private real estate was less expensive than public real estate,” said Tiedemann. “The REITs were sold off, though, and like any other entity that had some leverage, they were sold off heavily. In some cases we thought that was well overdone, particularly certain REITs along the lines of businesses that have cell towers or other technological applications. The entire REIT universe was hit together, and the discount for private REITs inverted, so we took advantage of that.”
One of Tiedemann’s strategic partnerships has proved extremely timely. Earlier this year, cash management specialist StoneCastle Cash Management partnered with Tieddemann to offer FICA Impact, a strategy that allocates cash to community banks, which can then deploy the funds as loans and community reinvestment programs. Community banks are expected to play a key role in the economic recovery to come.