Advice from the top – obtaining services of institutional money managers

Advice from the top – obtaining services of institutional money managers – Brief Article

Carolyn M. Brown

Allison Street Advisors help small enterprises tap talents of black asset managers

Until recently, only a select few–institutions and individuals who met a $2-$5 million in assets threshold–had access to Wall Street’s top performing African American money managers. But under a new program offered by Allison Street Advisors, small businesses and nonprofits with $200,000-$2 million in assets can now access the services of these institutional money managers.

ASA is a joint venture between GRW Capital Inc., a black-owned full-service broker-dealer in Washington, D.C., and Brinker Capital, an investment consulting firm based in Radnor, Pennsylvania. ASA (800-556-9151) is wholesaling the fee-based investment program through affiliate brokers and financial planners. ASA is targeting African American companies with retirement plans, endowments, foundations or public sector funds as well as high net worth individuals.

Currently, there are six African American money managers in the program: Randall R. Eley of the Edgar Lomax Co. in Springfield, Virginia; Michelle Clayman of New Amsterdam Partners in New York; Peggy Woodford Forbes of Woodford Gayed Management Inc. in New York; Mark Lay and Steven Sanders of MDL Capital Management Inc. in Pittsburgh; and John Rogers Jr. of Ariel Capital Management in Chicago.

Generally speaking, it’s only through mutual funds that retail investors have access to black money managers such as Rogers and Eley. “If you haven’t put together a mutual fund, then you aren’t available to clients on the lower end of the market,” says Woodford Forbes, whose eight-year-old firm has more than $600 million assets under management. “[ASA’s program] is a good opportunity for us to expand our market and capabilities.”

“In this unstable market environment, investors are searching for sound advice. How can I protect my assets? Where can I get maximum return with minimum risk?” says ASA President Lenda Washington. “Studies show that income levels among African Americans are growing steadily. And when investing, they are more likely to turn to companies that are diverse,” adds Washington, founder of GRW Capital.

“ASA’s program will be attractive to a large influx of business owners with increasing assets,” says Washington.

“These minority firms are looking to invest their money with minority asset managers.” The program also is appropriate, she adds, “for those people who have been downsized or are transitioning out of jobs where they now have lump-sum distributions.”

Individual clients work with their personal financial advisors to determine their short- and long-term investment goals. ASA then recommends the allocation of the client’s dollars, which is done by mixing asset classes (e.g., stocks and bonds, large stocks and small stocks).

“The key benefit of a program like ASA,” says Donna Gordon, national marketing director of Brinker Capital, “is that the individual benefits from broad exposure to a pool of managers and their different portfolio styles.”

For instance, MDL specializes in fixed income. Ariel invests in small companies that are undervalued. Amsterdam Partners focuses on building mid-cap and large-cap portfolios. Woodford Gayed invests in companies with above average revenue growth. And Edgar Lomax is a value investor.

In the typical asset manager relationship, the cost of the services vary and often are priced separately. With ASA’s fee-based program, advisory, brokerage and custodial costs are bundled into one fee based on the value of assets under management rather than commissions.

“This is important because a client shouldn’t have to feel like he or she has to place a trade to get investment advice,” says Gordon. “Many brokers may not be too interested in talking to a client about retirement or tax issues.”

ASA’s fees depend on the account size and asset mix, ranging from an annual rate of 0.5% to 2.5% of the net asset value. In comparison, transactions at a full service broker could cost as much as 3% per trade. The average mutual fund can run from 1%-2% in management fees plus a sales charge of 4%.

Moreover, investors get to “have it their way” in that ASA helps them customize their portfolios. “Should they decide they don’t want to invest in certain companies or industries [e.g., tobacco stocks], then we will adjust their portfolios accordingly,” says Gordon. “So, the client has a say in how his or her money is invested.”

COPYRIGHT 1999 Earl G. Graves Publishing Co., Inc.

COPYRIGHT 2000 Gale Group