Call it a generation-skipping succession plan.
When 62-year old industry veteran John LaPann decided it was time to hand over the reins of Federal Street Advisors, the $4 billion Boston RIA and family office he founded 22 years ago, observers may have reasonably concluded his successor would emerge from the ranks of firm veterans now in their 50s.
Instead, Federal Streets new president and chief investment officer is Kristin Fafard, the 46-year old former director of research -- and Jennifer Christian Murtie, 38, the former director of client services, is taking over as the new chief operating officer. LaPann will remain actively involved with the firm as chairman, focusing on spending more time working directly with clients, he said.
The appointments were made with the full backing of the fiftysomethings, LaPann says. Everyone was part of the process he said. We wanted leaders who would be strategic, fearless, diplomatic and well-regarded, and thats why the fiftysomethings stepped aside. They universally felt that Kristin and Jennifer were who they wanted to lead the firm.
As Daniel Gross, a 56-year-old principal and shareholder of the firm put it, as the process went along, it became increasingly clear that there was energy and dynamism in Kristin and Jennifer that was inspiring the rest of us. In their previous roles, Kristin and Jennifer had both proven their leadership and very much earned their stripes in our eyes, so the decision became an easy one.
Whats more, LaPann added, by opening up Fafard and Murtie's former roles, the move allowed other younger advisors in the firm to expand their roles and grow professionally. Federal Street is also interviewing to add a lead advisor to its staff of 28 client-facing advisors.
Industry observers applauded the strategy.
I believe John has wanted the firm to remain independent and I don't believe he is planning on retiring at any time soon, so the appointments were smart moves on his part, said Steve Prostano, the former chief executive of Boston-based Silver Bridge Advisors, which competes directly with Federal Street.
Balancing the firms growth with cultural issues such as teamwork and accountability will be her biggest challenge as president, said Fafard, a five-year firm employee who previously headed the investment research group for MassMutuals retirement services division.
We want to manage our growth carefully, Fafard said. Were particular about our investment choices for clients, and the larger you get, the less particular you can be.
FIXED FEES, SOCIALLY RESPONSIBLE INVESTING
Federal Street, whose average client size is approximately $50 million, has long been considered a model independent advisory firm (and a takeover target), distinguished by both its reputation as an innovator in socially responsible investing and its fixed-fee pricing.
We negotiate a dollar amount with clients based on the size of the asset pool, complexity and service requirements, LaPann explained. We may lose a little when the market goes up, but were protected on the downside.
Social investing has been particularly attractive to second- and third-generation clients, Fafard said. Theyre more interested in sustainable investing and taking their philanthropic interests into their investment portfolio.
Federal Street has developed a reputation as a leading player in the Boston marketplace, noted one-time rival Prostano, who also cited the firms outstanding investment platform and investment consulting capability.
Nationally, Federal Street is in a class of about a half-dozen firms in the country in terms of size, client experience and business efficacy, according to Jamie McLaughlin, a Darien, Conn.-based industry consultant who works with high- and ultra high-net-worth wealth management firms.