For a startup firm, attracting $150 million in assets under management within nine months is impressive. The entire story, though, goes back more than a decade.
"They had a lot of offices all around New Jersey," recalled Jim Ferrare, an investment advisor and managing principal at PWM Advisory Group, based in Red Bank, N.J. "We kept running into them, and we began working with them in the late 1990s."
"They" is an accounting firm, WithumSmith+Brown, which is a leader in the state and among the largest 35 in the U.S. "We" is
Pinnacle Associates, a $4 billion+ (AUM) advisory firm, where Ferrare is an executive vice president. The two firms formalized their long-standing relationship last December, forming PWM Advisory Group.
"At PWM, our clients so far have predominantly come from the accounting firm," Ferrare told Financial Planning. "The advisors at PWM are dual employees, of Pinnacle and PWM. They can provide integrated wealth management services."
Recent PWM clients include a woman whose husband had just died, leaving assets in a life insurance trust, and a man who had just sold a business. "We can help such people with budgeting, cash flow, and estate planning," Ferrare said, "in addition to portfolio construction."
According to Ferrare, clients who come to PWM from the accounting firm are comfortable with PWM's investment approach. "We aim for singles and doubles rather than home runs," he said. Results might lag in a great year for investments but losses might be minimized or even avoided in a down year.
"Our approach is to be low-cost and tax efficient," Ferrare said. "We prefer individual equities, fixed income securities, and ETFs to separately managed accounts and hedge funds."
The PWM approach also includes an emphasis on keeping current in technology, including the use of social media. "That's one of my biggest challenges as chief compliance officer at PWM," said Carmine D'Avino, an investment advisor and principal at the firm who also is a vice president and portfolio manager at Pinnacle Associates. "This area is new, so we want to be careful and do everything properly. Clients appreciate such extra touches, we've found."
One reason for emphasizing social media is to build up PWM's client base among younger people, including children of existing clients. "They expect the ability to communicate this way," D'Avino said.
"We usually have a $2 million minimum, in investable assets," Ferrare said, "but we are willing to take clients with smaller portfolios, if there is a good reason. That includes working with clients' children." Ferrare added that PWM is exploring other ways to broaden its client base, seeking newcomers who'll be attracted by the mix of accounting and investment expertise.