Serving clients from the world of venture capital poses special challenges for planners. Much like entrepreneurs, venture capital general partners bring risky and highly concentrated investments that cry out for diversification.
In adding its sixth advisor team this year, financial services firm HighTower brought on a pair of advisors from UBS with an expertise in this practice area. David Molnar and Drew Nordlicht, of the Molnar/Nordlicht Group, left the wirehouse world on Friday to join HighTower. Based in San Diego, the planners started their business while at Smith Barney serving general partners of local venture capital firms in the technology and health care industries.
“They are coming out of tremendous risk associated with their ventures [and] we’re in a position where we can help them build” balanced portfolios,” Nordlicht explains. “We are building formal financial plans with heavy doses of tax-efficient fixed income and income sources with reasonable predictability.”
Molnar/Nordlicht manages $330 million for a client base that also includes entrepreneurs, corporate executives and high-net-worth families.
The quandary of risky concentration is one that is also shared by corporate executives who own large amounts of their company’s public stocks.
“What it comes down to is helping the [corporate clients] take a concentrated position and [diversify] it in a way that is friendly to shareholder and conforms to securities laws … and realize some of the value that they’ve worked for years and years to build,” Molnar explains.
Molnar says that San Diego is the country’s third-largest hub for venture capitalists behind Silicon Valley and Boston, and ahead of New York and Texas. While there are many planning firms nationwide that specialize in a venture capital client base, he thinks they are only one of a few in San Diego.
After surveying options among other financial services firm, Molnar and Nordlicht decided that HighTower offered the best services to help them go independent.
"Over the last few years, we've studied the changing landscape of our industry,” Molnar says. “We came to the conclusion that HighTower is the only firm that is positioned to meet our needs and our clients' needs - both now and in the future.”
HighTower is a dually registered, multi-custodial firm based in Chicago.