Of all the virtues that clients look for in their independent advisors, continuity might be the most critical. It makes sense: How can a high-net-worth family trust a firm with its money if the principals are not clear about who they are and why they exist?
Modera Wealth Management, a recently enlarged independent wealth management firm, is a familiar name to some high-net-worth families in New Jersey, one of the 11 wealthiest states in the U.S. Since Jan. 1, it started to be a known name to rich families in the Boston area, too, after the firm merged with the former Back Bay Financial Group.
The deal was a merger of equals, but the principals decided that the Back Bay brand had to give way to a more regional name, Robert D. Seifert, one of Modera’s five principals, said in a telephone interview. Plus, it was a good idea to retain post-merger continuity with at least half of the new firm’s client base.
But what is behind the name Modera, anyway? Aside from their distinct accents, what did the Boston and New Jersey contingents find so appealing about each other that they went through with this deal? The combined client base is made up of close to 600 entities, mostly individuals and wealthy families.
Well, first there is the core-passive investment management approach. Before the merger, both firms delivered traditional equities and fixed-income options to clients through an asset class implementation of low-cost funds and exchange-traded fund. Both firms use Dimensional Fund Advisors, and strongly believe in using low-correlated, low volatility assets and even alternatives as a subset of the portfolio allocation, Siefert explained.
“We implement strategies for a $30 million foundation the same as we would for a $500,000 family portfolio,” Siefert said. “We don’t believe that stock selection adds value.”
But the firm’s regional reach and larger scale—it now manages more than $900 million in client assets—already add value, according to Greg Plechner, another principal of the firm.
“We have tremendous bargaining power on our clients’ behalf,” Plechner said in a phone interview. “We are able, in a way that is greater than before, to negotiate more favorable terms and conditions for our clients whether at the asset custodian or investment level, or elsewhere.”
Modera Wealth Management serves foundations and endowments, too, which followed Back Bay Financial into the merged entity. Since its founding in 2007, Back Bay Financial learned to take on non-profit clients carefully. It wanted to work with a semi-permanent board. It looked for a strong and lasting executive director.
“From a business perspective, we want to enjoy that business as much as we do working with individuals and families,” Siefert said.
Siefert said that whenever the principals are in a prospective meeting to sign up an endowment or foundation as a client, they often confront competition from brokerage firms or private banks. Being a regional operation with nearly $1 billion in AUM works in Modera’s favor.
More importantly, the five principals—who also include John H. Le Blanc, Thomas A. Orrechio and Mark A. Willoughby, have developed a polished, attentive approach to managing its clients.