Customer Profiles: Wealth Manager

Wealth Manager

Thomas is a 58-year-old wealth manager. His wife Sandra is a stay-at-home mother to their four children, who range in age from thirty to fifteen. Thomas and Sandra love to travel, going on several cruises per year. They prefer luxury resorts and want to see many of the top spots around the world well before they’ve retired.

Over the years, Thomas has worked with extremely high-profile clients who place incredible portfolios into his hands. He has a solid reputation for finding hedge funds and alternative assets for clients that often outperform benchmark indices. But in some markets, even Thomas can’t help stem losses in his client’s accounts. Downturns in 2008 and 2020 saw Thomas lose clients and referrals, even as he explained that with patience, assets would likely regain value in time.

The loss of clients forced Thomas to restrict his spending, as his AUM fell not only with client attrition but with lowered portfolio values for his remaining clients too. He continued investing his own money when possible, but he and Sandra stopped going on cruises and put off their travel plans for the time being.

When networking with high-net-worth prospects at the club or on the golf course, Thomas found his approach to investing increasingly challenged by investors who wanted him to provide the same cutting-edge technological service as some of the multi-family offices and digital wealth managers emerging in the area.

Thomas knew that he needed to do something to differentiate himself. He signed up for various newsletters with information on different investing strategies. He also conducted online research, spending hours scrolling through forums, reading news articles, and watching YouTube videos on investing to see if he could restructure his go-to tactics.

During his research, one particular strategy stood out: asset revesting. Thomas learned that the central tenet of asset revesting was moving capital out of falling assets and into rising assets within a set list. The strategy could use any group of investments imaginable: futures, CDs, ETFs, mutual funds, or collectibles. The primary objective of multi-asset revesting is to rotate capital amongst uncorrelated assets based on which ones are best for the current market condition. The result is that investors were holding only assets rising in value, preserving capital, and dramatically reducing portfolio volatility.

After reading about it in an established newsletter, Thomas found that this particular asset revesting strategy provider had published multiple white papers and a book on the category. He read them all and even got on a call with the strategy founder, who had proven its effectiveness over multiple decades and countless market environments.

Thomas approached his clients about asset revesting. He told them that this strategy involved moving assets between options based on market signals and that assets would be more protected against devaluation with market downturns. At worst, asset revesting had shown a maximum daily drawdown of 6 percent, thanks to the protective stops placed on every position. This contrasted sharply with the daily drawdowns of 30 or more percent that his clients had experienced.

Thankfully, Thomas’ clients were open to trying this strategy. A year later, Thomas’ clients were pleased with the growth of their portfolios and their lessened volatility. His reputation went back up, and his colleagues prodded him for his secrets. Old clients returned, and new clients were referred, so business was booming for Thomas, who couldn’t have been happier. Even better, because he reduced the overall volatility for his clients, he saw his own income steadily increase and didn’t have to weather reductions in his AUM during bear markets—unlike his colleagues, who often had to adjust their spending during prolonged market downturns.