The need for the ultra-rich to move on to the next generation. Don’t ignore family dynamics, this review says.

CIO Jason Laurie and CEO Rebekah Kohmescher of Altair Advisers.

Photograph by Jon Wes

The wealth of Altair Advisers clients is often so great that they will never need to touch most of it – and this ultra-long investment horizon opens up all sorts of investment opportunities. “Most of our customers can afford to take tons of risk, if any, with a lot of that money,” says Rebekah Kohmescher, CEO of Altair.

Talk with Barrons, Kohmescher and Jason Laurie, Chief Investment Officer of Altair, discuss how their 20-year-old company meets the distinct needs of its ultra-high net worth client households. The Chicago-based company requires new clients to have $5 million to invest, or expects them to do so soon, and it has $6.7 billion in assets under management. One of the main areas of focus of the team of 65 people and 29 advisors is helping clients make good decisions before selling a business; another is to support families in the minefield of intergenerational wealth transfer.

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Barrons: How are you organized to serve each client?

Rebekah Kohmescher: Our service model is to have an experienced person, then a support team – a younger advisor and a person dedicated to customer operations. The Senior Advisor manages the relationship, provides investment advice and planning, and brings education to the table. The second adviser provides continuity and day-to-day monitoring. And the person in charge of customer operations helps to facilitate the customer relationship.

Who are your typical customers?

Jason Laurie: Many of our families have owned businesses. We also have a lot of C-suite frameworks. As for net worth, it’s pretty much everywhere, but the assets we’re advising probably average between $5 million and $25 million. Our clients’ net worth can be a multiple of this number, and we do financial planning across the entire balance sheet.

What is your investment approach?

Laurie: Generally speaking, we follow a diversified and globally balanced approach, with investments focused on both value and growth. All of our clients have long-term strategic allocations. And from time to time we make tactical changes or recommendations at the asset class level.

Key data

  • Assets under management
    $6.7 billion
  • Number of clients
  • Number of advisors

I imagine that your clients expect above all that you preserve their wealth.

Laurie: Conservation is important to customers. On the other hand, when you’re dealing with ultra-high net worth clients with multi-generational pots of money, the type of advice is reversed: it’s not about preservation, it’s about net worth expansion. The best part of my job is that the majority of our clients’ time horizons are extremely long. When it comes to investing, this is a very important ingredient for success.

Kohmescher: It’s not really a question of what kind of risk they have to take to make the retirement picture work. It’s a different type of choice.

Businesses with very wealthy customers are expected to provide top-notch service. Can you give an example?

Laurie: A lot of it is family dynamics. You will often have a patriarch or matriarch who passes the responsibility on to the next generation. And the siblings now have shared wealth and need to figure out how they’re going to manage it. Much like Thanksgiving dinner, it can get risky at times. I would say that we spend almost as much time on family dynamics as on basic investments. Because if we don’t have the right structure, the investment won’t matter.

What do you do in these situations?

Laurie: These are family reunions, it involves interviewing each member of the family. It’s that long process of building consensus. Whether you’re talking about risk tolerance, payout policy, portfolio preferences, there’s a whole host of things we could spend a lot of time on.

What do you offer your clients in terms of tax management?

Kohmescher: We do not practice CPAs; we do not give tax advice. But we are very consultative with our clients and interactive with their external CPA or whoever does the tax work. There are many opportunities that we come across. For example, I had a call yesterday with a new client who is going to sell his business in the first quarter of next year. There are plenty of opportunities while still private to do things like donate shares to a donor-driven fund or foundation. So we can bring in their accountant now and help them think proactively about their taxes.

How well do you help business owners manage the sale of their business?

Kohmescher: We have a lot of experience helping business owners who are approaching or considering a sale. I think we tend to say, “I don’t have the money yet, so I don’t need an advisor. But we focus on the way from one side of the sale to the other. This is a huge time of transition in the life of a family. And we are entrepreneurs ourselves, so we can understand their point of view.

Thanks, Rebekah and Jason.

E-mail: [email protected]

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