We are a full-service wealth management firm focused on providing financial
advisory and related family office services to ultra-high net worth individuals
and institutional investors. In addition to a wide range of investment capabilities,
we offer a full suite of complementary and customized family office services
for families seeking comprehensive oversight of their financial affairs.
We were founded 13 years ago on the premise that if we staffed and organized
our business to deliver a combination of excellent investment performance together
with high-touch client service, we would differentiate our business from a crowded
field of firms nominally in the wealth management business. We seek to attract
and serve a base of individuals and families with $10 million or more of investable
assets, and we believe we are well-positioned to offer comprehensive investment
and family office service solutions to families with over $25 million of investable
assets. As a boutique, we are large enough to provide an array of comprehensive
capabilities, yet agile enough to coordinate and deliver highly personalized
client service.
Our organic growth has been complemented by selective hiring and by six successfully
completed strategic acquisitions that have expanded not only assets under management,
but also our professional ranks, geographic footprint and service capabilities.
We believe additional acquisitions will allow us to extend our geographic presence
nationally. As we grow, we will maintain our value proposition to continue to
deliver to our clients excellent investment performance together with excellent
client service, the essence of what differentiates us from our competitors.
Our clients engage us to advise them on traditional investment strategies focused
on equities, fixed income and cash as well as non-traditional investment strategies
including hedge funds, private equity funds, real estate and commodities. Our
clients receive a full menu of proprietary investment capabilities together
with a focused array of complementary non-proprietary capabilities offered by
unaffiliated firms selected by us. In addition to our investment capabilities,
we also provide our clients with family office services and related administrative
services, which include financial planning, tax planning and preparation, partnership
accounting and fund administration, and consolidated wealth reporting. Our fees
for our investment advisory services, non-proprietary services and family office
and related administrative services are structured to align our financial incentives
with those of our clients to ensure they receive unconflicted advice. The vast
majority of our fees are derived from discretionary assets under management,
and are based on the value of the assets we manage for our clients. These fees
increase if our clients’ assets grow in value; on the other hand, these
fees decrease if our clients’ assets decline in value. Unlike our management
fees, our fees for family office services and related administrative services
are generally not based on or correlated to market values. For these services,
we generally charge our clients a negotiated fee based on the scope of work.
These services create strong client relationships and contribute meaningfully
to our record of client retention.
When forming our company, our founders had the objective of creating a large
full-service boutique operation focused on managing portfolios and delivering
financial advice to wealthy individuals and select institutions. We commenced
operations in April of 2002. Our first partners and employees came almost entirely
from Donaldson, Lufkin & Jenrette (“DLJ”) Asset Management Group,
which had been acquired by Credit Suisse Asset Management in late 2000. In 2002,
we carefully recruited and hired the same equity, fixed income and client service
teams with whom our clients had worked at DLJ Asset Management Group.
Our headquarters are located in New York City with additional offices in Boston,
Massachusetts, Los Angeles, California, Virginia and New Jersey. From inception,
we have embraced an organizational structure in which the primary functions
of client service, investments, technology and operations, and business administration
are organized and staffed with professionals who specialize in each of those
functions. This structure permits each professional to focus on his or her area
of expertise without the distraction of other business responsibilities. At
many other firms, the senior professionals are expected to serve multiple roles
simultaneously, which we believe dilutes the value to clients and makes scaling
the business effectively unachievable. We firmly believe that our business structure
represents a better approach and will permit us to greatly expand our business
on our existing platform.
In meeting our primary objective to deliver strong investment results, we seek
to add value through our asset allocation advice, as well as through our proprietary
equity and fixed income strategies and outsourced investment capabilities. We
recruited and hired a team of seasoned securities analysts who have an institutional
caliber approach to security selection and a long record of success in implementing
their strategies. We encourage them to focus 100% of their professional time
on the task of securities selection. Our in-house equity analysts are focused
on U.S. large cap, small cap, Smid cap, multi cap, equity income and focused
value equity strategies. On the fixed income side, our analysts are focused
on high-grade municipals, high-yield municipals and high-grade taxables.
In order to deliver excellent client service, our portfolio managers are charged
with the responsibility of working individually with each client to help define
investment objectives, risk tolerance, cash flow requirements and other financial
needs. Client-facing portfolio managers, their support staffs and the family
office services group, account for 50% of our total employees, a reflection
of our high commitment to excellent client service. We are staffed to ensure
that each client receives senior level personal attention.
We have a staff of six professionals who work with our portfolio managers
to deliver family office services to interested clients. The fees for family
office services are negotiated with the client and generally are not asset-based.
For this reason, the revenues generated by our family office services are non-correlated
to market movements and provide us with a diversified source of earnings. We
believe these family office services have been an attractive component of our
overall value proposition and engender a stronger relationship with the client,
leading to greater client retention and the institutionalization of client relationships.
We built our company to take market share from financial services firms whose
wealth management models we believe are flawed. Our growth strategy has been
and will continue to be to grow our business organically, to complement our
organic growth with strategic hires and acquisitions and to expand our presence
in the institutional market. In support of each of these initiatives we plan
to continue to invest in establishing our brand through continued selective
advertising and public relations.
The business of attracting ultra-high net worth clients is the business of obtaining
referrals and gaining trust. At our company, these responsibilities reside principally
with our portfolio managers. Our senior portfolio managers have on average nearly
30 years of industry experience and they have developed a wealth of contacts
and professional referral sources as a result of that experience. In spearheading
the effort to deliver excellent performance and service to their clients, our
portfolio managers have developed very close relationships with their clients
and in many cases these relationships are much older than our company itself.
Much of our new business results from referrals from existing clients. In this
regard, it is critical that our portfolio managers work closely with each of
their clients to establish the trust that is at the heart of the relationship.
Where appropriate, our portfolio managers are also encouraged to introduce our
clients to our family office services capabilities and we have capacity for
growth in client utilization of these services. Eight of our ten largest clients
use our family office services and some of these clients have closed their own
family offices to consolidate those activities with us. This is a profitable
business for us and it serves to tighten our ties to those clients who avail
themselves of the services we offer. It is also extremely useful to us in new
business competitions where we use these services as a differentiator from our
competitors. We continue to see the opportunity for greater penetration with
our current clients in future years.
Complementing the efforts of our senior portfolio managers to cultivate client
referrals, our business development team is charged with identifying newly formed
wealth (resulting from merger, acquisition or corporate finance) and then creating
customized solicitations. Our objective is two-fold: we will expand awareness
of our company and its capabilities by distributing our marketing materials
to this new audience and we will attract a certain amount of new business. The
basis of this effort is careful research designed to ascertain if the prospect
has any relationship with us-or any of our clients or friends-and then our solicitation
is tailored to those circumstances.
In all of our business development efforts we devote a great deal of time and
effort to developing highly customized and detailed proposals for our prospects.
In order to do so, we spend as much time as is required to thoroughly understand
the prospect’s circumstances and goals as well as the sources of its dissatisfaction
with its existing adviser. Where appropriate our proposals include the integration
of our entire suite of family office services. We believe our customized new
business presentations distinguish us from both our much larger competitors,
which have substantial resources, but whose size, we believe, may impede them
from easily tailoring solutions to suit clients’ needs, as well as from
our smaller competitors whom, we believe, do not have our depth of resources
or capabilities.
From our inception, our organic growth has been complemented by selective hiring
and strategic acquisitions, which have served to enlarge our client base, expand
our professional ranks, increase our geographic presence and broaden our service
capabilities. We therefore expect to continue to recruit and hire senior portfolio
managers with significant client relationships as well as successful investment
professionals with capabilities currently not available internally to us. We
have used acquisitions to extend our presence into new geographies (Boston,
Virginia and New Jersey) and to gain new investment expertise. The six strategic
acquisitions we have successfully completed have allowed us to benefit from
economies of scale and scope.
In making acquisitions, we look for firms with compatible professionals of the
highest integrity who believe in our high service-high performance model for
the business. It is important that their clientele be principally clients of
high net worth and it is helpful if they have a similar value-based investment
methodology. These firms are attracted to our company by the strength of our
brand, the breadth of our services and the integrity of our people. Often these
firms are extremely limited in the investment products and services they can
offer their clients and it is not uncommon that they have succession or other
management issues to resolve. In addition, the high and growing cost of compliance
with federal and state laws governing their business is often an added inducement.
We believe we will become the partner of choice for many such firms.
Continuing our short-term growth strategy, we intend to establish offices in
major wealth centers on the West Coast, in the Southwest and in the Midwest
in order to be closer to both our clients and to prospective clients.
Our past acquisitions have sharpened our ability to integrate acquired businesses,
and we believe that once we identify an acquisition target we will be able to
complete the acquisition and integrate the acquired business expeditiously.
After seven years of effort focused on cultivating relationships with institutional
investment consultants, we continue to regularly make new business presentations
to institutional investors, including public and corporate pension funds, endowments,
foundations, and their consultants.
We are on the “approved” lists of certain prominent institutional
investment consultants, which means that these consultants would be prepared
to recommend our firm to clients in search of a particular investment strategy
for its clients. This has significantly enhanced our ability to win mandates
these consultants seek for their institutional clients and as a result we have
won institutional mandates in our equity strategies. We expect this trend to
continue once it is publicly known that these and other institutions have engaged
us to manage significant portfolios for them. The importance of institutional
growth to our company is noteworthy: institutional assets will likely expand
not only our assets under management but also our profit margins; and the painstaking
due diligence conducted by these institutions before selecting us will ratify
and confirm the decisions to hire us made by our individual clients.
We have invested heavily to build, maintain and extend our brand. We have done
so in the belief that creating awareness of our company and its differentiated
characteristics would support all aspects of our business but most notably our
growth.
With limited resources, we have created a focused national advertising campaign,
which has drawn praise from clients, prospects and competitors alike. We have
carefully chosen media outlets that reach our target audience efficiently and
we estimate that the new business that we get directly as a result of our advertising
now finances its cost.
Complementing our advertising strategy and again with limited resources, we
have also invested in an effort to get media coverage of our company in some
of the nation’s most prestigious national publications as well as in industry
journals and newsletters. This effort has resulted in press coverage by the
Wall Street Journal, Barron’s, Bloomberg, the Financial Times and The
New York Times as well as various trade publications distributed within our
industry. This public relations effort has proven very helpful in establishing
our company as a leader in our industry.
We were founded in 2002 to provide independent investment advisory and related
family office services to ultra-high net worth individuals and endowments, foundations
and other institutional investors. To this end, we are structured to provide
our clients with institutional-quality investment management with the superior
level of service expected by wealthy individuals.
To provide this high level of service, we rely on portfolio management teams
and our family office services team to provide objective, conflict-free investment
management selection and a fully integrated, customized family-centric approach
to wealth management. We believe the combination of comprehensive family office
service, excellent investment capabilities and a high level of personal service
allows us to take advantage of economies of scale to service the needs of our
ultra-high net worth clients.
We have dedicated investment management teams tasked with successfully implementing
their respective investment strategies. To increase the probability of success
in meeting this objective, our analysts are not responsible for client interaction,
management of our business, marketing or compliance oversight. This enables
us to effectively serve ultra-high net worth clients as well as institutions
that typically perform in-depth due diligence before selecting a manager.
Recognizing the value of diversification to our clients, we offer a variety
of outsourced investment capabilities designed to complement our proprietary
capabilities. These outsourced capabilities include managers who have long records
of success in managing growth equities, international equities, taxable high-yield
bonds, hedge funds and other strategies not offered on a proprietary basis by
us. In selecting these managers, we utilize an investment manager database for
initial screening and then a dedicated staff conducts on-site due diligence.
Potential managers are reviewed and selected by our IPSC. Our selection criteria
include the following:
Highly Consistent Returns. We emphasize consistency of performance over strong
performance marked by high volatility.
Tax Sensitivity. We seek managers with a low turnover style of management designed
to achieve attractive after-tax rates of return.
Solid Operations, Technology. We require each manager to produce evidence that
it has strong technology and operations capabilities as well as vigorous compliance
adherence.
Alignment of Interest. We require evidence that the strategy’s key people
have significant equity in their company and are motivated to stay in place.
Willingness to Negotiate Fees. We require our managers to accept a significant
discount in their management fees because we expect to manage all aspects of
the client relationship. Their only responsibility is to manage the capital
entrusted to them. No manager has refused to offer the discounts we seek.
Silvercrest Hedged Equity Fund is designed to complement and diversify long-only
equity portfolios through investments with managers who employ long and short
strategies;
Silvercrest Emerging Markets Fund provides international and non-dollar exposure
and diversification focused on long, short, credit and other managers who invest
in emerging markets;
Silvercrest Commodity Strategies Fund seeks to give investors comprehensive
commodity exposure;
Silvercrest International Fund provides investors with broad coverage of international
markets, spanning developed, emerging and frontier markets;
Silvercrest Special Situations Fund is designed to outperform traditional benchmarks
with less volatility; and
Silvercrest Jefferson Fund is designed to outperform its benchmarks on a risk-adjusted
basis for investors who seek to minimize risk and preserve capital.
We have two types of fee arrangements with outsourced managers. Clients either
pay a discounted fee, negotiated by us, directly to the manager who retains
the entire fee or directly to the manager who distributes a portion of the fee
to us. Clients are informed of the applicable arrangement and sign a written
acknowledgement.