Author: Harbor Ithaka

The Transformation of the Wealth Management Industry

Clients have been showing their dissatisfaction with traditional wealth management platforms. Market volatility during the past 15 years has damaged trust. New products and services are not enough. We believe established business models are mostly incapable of delivering true advisor-client interest alignment.

Know What You Pay; Pay for What You Get

Investors carry the burden of the advisory costs regardless of the direction of the markets. Thus, they should understand the incentive structure behind the advisory received. How “fiduciary” is your advisor?

First Ingredients First

A real client-centered approach: Investment portfolios make little sense until they are considered in light of a broad reaching estate plan, including an understanding the client’s balance sheet and her values and life’s goals.

What Clients Want

What a client wants is not always what the client needs: Is there a line between “servicing” and “coaching?” How do we define and cross the knowledge asymmetry-divide in an industry in which what an advisor/ broker/ firm rep. is incentivized to do is not exactly what the client needs. In sum, how does the investor-client judge “quality.” Does he trust too much?

The Problem With Macro

On any given day, 20 or 30 or 40 world-renown investment veterans argue eloquently for almost exactly opposing opinions regarding the future of any number of trends. If 50 plus years of academic research evidence that a trivial percentage of investment managers are able to consistently justify their fees, how is it that many advisors/brokers still construct portfolios on the basis of their “educated” guesses?

“Conservative” Is Not So Conservative Anymore

The dot.com crash and 2008/09 crises proved traditional diversification a failure. It took over 6 years for equity indexes to recoup the 2008/09 losses; Now there’s talk of expensive valuations across asset classes, all driven by the same factor: experimental monetary policies.

Cash is Strategic

Cash and cash equivalents are typically accused of having lower historical returns than any other asset class. But who ever said cash and other sources of liquidity should always stay at the sidelines. In fact, strategic use of “optionality” can be one of the most powerful tools in the asset allocation strategy.