In a market burgeoning with financial planners, a startup firm needs to be different.
Two Tulsa firms fresh on the wealth management scene have taken widely separate approaches to make them stand out.
Warburton Capital Management, which signed its first client in September, brings an unusual methodology to the mix – a passive investment strategy.
“What I am offering seems to be completely different from what anyone else in the marketplace is offering,” said Tom Warburton, sole principal and employee of Warburton Capital Management, which operates out of a single-room office on the second floor of the downtown 321 S. Boston Building.
“I believe anyone, from the people with $100,000 of liquid net worth up to the wealthiest people in the world, should have some of their money invested in this passive strategy,” Warburton said.
Passive investors allocate assets based on research that determines probable asset class risks and returns. Those allocations are spread widely within and across asset classes and are typically maintained long-term through periodic rebalancing.
Warburton’s investment strategies are built on the funds of Santa Monica money management firm Dimensional Fund Advisors, the showcase and proving ground for passive investment.
“I am basically a distributor for this institutional class wealth management model that, as an investor, you have reasonable expectations to harvest the markets over the long haul,” he said.
In his first three months, Warburton has signed 21 clients.
Servicing the Person
and the Portfolio
Across town in a 1,000 SF suite on the ninth floor of the Exchange Center at 4500 S. Garnett Road, Don Hardcastle CMT and Donnie Davis have developed a firm that combines investment management with life and wealth coaching.
Hardcastle, investment manager, financial strategist and co-owner of Coachwise Financial Solutions, characterized the combination as “very uncommon.”
“The investment industry is very technical and sales-oriented, so the two major directions that you see in the industry are technicians and sales guys,” he said. “The ability to bring in Donnie’s soft skills and his ability to visit with people and really perceive what issues they are dealing with both personally and financially has been a real key to our success.”
The two, who met in 2001 while employed at another advisory firm, started Coachwise Financial and its parent firm, Coachwise Solutions, two years ago.
“Don comes from a very technical background. I come from a very psychological, theological and business background,” Davis, business and leadership coach and president of Coachwise Solutions, said. “So the hard skills and the soft skills came together in a good marriage.”
Hardcastle and Davis, the only full-time employees of the firms, credit their mix of skills for much of their growth. Although they would not disclose how much they have under management, they said the investment business had grown about 600 percent over the past year.
“We have had some considerable growth – in fact about 50 percent of our business coaching clients have become investment or wealth management clients,” Davis said. “So not only have we had tremendous growth in the wealth management side of our business, but we have had a significant conversion rate of providing multiple services to our clients.”
Harvesting the Markets
Even though Warburton’s firm is only three months old, it is the result of three decades of studying wealth management.
He started his career in the early ‘70s at First National Bank of Chicago while he was earning his MBA at the University of Chicago.
He then went into private enterprise in Tulsa, building and then selling Warburton Valve and temporary help, temporary nursing and data processing firms.
By 1997, he had sold off all of his businesses because he had found himself “a slave to the airports and hotel rooms.”
“I was tired of it, and I was 47. I thought, ‘I’m just going to play golf for the rest of my life,’ and for the next three years I did play 800 rounds of golf.
“I got extremely bored,” Warburton said. “I really did not want my legacy to be that I spent the last 30 years of my life hacking it around some golf course.”
When he decided to re-enter the labor force, some timely introductions brought him to the Bank of Oklahoma.
“Before you know it, I was a VP in the Wealth Management Division of the Trust Department at Bank of Oklahoma,” he said.
“I really discovered that professional wealth management did not mean that you watched CNBC and bought what (financial reporter and anchor woman Maria) Bartiromo talked about.”
Another opportunity brought him to “one of the premiere firms in the world” three years ago when he joined JPMorgan in its private client services group in Tulsa.
“It was great,” said Warburton, who holds his NASD Series 65 license and is an investment adviser registered with the Oklahoma Securities Commission. “I am a real compulsive person. When I get into something, I have my blinders on. I am famished for data and I learn all about it.”
“Also, I was on kind of a self-study program,” he said. “I would go home every night and study wealth management and how it is practiced around the world and how it is practiced by different purveyors.”
“I started suspecting that maybe there was a better way to do it, because most wealth management is delivered via a lot of conjecture and speculation that’s masked with a lot of fancy,” he said.
“Conjecture and speculation is fruitless. You cannot time the market, and you can’t figure out when to buy and sell. You can’t figure what sector is going to be hot next, and you can’t figure out what capitalization is going to be best next. You cannot figure out what style is going to be hot next, value or growth, and you can’t figure out what domicile is going to be on fire, whether it is the U.S. or the EAFE (Europe, Australia and Far East) or if it’s the emerging markets popularized as BRIC (Brazil, Russia, India, China).”
“I discovered that there is a large body of evidence that has concluded that investors are more likely to be rewarded by investing passively in large baskets of stocks that are in an asset class,” he said.
He left JPMorgan in June when he decided to open his own firm to market that strategy.
As he grows his business he said he is looking for clients who are goal-oriented and coachable.
“I really don’t want a client who isn’t willing to absorb a little information so they understand what is happening to their money,” he said. “I want them so when they see their statement and they know what is happening in the markets, they say, ‘Oh, I get it. I’m not trying to beat the markets, I am trying to harvest the markets.’”
It Pays to be Different
Coachwise Financial, a registered investment adviser firm, has a different audience in mind.
“Our target clientele is that account size from $25,000 up to $2 million, which is the individual that is in the accumulation phase of his life, not the ultra-high net worth client,” Davis said. “Our clients are the people that Merrill Lynch is sending to an 800 number (to be managed).”
Competition is driving fees down, and because of the workload required to service an account, the large financial services firms are requiring that account sizes need to go up for personal service, he said.
“What that means is that somebody who is raising a family, 48 years old and has $75,000 in their IRA is going to an 800 number to be managed,” Davis said. “We found clients like face-to-face. They like that Don is not only the investment adviser but the money manager on their account, and they like the holistic approach through relationship dynamics, with multiple advisers caring for them.
Hardcastle, who has worked in financial planning for 30 years and is certified as a Chartered Market Technician by the Market Technicians Association, has seen commoditization move into the industry.
“Everyone looks alike, and you just become a commodity,” he said. “I know that when we were contemplating opening our own firm one of the things we really wrestled with was there is a strong commoditization trend in most industries, and this industry is not excluded. To be successful, you have to find a way to differentiate yourself to add value. That’s why we spent so much time working on our business model – how can we be unique, how can we be something that’s different?”
“It’s critical that you keep it a relationship business and that you find a way to add value and be unique and that you shift and adjust to the marketplace,” Hardcastle said. “Just as in our investment management strategy, we think it’s critical to adjust to changes in the marketplace. In our business model, we tried to do the same thing.”
“The fact is that the business end of the wealth coaching discipline is relatively new to the Midwest,” said Davis, who passed his Series 66 license test last week. “Coaching, like counseling, consulting or training, is its own discipline. I have a master’s of divinity in pastoral counseling, but I have a certification in coaching as well.”
“It is its own discipline to help clients make forward progress, to help them move beyond where they are, to help them remove personal challenges, set higher goals, and help them strive for more sense of purpose and significance in their lives,” Davis said.
“That’s where our name Coachwise Solutions comes from. We believe you can’t separate finance from anything in your life. It interacts with most everything else – relationships, health, career choices, businesses, etc.” ?
In a market burgeoning with financial planners, a startup firm needs to be different.