John Essigman is the Founder and Managing Member of John Essigman Wealth Advisors LLC, a family orientated RIA located in Cleveland, Georgia, and an AdvisoryWorld client since 2015. Advisor Spotlight is a series that features select AdvisoryWorld advisor clients and their practices. As told to AdvisoryWorld.
We are a boutique advisory firm that takes pride in knowing our clients personally. The majority of our clientele are retirees in the North Georgia area that are in need of fee-only financial planning, estate planning, and investment advisory. My role as a financial advisor in my clients’ lives requires a lot of trust and accountability. When I founded John Essigman Wealth Advisors in 2011, I initially hired third-party money managers, but I always knew I would work towards bringing our money management in-house. To us, full accountability means being personally involved with our clients across the board.
About two years ago, I became disappointed with the cost and performance of these third-party money managers and knew that the time had come to transition our money management in-house. I began the process by self-educating. I enrolled in intensive investment management courses and read countless books and articles, both of which I continue to do till this day. The next step was to find research and technology tools that would support us in selecting securities appropriate for clients’ goals, time frame, and risk tolerance. There was an element of fear in this big, in-house undertaking, one that I realized quickly could only be overcome by self-education and thorough vetting of my technology partners.
After reviewing several technology offerings, we chose AdvisoryWorld because the platform is very user friendly and required minimal training. I use the hypothetical illustrations primarily to evaluate a new or existing client’s portfolio. Additionally, Orion Advisor Services, our selected portfolio accounting service provider, and AdvisoryWorld integrate seamlessly. AdvisoryWorld provides a wealth of information including a high-level summary of the portfolio, benchmarks, Monte Carlo simulations, MPT Statistics, and details on individual securities. We also use the optimizer to evaluate the Efficient Frontier and Sharpe Ratios. The ability to generate a chart showing Correlation Coefficient is invaluable.
I like to meet all my clients face to face, a lot of them are locally based and will sometimes even drop by my house if they are passing. I like to be able to reassure them they are in good hands. The platform has certainly helped me do a better job of building my own investment portfolios. Naturally, this increased our internal costs in managing portfolios and this cost was passed on to clients. What is striking, however, is that our clients overall portfolio cost is now lower. The cost of money-managers, their transaction costs and embedded administrative fees have been largely eliminated.
Hands-on involvement is a major part of my work. I would be seriously concerned if an advisor was not analyzing a client’s portfolio, does not understand how an ETF or mutual fund is structured, or cannot clearly articulate the reasons for using an investment. An investment advisor, to my mind, needs to understand investments and economics at their most basic levels. To accomplish this an advisor needs tools that can look backwards at historical trends as well as research that looks forward to the potential of an investment.
To my colleagues that are considering bringing their money management in house, I highly recommend that you choose the right technology partners and commit to self-education. The transition process, while daunting, has been highly rewarding and I would not hesitate to do it all over again. The benefits of bringing everything in-house certainly outweigh the challenges it posed.