Persistent Portfolio Management

Client evolution is a constant

In mid-September, CNBC polled about 400 chief investment officers, equity strategists, portfolio managers, and CNBC contributors who manage money about their market views for the rest of 2021 and 2022. More than three-quarters of the respondents said now is a time to be very conservative in the stock market when asked what kind of market risk they are willing to accept for themselves and their clients.

For the clients of Florida-based 1650 Wealth Management, the common denominator has long been conservative growth of portfolios and wealth preservation. “Our clients are pretty similar,” Tom Balcom, CFP®, CAIA, MBA, and founder of 1650 Wealth Management, told Advisors Magazine in a recent interview. “We don’t have any clients that are ultra-aggressive, and our niche is creating customized solutions for them.”

A portfolio’s allocations will vary because clients’ goals and objectives are different, and that requires constant attention, according to Balcom.

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Balcom received both his undergraduate and graduate degrees from the University of Miami. It was after getting his MBA in 2000 that he knew he wanted a career in finance. He spent 10 years with a Miami-based financial advisory firm before deciding to stay closer to home (Lauderdale-by-the-Sea) and started his own practice. That was now 11 years ago.

Today, 99 percent of new business is from existing client referrals. “We work to simplify all the financial jargon and filter out the noise,” Balcom explained, “and get down to a client’s goals and objectives for their money.”

And he always tells prospective clients: “Whether you work with our firm or another firm, you have to like the advisor, trust the advisor, and be confident in the advisor’s competence. If you don’t have all three of those, the relationship is bound to fail.”

All three and then some were in full gear for 1650’s clients at a critical period of the pandemic. As markets spiraled downward in March of 2020, Balcom and his team reached out to each client to explain what was being done to protect their wealth.

TB head“We reassured them that this was a short-term event and not to panic, and that the worst thing is to sell off at an inopportune time,” Balcom recalled. “And six months later, clients were calling me, thanking me for not allowing them to panic. It was a great feeling to not only preserve their wealth, but to see many of them actually grow their portfolios.”

Balcom noted: “One client was even able to make a down payment on a new home. It made me very, very happy to help him reach his goals.”

And reaching client goals is something where robo-advisors and online trading platforms can fall short, even though Balcom holds a largely positive opinion of them.

“I think robo-advisors are good in that they allow more people—especially young people—to get involved with investing and saving for the future,” he said. “But the fact remains that I am continually involved in adjusting portfolios, scrutinizing them and rebalancing when needed. Clients appreciate that because they know and trust that I’m helping them preserve and protect their wealth for retirement.”

In fact, 1650 Wealth Management takes its name as an homage to the year 1650 when Dutch settlers built a 12-foot protective wall, known as the New Amsterdam palisade, to guard their colony. Known today as Wall Street, it also embodies the firm’s mission statement: ‘To Protect and Grow Our Clients Wealth.’

As a fiduciary, 1650 is a fee-only, registered investment advisor and the typical minimum investment is $100,000. As an independent, boutique practice, the firm is free from corporate mandates or sales commissions and transparency is a valued operating practice.

When it comes to the financial advice industry in general, however, Balcom maintains that transparency can still be improved.

“Many people still don’t know what they’re paying for, what services they’re receiving and the risks involved,” he said. “We make sure to be clear about all that.”

Balcom pointed to an analogy: “No one goes to a mechanic and says, ‘Hey, repair my car,’ without asking how much it will cost. But many will begin working with an advisor without any idea what they are paying and it could be thousands of dollars.”

It’s worth noting that Balcom is frequently a guest on major media, being interviewed on topics from personal financial management to asset management to effective use of hedging investments in client portfolios. As such, he’s been featured in Forbes, CNNMoney, Bloomberg Businessweek and many other top outlets.

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