A Fan of Alternatives
By Brad Thomason, CPA
May 8, 2015
It has been said that in order to do a good job selling something, you really need to believe in it. At some point, no matter what business you are in, you get asked whether you really believe in your widget or if you are just pretending to in order to make more sales.
Among the services our firm sells are a number of offerings designed to make it easier for retirees and investors to be involved with Alternative Investments. These run the range from analysis and advice, to deal sourcing, to help with the management of holdings. We believe that these services fill a common need that’s out there in the market. And we believe that there are any number of situations where Alternatives can be a better choice for a portfolio allocation than a more traditional choice.
A long time ago I had a stock broker’s license. In fact, I had the license that you have to have to supervise other brokers and be an executive within a broker/dealer. It’s called a Principal’s license (Series 24, to be technical). It meant that I had access to the full range of stocks, bonds, funds and other specialty securities that make up the catalog of every major b/d in the US. I even got to conduct due diligence and chime in from time to time when we were considering new offerings to add to the list. Ultimately I turned in my license and moved on. Which I mention simply to make the point: if we wanted to be in the business of selling traditional investments, we could be; and would be. Because we were.
I left the b/d world for a host of reasons that even today I probably still couldn’t fully articulate. But there were a few main points that stand out. First is the fact that there are already an awful lot of people selling those products. It’s a commodity business, and I realized one morning that if I was no longer present to be part of that army, no one in the whole world was going to be worse off, me included.
Second, I saw up close any number of instances when a broker had created a portfolio for someone which wasn’t getting the job done, and the broker had no idea what to try to change to fix it. I started becoming aware that there were a lot of things out there in the asset world which were better fits for many of the recurring situations I was seeing, but they were outside the scope of what the b/d was approved to peddle. My orientation, coming first from the CPA patch, was to find what worked for the client’s situation. More and more I became aware that many of the best solutions were not on the table; and the clients suffered because we couldn’t sell what would be more effective.
That lead to the third point. When you are licensed to a b/d, the compliance department gets to have a say in everything else you do professionally, whether it has anything to do with securities or not. That’s the law. The more I investigated Alternatives (tax liens first, then other things) the more potential I saw for the work I needed to do on the advisory side as a CPA being constrained by what the b/d would allow. So I made the choice to leave the traditional behind in favor of having access to the world of Alternatives, because I felt like that was the best way to accomplish what our clients needed done.
So, are we fans of Alternative Investments just because we sell services related to them?
No, sir. Just the opposite. Being a fan preceded the current business. And the current business didn’t happen by accident. We got “here” because we meant to, as the product of some intentional decisions about what to avoid or leave behind, and a rather significant amount of effort, spread over many years. We wanted to work with Alternatives, because we believe in them; not the other way around.
These services are not the only thing we do, and they are far from the only thing we are capable of doing. So we could still earn a living just fine if we spent our time elsewhere. But we don’t spend it elsewhere: we spend a lot of it working with Alternatives.
All of which you can take as testimony to the depth of our belief that given the right circumstances, these things really can help make your portfolio better.