Saturday, 31 October 2020

Review of Gerstein Fisher

Review of Gerstein Fisher
09 Oct
2:09

Updated on Friday, October 9, 2020

Gerstein Fisher is a small investment advisory firm of 10 employees headquartered in New York City. The firm, which offers investment management and financial planning, is a part of People’s United Bank, a larger financial services company with banks and advisors across the Northeast.

The advisory arm of the company, People’s United Advisors, which Gerstein Fisher falls under, has over $9.1 billion in assets under management (AUM) and 145 employees on staff. Gerstein Fisher primarily serves individual investors and families but also offers its services to institutions and other investment advisors.

All information included in this profile is accurate as of October 9, 2020. For more information, please consult Gerstein Fisher’s website.

Assets under management: $9,116,996,322
Minimum investment: Varies by account type, starting at $2,000
Fee structure: A percentage of AUM, fixed fees, hourly charges
Headquarters: 565 Fifth Avenue, 27th Floor
New York, NY 10017-2478
https://gersteinfisher.com/
(888) 796-2540 / (800) 473-1155

Overview of Gerstein Fisher

Gerstein Fisher was founded in 1993 by Gregg S. Fisher, the nephew of Ed Gerstein, who started a family-owned tax business in 1978. Fisher is known in the investing world as being one of the first investment managers to offer factor investing, an approach that uses quantitative data to tilt equity portfolios to target higher returns. In 2016, the firm was acquired by People’s Securities, Inc., a subsidiary of People’s United Bank, a diversified financial services company with about 400 retail locations in the Northeast.

Gerstein Fisher has 10 employees performing investment advisory functions in its New York City office. This is a small part of the larger team at People’s United Advisors, a subsidiary of People’s United Bank of which Gerstein Fisher is a part, which has 115 employees who perform investment advisory functions at offices around the Northeast, including the 10 Gerstein Fisher employees in New York.

What types of clients does Gerstein Fisher serve?

Gerstein Fisher’s clients include individuals, business entities, retirement and pension plans, trusts, estates and charitable organizations. The bulk of the firm’s clients are individual investors with less than $750,000 of AUM (meaning they’re not high net worth individuals per the SEC’s definition). The firm does also work with high net worth individuals.

The firm’s minimum investment of just $2,000 for its RealLifePortfolios™ portfolios allows a broader range of investors to use its services. However, access to its investment advisory services requires a minimum investment of $500,000.

Services offered by Gerstein Fisher

Clients of Gerstein Fisher are offered discretionary investment advisory services, meaning the advisor has the authority to make decisions about buying and selling securities on the client’s behalf. This service is offered through customized portfolios for private clients (investors with more than $500,000), or through RealLifePortfolios™, the firm’s robo-advisor option, for clients with between $2,000 and $500,000 to invest. Private clients have investment portfolios that are designed based on their financial situation and goals, while RealLifePortfolios™ clients are assigned a set portfolio based on determined strategies.

The firm also offers financial planning and consulting services (for investment and non-investment related matters) on a negotiable, standalone basis. Additionally, Gerstein Fisher supports investor education through access to a number of financial education resources, such as videos, articles, webinars, events and market commentary.

Below is menu of the services offered by the firm:

  • Investment advisory services (discretionary)
  • Financial planning and consulting services
    • Insurance planning
    • Estate planning
  • Reporting services and investment data storage
  • Investor education

How Gerstein Fisher invests your money

The firm invests with a few core tenets in mind: global diversification, proactive tax management, smart portfolio structure, investor behavior and risk management. These tenets hold true for both private clients and clients using the firm’s robo-advisor option, RealLifePortfolios™.

Gerstein Fisher builds portfolios using a model-based, multi-factor approach, which is based on arbitrage pricing theory. This approach focuses on risk and behavioral factors for higher returns over the market index while keeping a broad market exposure. Plainly speaking, the firm looks to earn clients more money while keeping portfolios diversified.

While it will depend on a client’s time horizon, financial goals and risk tolerance, portfolios may include equities, fixed income, commodities and international investments.

Fees Gerstein Fisher charges for its services

Gerstein Fisher charges clients based on a percentage of AUM. The fee schedule below outlines the firm’s rates, which are based on the amount of assets a client has under management and the type of account strategy used, with equity and balanced accounts charging higher fees than fixed income accounts.

The firm states that fees are negotiable and that certain clients may be subject to a different fee schedule than the one outlined below. In addition to investment management fees, clients are responsible for brokerage commissions, transaction fees, account maintenance and other fees.

Gerstein Fisher Investment Advisory Services Fee Schedule
Assets Under Management Equity and Balanced Account
Strategies: Annual Rate
Fixed Income Account
Strategies: Annual Rate
Initial $2,000,000 1.00% 0.55%
Next $3,000,000 0.70% 0.45%
Next $15,000,000 0.50% 0.35%
Additional amounts over $20,000,000 0.35% 0.25%

Gerstein Fisher also offers a wrap free program for those with $25,000 or more in AUM. Wrap fee programs provide clients with one bundled fee for advisory and brokerage services. This fee is not inclusive of financial planning or consulting services and may or may not save a client money in aggregate fees. Below is the breakdown of the firm’s wrap fee schedule.

Gerstein Fisher Wrap Fee Schedule
Assets Under Management Wrap Fee
Initial $500,000 1.10%
Next $500,000 1.05%
Next $1,000,000 1.00%
All assets over $2,000,000 0.90%

Clients who wish to engage the firm’s financial planning or consulting services will pay a standalone fee, which ranges from $750 to $10,000 for fixed fee, or $200 to $500 on an hourly basis. A client’s rate will depend on the level and scope of services provided.

Gerstein Fisher’s highlights

  • Low account minimum: With its RealLifePortfolios™ offering, Gerstein Fisher opens its doors to investors with just $2,000 to invest, making it more inclusive than many other investment advisory firms. However, getting a customized portfolio does require a higher minimum investment of $500,000.
  • Competitive fees: Gerstein Fisher’s fees are below the industry average of 1.17% of AUM, as determined by a study by RIA in a Box. Even the firm’s wrap fee, which includes brokerage costs, falls below the industry average at just 1.10% at its highest tier, compared to the industry average of 1.17%.
  • Industry accolades: For five consecutive years, from 2012 to 2016, the firm’s founder, Gregg S. Fisher was named a Barron’s top 100 advisor.
  • No disclosures: The firm has a clear disciplinary track record. See more on this below.

Gerstein Fisher’s downsides

  • Potential conflict of interest: Gerstein Fisher may refer clients to People’s United, the larger financial institution that owns the firm. Gerstein Fisher stands to earn referral fees for passing clients to People’s United, which represents an inherent conflict of interest.
  • Fewer services than other wealth management firms: Comparable firms offer more comprehensive services, such as in-house tax services and family office considerations. Gerstein Fisher, on the other hand, is more narrow in scope. It offers investment management, and financial planning is available as an add-on service.
  • One location: The firm is located in New York City and does not have other offices, which may not make a good option for investors who don’t live in the area and want to meet with their advisor in person. That being said, People’s United Advisors, of which Gerstein Fisher is a part, does have a larger footprint throughout the Northeast.

Gerstein Fisher disciplinary disclosures

The larger company of which Gerstein Fisher is a part, People’s United Advisors, reports one disciplinary disclosure on its Form ADV paperwork filed with the SEC. The incident relates to an advisory affiliate against whom a regulatory authority entered an order related to investment activity within the last decade. For more information, visit the firm’s IAPD page.

Gerstein Fisher onboarding process

To start a client relationship with Gerstein Fisher, you can call the office or schedule a meeting through the firm’s contact page. The form asks your name and contact details as well as how much you have to invest.

New clients will work with an advisor to discuss their financial objectives and goals, risk tolerance and time horizon, which will inform their portfolio’s investment management strategy. Private clients (those with more than $500,000 invested) will have access to the client advisory team, while RealLifePortfolios™ clients can access their accounts through an online portal that offers monthly statements and performance details. Private clients also have access to this portal.

Is Gerstein Fisher right for you?

Gerstein Fisher’s low management fees and low minimum account size may make it attractive to a broad range of investment management clients. However, with that broader appeal might come a downside: The firm doesn’t offer the same types of services as wealth management companies that cater to the ultra high net worth crowd. For example, there isn’t a family office or real estate or tax services on the menu of what’s offered.

While the firm’s affiliation with People’s United Bank means it can offer more services and has financial backing beyond itself, clients may find themselves referred to services offered by the larger entity which may or may not result in referral fees for Gerstein Fisher. When searching for a financial advisor, it’s always important to ask questions of the advisor to make sure you understand what services are being offered and what costs are involved.

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Source: https://www.magnifymoney.com/blog/investing/gerstein-fisher-review-ria/

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