Thursday, 9 July 2020

Review of Wetherby Asset Management

Review of Wetherby Asset Management
20 Mar
4:08
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Wetherby Asset Management is a San Francisco-based registered investment advisor (RIA) with an additional office in New York City. Catering to high net worth clients with at least $10 million to invest, the firm’s 40 financial advisors provide service to 500-plus clients and oversee roughly $4.85 billion in assets under management (AUM).

Along with traditional investment management, Wetherby also advises clients on impact investments across nearly every asset class. The firm also offers a full range of financial planning services.

All information included in this profile is accurate as of March 20th, 2020. For more information, please consult Wetherby Asset Management’s website.

Assets under management: $4,851,933,986
Minimum investment: $10 million (exceptions made on a case-by-case basis)
Fee structure: 0.15% to 1.00% of AUM; hourly fees; fixed fees; negotiated fees; contingent fees
Headquarters: 580 California Street
Eighth Floor
San Francisco, California 94104
www.wetherby.com
(415) 399-9159

Overview of Wetherby Asset Management

Wetherby Asset Management was founded in 1990 by Deb Wetherby, a former broker in Morgan Stanley’s private client division. Prior to that, Wetherby worked in the auditing and consulting department of Price Waterhouse, the accounting firm. In founding her RIA, Wetherby’s goal was to marry the investing know-how of Wall Street with the personalized service and objectivity of accounting.

Today, Wetherby Asset Management is privately held. Wetherby, who is the firm’s CEO and a wealth manager, owns between 10% and 25% of the firm. The remainder is distributed among 23 other shareholders, only four of whom are non-employees.

The firm generally requires its wealth managers to hold an advanced degree or professional license. Its current team includes a number of chartered financial analysts (CFA), certified financial planners (CFP) and certified private wealth advisors (CPWA).

Which types of clients does Wetherby Asset Management serve?

The vast majority of Wetherby’s clients are high net worth individuals, though the firm works with a limited number of individual investors who are not high net worth. For reference, the SEC defines high net worth individuals as those with at least $750,000 under management or a net worth of at least $1.5 million. In addition to individual investors, Wetherby manages money for charitable organizations, corporations, pooled investment vehicles and state and municipal government entities.

With a $10 million minimum, however, Wetherby caters almost exclusively to high net worth and ultra high net worth clients. In some instances, Wetherby will lower its minimum requirements. Still, clients at the top end of the asset level enjoy low fees and a high level of customization.

Services offered by Wetherby Asset Management

Wetherby Asset Management provides investment management services to all of its client types. Clients typically work with Wetherby under one or more of the following arrangements:

  • Discretionary: Wetherby has the discretion and authority to invest and place trades in client accounts according to a client’s established objectives and guidelines.
  • Non-discretionary: Wetherby provides investment guidance but does not have the authority to place trade in client accounts without prior approval.
  • Consulting: Wetherby provides investment advice as needed based upon a mutual agreement, but clients execute trades on their own.

Wetherby’s services also include an impact investing capability, which is the practice of investing in companies, organizations and funds with the intention of generating positive social and environmental change along with financial return.

In addition to investment management, Wetherby also offers its clients a wide range of financial planning services. These services are provided as needed, and clients may or may not incur additional fees for financial planning.

Here is a complete list of services currently offered by Wetherby Asset Management:

  • Investment management
    • Impact investing
  • Financial planning:
    • Financial statement preparation and analysis
    • Income tax planning guidance
    • Risk management/insurance analysis
    • Retirement planning
    • Estate planning
    • Education planning
    • Philanthropic planning
    • Intergenerational wealth transfer
    • Equity ownership and stock option advice

How Wetherby Asset Management invests your money

Wetherby Asset Management invests client money with the dual goals of growth and downside protection. The firm develops an investment policy for each client that takes into account each client’s needs and goals, as well as the current economic and market conditions.

Wetherby’s investment approach is long term, with advisors looking out at least a year, though changing market conditions could cause Wetherby to sell securities more quickly. The firm diversifies its investments across asset classes and among multiple money managers. To execute its investment strategy, Wetherby primarily uses actively managed funds, though it includes passively managed funds in client portfolios to reduce fees and taxes.

Clients have the ability to customize their portfolios with Wetherby. That being said, client assets are generally invested in open-end, no-load mutual funds and other pooled investment vehicles. In some cases, investments are made in individual equities, fixed-income securities, exchange-traded funds or closed-end mutual funds. Some clients may have assets invested in private investment funds or other separate account vehicles or strategies managed by outside advisors.

In addition, Wetherby clients have access to private fund offerings through LRHF II Holding Company, which is owned and managed by Wetherby Asset Management. Wetherby also has an impacting investing capability for clients who want it. With this service, the firm reviews the social and environmental challenges that clients want to address and then finds appropriate investments to meet those goals.

Fees Wetherby Asset Management charges for its services

Wetherby charges clients based on a percentage of assets under management for its discretionary investment management services. There different fee schedules for clients with portfolios under $10 million and portfolios over $10 million, with rates generally declining the more assets a client has invested. However, the firm’s rates are negotiable and may be lowered for charitable organizations or employees’ family members and friends.

Fee Schedule for Portfolios Under $10 Million
Assets Under Management Annual Rate
First $3 million 1.00%
Amounts over $3 million and up to $9 million 0.75%
Amounts over $9 million and up to $10 million 0.00%
Fee Schedule for Portfolios Over $10 Million
Assets Under Management Annual Rate
First $10 million 0.75%
Amounts over $10 million and up to $40 million 0.55%
Amounts over $40 million and up to $80 million 0.25%
Amounts over $80 million 0.15%

In addition to the fees charged by Wetherby, clients may be responsible for some trading fees, such as when investing in private placements. Clients will also incur expenses for investing in mutual funds and other pooled accounts. Further, clients who use the services of LRHF will be charged an additional fee.

Whetherby’s fee may also include a negotiated fee in which clients contribute a portion of their negotiated fee into Wethreby’s Donor Advised Fund.

In some circumstances, Wetherby may negotiate with another investment advisor on behalf of a client for a reduced fee. For this service, Wetherby fees may include a contingent fee, which is charged based on a percentage of the client’s savings.

For the firm’s non-discretionary asset management and consulting services, clients may be charged either a fixed or hourly fee, with the rate varying based on the complexity of the client’s situation.

Wetherby Asset Management’s highlights

  • Low fees (for big investors): Those with more than $80 million to invest can enjoy rock bottom fees of 0.15%. A sampling of investment advisory fees in 2019 by AdvisoryHQ shows that the average rate for assets over $30 million is 0.59% a year, which is significantly higher than Wetherby’s rate.
  • High level of customization: With just under 550 clients, Wetherby has 40 investment advisors on staff. The firm allows clients, including those who request impact investing, to place certain restrictions on the types of investments in their portfolios. Additionally, Wetherby will provide consultation and oversight to assets not held at the firm for no additional charge, unless asked to provide reporting or additional research on the assets.
  • Awards and accolades: Wetherby has frequently earned top rankings over the years. The firm’s founder, Deb Wetherby, landed the No. 5 slot on Forbes’ list of the Top 50 Best-In-State Wealth Advisors in 2020; No. 122 on Forbes’ list of America’s Top Wealth Advisors in 2019; and No. 19 on the magazine’s list of America’s Top Women Advisors in 2019. Other awards the firm has won include two entries on the list of the 2018 Top Wealth Advisor Moms by Working Mother magazine and appearances on B Lab’s lists of the Best for the World for Changemakers, Workers, Customers and Governance in 2019.

Wetherby Asset Management’s downsides

  • High account minimum: Wetherby’s high investment minimum requirement of $10 million makes its services out of reach for many investors. However, the firm will waive this minimum on a case-by-case basis, and it does currently serve just under 50 individuals who do not meet the SEC’s definition of high net worth individuals.
  • Small geographic footprint: With just two offices, Wetherby has a limited geographic reach. If you aren’t located in San Francisco or New York, it will be challenging to meet with your advisor in person, though the firm is registered in a number of other states if you’re open to working remotely with your advisor.
  • Potential conflict of interest: Debra Wetherby and two other owners of the firm also own minority ownership interests in a savings and loan holding company called National Advisors Trust Company (NATC). The firm intends to refer clients to NATC for trust and custodial services, contending that NATC provides these services for less than competitors. While the firm states in its Form ADV that it “will only recommend NATC to its clients when it is in the best interest of its clients,” this outside interest does present a potential conflict of interest as advisors may have an incentive to give the company additional work, thus referring its clients.

Wetherby Asset Management disciplinary disclosures

Wetherby has no disciplinary disclosures listed in its Form ADV. SEC-registered firms are required to provide prompt disclosures of any legal or disciplinary actions in their Form ADV to help current and prospective clients evaluate the firm. The type of legal and disciplinary events that must be disclosed include criminal and civil actions; administrative proceedings before a federal regulatory agency; and proceedings before a self-regulatory organization.

Wetherby Asset Management onboarding process

Prospective clients can contact Wetherby by filling out a form on its website, emailing the firm at [email protected] or calling (415) 399-9159.

Once clients choose to work with the firm, they will attend an official kickoff meeting during which advisors will get to understand the client’s goals and risk tolerance to create a suitable portfolio. The firm continually monitors clients’ investments and will make adjustments as necessary as a client’s goals and objectives change over time.

Clients have five business days after signing on with Wetherby to rescind the contract (though they will be required to settle transactions that Wetherby began on their behalf).

Is Wetherby Asset Management right for you?

For high net worth investors, Wetherby Asset Management offers a customizable investment management experience. Additionally, the firm’s requirement that wealth managers hold professional licenses and its clean disciplinary record can provide assurances to investors that they’ll be taken care of. What’s more, Wetherby’s emphasis on impact investing gives investors an option to participate in an increasingly popular investment style. However, the firm’s high account minimums leave out all but the very wealthy who are based near the firm’s offices in San Francisco and New York City from getting advice there.

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Source: https://www.magnifymoney.com/blog/investing/wetherby-asset-management-review-ria/

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