Investor Advocacy Program-- Thoughts?

I am interning for an economist who is highly ranked by bloomberg, sells his research to top firms, speaks at many important conferences, etc. He is a nice dude who want to make more money off of his brain. What he wants to do is going into the Asset Management sector, particularly focusing on Investor Advocacy. Basically, he wants to be a "buy side" guy for people with a lot of money. He would be like a watch-dog for his clients to protect them from the financial advisors, make sure their financial advisors are making good decisions based on actual markets and not just the number of production credits they'll generate. Pay structure would be a retainer fee, which includes 25 hrs of work, i.e. quarterly calls/meetings, looking over deals, etc. My task as an intern is to try to figure out how to get these high net worth clients. My question for WSO is: what do you think of this idea? Have you seen anything like this? Do you think this is worth trying?


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Comments (4)

Best Response
Feb 15, 2013 - 7:45pm

Well his argument is that it's supposed to be performed by wealth management firms, but they way wealth management firms get paid is based off of transactions in addition to a percentage of the money they make for the client, so his thought is that he would basically be making sure they're doing what makes sense economically. Also, a lot of people, even high net worth, don't really seem to know a whole lot about markets or their financial investments, so his thought it that having an economist who has also worked in IB, etc, will give them peace of mind and they'll feel secure that they're avoiding Bernie Madoff situations. He put it to me like this: when you buy a house, there's the realtor for the person who is selling it to you, and then you have your own. In wealth management, it's basically like the other guy is the "realtor" for financial services, but you don't have anyone really representing you. That's what he wants to do. And he thinks having a set rate retainer fee will help reassure the client that he isn't looking to profit on a per-transaction basis, but rather just to help keep watch over their assets.

Does this sound like anything any of you have heard of? If yes, point me in the right direction? If no, what do you think are the pros and cons of this? Is it a good idea, period?

I am supposed to be figuring out how to best market this to clients and then eventually getting some clients. Problem is, I've never seen anything like this before. Anything similar that you've heard of would be appreciated!

  • 3
Feb 15, 2013 - 9:13pm

It's a horrible idea. He will be competing with consultants....super low margins. How does he get clients? That's a real good question. My guess is that he won't.

This reminds me of the thing that used to exist called fund of hedge fund of funds. These guys were supposed to perform due diligence on the fund of fund guys to see if they were any good.

Feb 17, 2013 - 11:13pm

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