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Business Observer Thursday, Apr. 9, 2009 13 years ago

Masters of their Universe

Running an independent wealth management firm sounds like an oxymoron these days. Two industry veterans are still giving it a shot.
by: Mark Gordon Managing Editor

Running an independent wealth management firm sounds like an oxymoron these days. Two industry veterans are still giving it a shot.

The stench wafting out of the wealth management business is as noxious as it has ever been, thanks to the recession and so-called wealth managers who turned out to be scam-artists.

But a pair of longtime money managers, both of whom relocated to the Gulf Coast from New York City, is taking a chance on the industry nonetheless. Independent of each other, Raul Elizalde and Al Bartolomeo have recently launched their own wealth management firms in Sarasota.

In his first six months, Elizalde's Path Financial has picked up nine clients, with about $5 million in assets under management. Meanwhile, Broad Reach Wealth Management, founded by Bartolomeo in March 2008, has signed on six clients totaling about $4 million in assets.

Small numbers to be sure, but the advisers both say they would rather be small and on their own than be part of a bigger firm.

Plus, both Elizalde and Bartolomeo are hoping to turn the industry tumult into an advantage. While their pitches to clients are more dissected than in the past, they say being independent provides a chance to prove themselves under high scrutiny.

“In the downturn, there are so many people looking for new advice,” says Bartolomeo. “For an adviser like me, this is a good time to look for clients.”

Adds Elizalde: “This is perfect timing for me. Big firms have been so discredited.”

Elizalde built his career by working for some of the biggest firms in the business. A native of Argentina, Elizalde worked on the trading floor of Salomon Brothers on Wall Street in the mid-1980s, the height of the industry's 'Masters of the Universe' phase.

Elizalde would later travel the world — he filled three passports in the 1990s — when he ran the investing strategy department for several firms, including Banc of America Securities. But family, weather and a post 9/11 life reassessment of his life brought Elizalde to Sarasota earlier this decade.

Through Elizalde's various stops in his career, he says he's developed a few contrarian market philosophies. For one, he doesn't believe in the traditional buy-and-hold strategy. He also isn't a big fan of holding an arbitrary asset mix.

Says Elizalde: “The belief that if your investment horizon goes long-term it becomes less risky is inherently flawed.”

Instead, Elizalde says he uses a mixture of short-term and mid-term strategies. He is also big on regularly testing a client's portfolio for problems, including utilizing what's known as a Monte Carlo Analysis, a method of repeated random sampling.

Bartolomeo also brings a wealth of testing to his firm. That includes making sure he and any potential clients are a good fit. After spending about 15 years at boutique New York investment firms that catered to high net worth individuals,
Bartolomeo also developed his own industry philosophies.

Chief among those beliefs, says Bartolomeo, is that the industry is overloaded with firms and individuals that will take on a client just for the sake of selling products. Bartolomeo says he has and will turn away a client that doesn't fit, like he did recently when he met with a man in his 80s who had an estate of $4 million, with all but $200,000 tied up in real estate.

Bartolomeo suggested that the perspective client should instead see an estate attorney.

“A lot of the industry is sales,” says Bartolomeo. “And I want to get away from anything that isn't totally client focused.”

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