We catch up with a US wealth management firm that chooses to keep its investment management in-house rather than outsource it.

That many wealth managers farm out their investment operations to curb costs and focus on other tasks is now a given of the industry. The model of “outsourced chief investment office” or OCIO is well established. 

Manhattan West, a firm formed in 2016, recently promoted Angie Spielman to the rank of founding partner – formerly from JP Morgan, Spielman joined the firm in the year it was created. 

The organization serves private wealth clients with business management, tax, insurance, and planning services, while also running proprietary alternative investments across multiple asset classes including private equity, venture capital, crypto, real estate, private debt, and traditional equity and fixed income portfolios. 

And, as Spielman pointed out, Manhattan West is a “one-stop shop” for clients’ needs, whether for financial planning or investment. Unlike many wealth managers, it manages investments, including those in the alternative space, in-house (private equity and real estate). 

“We have found this is the best fit for what we are trying to build,” Spielman told Family Wealth Report. 

With clients, the firm targets alternative investments to make up about a third of the total portfolio, she continued. 

Alternative investments – also called private market investing – are all the rage, and are likely to remain so while inflation remains elevated. These asset classes aren’t all cheap, however, with a performance fee on top of the management fee. 

“We offer full transparency on what fees and inherent risks are involved with all our alternative investments. These are included in all our marketing material and investment documents,” Spielman said. “However, it is our belief that despite the higher up-front costs, the potential upside of the returns will more than offset any of these fees.”

As far as “liquid alternatives” are concerned – such as listed funds – Manhattan West isn’t looking to add this area to its offerings yet.

The macro-economic environment cannot be ignored in any investment conversation. FWR asked Spielman how the firm is managing client money during this inflationary period. 

“For better or worse, monetary policy has taken a larger role in our economy and the Fed's only tool to tame inflation is to suppress demand through tightening monetary conditions by increasing the Fed funds' rate and quantitative tightening,” she continued. ”Companies with lofty valuations have already seen multiple contraction due to higher interest rates and companies with weak balance sheets that can't fund themselves cheaply are going to have a tough time in this environment.”

“That's why we've maintained a value tilt in equity focusing on quality names with strong credit profiles. In fixed income, we've maintained a short duration strategy and will continue to [do so] until inflation shows signs of being tamed,” Spielman said. 

Women’s issues
The conversation pivoted to women's voices which, both as clients and advisors, are becoming louder. Women face specific liquidity events that are often different from those for men, such as divorce pay outs (although it can sometimes go the other way if the woman is far wealthier than a husband/partner) and inheritance. (We have also written about the topic of "suddenly single").

“In my experience they [women] have come into the situation where they haven’t been the decision-maker [over finance] in the past,” she said. “It is about assessing what they have and there is education…a lot of women who come into wealth don’t have experience in this particular space.”

“Women who don’t have experience in managing their wealth tend to feel a bit vulnerable after a liquidity event,” she said. 

A great deal of time is taken talking to women about their financial situation and working on plans. Spielman said that her clients’ estate plans will tend to be more focused on charitable causes than is the case, other things being equal, than with men. Women tend to have more of an ESG tilt. 

Spielman returned to explain how she approaches clients' portfolios. 

“We offer a highly personalized method of portfolio design and creation. We spend time understanding each client’s specific goals and objectives. This enables us to design a customized portfolio for each client based on their time horizon, risk profile, and financial objectives. What differentiates us is the diversity of our team,” she said.

“I, for example, spent over eight years of my career in credit so I have a unique understanding of both sides of the balance sheet, in addition to my experience working with women. I have a colleague who works with athletes, specifically. I have another who strictly works with international clients and has a robust understanding of the intricacies of investing in the US while living abroad. We then leverage each other’s knowledge and experience to offer the best process possible.”

Manhattan West does outsource estate planning. 

“We strive to make introductions to at least three different attorneys and assist in the conversations with them if the client would like us involved in the process. All drafting and recommendations we leave to the experts,” she responded. 

Gender issues aside, FWR asked what were the main financial planning objectives of clients and where they have changed. 

“This one is difficult to answer as there is not one `main’ financial objective for all clients. Every client’s financial situation and goals are different. What we do is tailor our financial solutions to meet their very specific needs,” she added.