Investment Management for the Masses
Personalized advice is increasingly critical for retirement plan participants and their positive outcomes, but scaling such a service is an ongoing issue.
Tom Brown and Blue Water Capital Management seem to have figured it out.
“Why do we exist?” Brown asked matter-of-factly. “Blue Water Capital Management is a Syracuse, N.Y.-based RIA that works with individuals in the areas of financial planning and investment management. We also work with regional businesses, helping them to manage their retirement plans.”
The firm provides a high level of investment management and financial planning to individuals and families, but in a unique twist, it delivers that same level of investment management to retirement plan participants.
“We use model portfolios in all of our retirement plans; the same portfolios that we use with a $2 million account will be in your 401k,” Brown, a partner with the firm who heads its retirement plan division, said. “It will have the same type of service model and the same access to financial planning. We really feel that investment management for all is the way to go, and we’re able to do that effectively in 401ks.”
They’re also the fiduciary on the plan, and help plan sponsors and trustees select the investments, perform ongoing research and monitor those investments.
“You can stop there as a fiduciary, but we take it all the way down to that new participant, where I’m physically meeting with an individual and discussing the same things that we discuss when we’re in an investment committee meeting. It means we are able to deliver high-level investment recommendations, directly to the participant, in an easily digestible way. Who better to hear it from than the fiduciary on the plan? That makes us somewhat unique.”
So, how specifically does he and the team at Blue Water measure participant outcomes? By focusing on what they call an engagement ratio.
“Anyone can track participation, investment performance, average contribution and things like that,” Brown explained. “You can create a beautiful plan but if no one’s using it, what’s the point? So, the engagement ratio is essentially people who physically meet with us. How many people are meeting with us one-on-one, and how many active or eligible participants are there? That ratio is what we’re looking to increase. Did they meet with me once or are they meeting with me regularly?”
Those participants who are actively engaged, he added, “have much better overall performance in terms of savings and investments than the folks that do not. That’s an important and different metric that we look at.”
It sounded great, but we wondered how they systematize something like that.
“It starts with the core of our business, which is investment management and working with individuals,” he said.
As an example, Brown and Blue Water recently had a new participant in a plan, and she had zero dollars in her account (because she was new).
“We went through an in-depth discovery process and talked about risk and return and what her goals are. In that meeting, we found out that she has another 401k with $30,000. So, we helped her get that rolled into the current plan.”
As the process continued, Brown discovered that she has $120,000 in a savings account.
“She’s 27 years old, and that’s impressive, but it isn’t an appropriate place for a 27-year-old to have the majority of her assets,” he concluded. “So, she’s now also a private client of ours and is in CDs and a portfolio that’s much more tailored to her goals and objectives. If she hadn’t met with me, I can tell you right now, that money would still be sitting in cash.”
Tom Brown is a partner and head of retirement plans at Blue Water Capital Management.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
