Client Portals

The Art of Battling Giants4 min read

Dec 31, 2013 - John Osbon ( 6 mins to read)

What’s it like starting from zero and operating a small investment boutique, competing against the giants of Wall Street?  Challenging yes, but far from impossible. As Malcom Gladwell describes in David and Goliath, a guidebook for newcomers, underdogs and entrepreneurs, there are real advantages in being small.david-1

Gladwell’s David and Goliath “uncovers the hidden rules that shape the balance between the weak and the mighty.” And what a story it is.  We all know the David and Goliath legend, where the lowly shepherd boy kills the armed and armored giant with a single stone flung with his sling. It seems an impossible outcome, but Gladwell describes how, on closer examination, powerful and strong is not what it seems. In many cases, what giants see as strengths are also their weaknesses.

For David – and all the Davids since – speed, maneuverability, and surprise are “advantages of disadvantage.”  This book is must reading for any entrepreneur, demonstrating how being the underdog opens doors and creates opportunities.

David goes to Wall Street

I established Osbon Capital in 2005 after many years at Goliath firms like Morgan Stanley and Credit Suisse. At these firms I ran Chinese armies of salespeople, selling long lists of proprietary, premium-priced products. We had products for every imaginable goal from capital preservation to diversification, from low volatility to income. It seems that if we couldn’t convince prospects with logic, we would overwhelm them with variety.

We considered all these products to be strengths, but in terms of meeting the real needs of clients, they were weaknesses. I created Osbon Capital to focus on the true strengths of money management – focusing on costs and not paying more than necessary; reducing taxes wherever possible; avoiding speculation and prediction; and above all, matching the portfolio to the client’s goal. Everything else, like Goliath’s 100 pound armor, just weighs you down.

Beating Goliath

Part of competing with Goliaths is letting their own weaknesses, blindspots and excesses (high overhead, slow hierarchies, inflexible systems, conflicts of interest) work against them. We saw in the financial crisis how internal profit motives and weak controls led to behaviors among Goliaths that hurt clients, eroded reputations, and resulted in $93 billion in fines so far.

We also use the advantages inherent in our boutique size and close connection to clients – including speed, maneuverability, responsiveness and clarity of purpose.

Advantage in action

Let me share four recent examples that demonstrate our David-like advantages.

  • Speed – A new client emailed at noon on Friday, December 27th, wishing to invest fully before year-end.  Result: account opened same day with wire instructions provided within three hours.  How?  Because we can. With a fixed limited number of clients we are ready to act immediately.  Through experience we know how to get things done quickly and correctly.
  • Clarity – Regulators don’t require advisors to share after-tax portfolio performance. But investors need it. We did an after-tax analysis of a client’s account at a Goliath firm and found that the client would have to pay roughly $20,000 in taxes. This surprised the client. Few if any major investment firms want to present after-tax returns – we’re happy to run the analysis anytime. Because we can.
  • Connection – When a client needed to move her business retirement account to a new provider, we offered free assistance to facilitate the move. Why? Because we can. We charge one fee for managing assets and do whatever we can – inside and outside the holdings of your portfolio – to help you reach your investment goals. We get paid for one thing, so we can do many things.
  • Allegiance – We recently did a fee analysis on a client’s outside portfolio and found a full 60 basis points of savings by swapping more expensive funds for identical but lower fee products. We focus solely on the client’s best interests. Because we can. We have no incentive or compensation to sell products to satisfy upper management.

Some would say it’s not a fair fight between a David-style boutique like ours and billion dollar Goliath firms backed by huge ad budgets. And when you consider all the advantages we have in how we serve clients, I guess they’re right.


Give us a call at 617-217-2772 – we’d love to hear what’s on your mind


delivered to your inbox


This communication may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.”

“Historical performance is not indicative of future results. The investment return will fluctuate with market conditions.

Past performance is not indicative of any specific investment or future results. Views regarding the economy, securities markets or other specialized areas, like all predictors of future events, cannot be guaranteed to be accurate and may result in economic loss to the investor.

Investment strategies, philosophies, allocations and holdings are subject to change without prior notice.

This communication is intended to provide general information only and should not be construed as an offer of specifically tailored individualized advice.

While the Adviser believes the outside data sources cited to be credible, it has not independently verified the correctness of any of their inputs or calculations and, therefore, does not warranty the accuracy of any third-party sources or information.

Adviser does not endorse the statements, services or performance of any third-party vendor.

Unless stated otherwise, any mention of specific securities or investments is for hypothetical and illustrative purposes only. Adviser’s clients may or may not hold the securities discussed in their portfolios. Adviser makes no representations that any of the securities discussed have been or will be profitable.

Any IPO alerts are purely informational and should not be construed as recommendations to invest.

Adviser is not licensed to provide and does not provide legal, tax or accounting advice to clients. Advice of qualified counsel or accountant should be sought to address any specific situation requiring assistance from such licensed individuals.

Any case studies or hypothetical client profiles are for demonstration purposes only. They illustrate the breadth and depth of the many clients we represent at various life stages. Any similarities to actual Adviser’s clients past or present are strictly coincidental. Individual advice and results will vary based on each client’s circumstances, objectives and prevailing economic conditions.