What’s best for the client?

When you create a wealth management practice from the ground up, as I did in 2005, you must make many choices about how to structure, staff, and operate the business. It’s been a complex process building Osbon Capital, made considerably easier by asking one question over and over: What’s best for the client?

When I focus on what best serves the interests of clients, several fundamentals for the business become non-negotiable:

  • Size – Only as many clients as I can maintain close, honest, one-on-one relationships with
  • Transparency – No surprises, relentless clarity on fees and products, frequent communication
  • Open source – Completely unbiased investment decisions, non-proprietary products, expert team

These elements are all important, but open source is first among equals. When I ask what is best for the client in terms of staffing, my open source standard is always to find the best people, no matter where they are.  In contrast to the big brand name investment houses who are restricted to their own internal resources, I can seek out the best companies and individuals to meet both the needs of clients and my own high expectations. When you can look anywhere to find good people, your choices expand exponentially, both in quantity and quality.

There’s no replacement for experience

It is a privilege to work with true experts.  It is refreshing and reassuring to know that our team members, like me, have honed their skills through decades of experience, working not just for a single firm, but for a wide range of wealth management organizations and investors. They bring knowledge, perspective and refined skill sets to every aspect of the business. Our tax advisors, for example, do hundreds of tax returns of a size and complexity far beyond that of Osbon Capital, and we benefit.

I am the only employee of Osbon Capital. Everyone else who contributes to the client experience is a contracted service provider, such as Fidelity, which acts as custodian for client accounts, or an independent contractor. Getting beyond the 20th century concept of employee to the far more flexible 21st century alternative of independent contractor (IC) was a big step forward for the economy in general, and certainly for Osbon Capital.

Cost control, one of my true obsessions, constitutes a significant IC advantage. I pay ICs only for what I need and use to serve clients. For their part, ICs have a clear incentive to provide exceptional service at reasonable rates.  It’s a great symbiotic relationship. In contrast, the big brand name firms pay large staffs of salespeople, sales managers, product managers, marketing departments, economists, analysts, lawyers, lobbyists, and others who may or may not contribute to the quality of client service. Not to mention prime-locations offices clad in marble and mahogany, elaborate boardrooms, Meisterstuck pens, and 24/7 national advertising.  Who benefits from that?  Probably not clients.

In it for the long haul

One of the scourges of the investment management industry, in my view, is turnover. It comes in several insidious forms – the sale of one firm to another, restructuring, arrival and departure of employees.  For a business that is built on longevity, relationship, communication, and trust, this turnover is the worst thing that can happen to the client.  It’s particularly endemic among rapidly growing and large financial managers, seemingly always chasing internal financial incentives that have nothing to do with client wealth and happiness.  Firms sell out, lever themselves with debt, acquire voting shareholders whose interests may be opposite to the client’s, and so on.

Osbon Capital was designed for longevity and continuity. Our family owns 100% of the business, and all voting control of our private stock is in my hands. There’s no employee turnover, no strategy to fatten the firm and sell it, no debt holders or outside shareholders seeking their own enrichment at the expense of clients. With this enviable – and intentional – structure, I have the freedom to make decisions that are best for the long-term interest of clients.

Longevity is reinforced through the use of high quality ICs.  Since our establishment in 2005 there has been little turnover in the ICs we use.  There has been no turnover due to unsatisfactory performance, and most if not all changes in our ICs are the result of upgrades and improvements to Osbon Capital.

The cloud

One requirement of all our providers is that they operate seamlessly in the cloud.  With one exception (Windham, for security reasons) they all do, which means I can access all parts of Osbon Capital at any time, from anywhere. During last year’s six feet of snow in six weeks that sure came in handy as I worked from the home office in Beverly after abandoning all hope of shoveling my way out.  It works when I go on vacation, which I do regularly.

I list below our key providers and the year we first engaged them:

  • 2005 Fidelity Investments – custody of client investment portfolios
  • 2005 Steve Mott of Mottwords – editor of everything I write
  • 2005 Clockwork Design – designer and caretaker of our public face, www.osboncapital.com
  • 2005 Regus – real estate and office services (we are their longest tenured client at 225 Franklin Street, 26th Floor, Boston, MA)
  • 2006/2011 Sadhana Consulting, a spinoff of our original operations manager OpFocus
  • 2006 Schwab Performance Technologies – portfolio reporting services
  • 2010 National Regulatory Services – regulatory compliance manager
  • 2010 Windham Capital Management – portfolio design and risk management

You will not find roomfuls of people employed by Osbon Capital at 225 Franklin Street.  The firms and people mentioned above are in Massachusetts, Texas, New Hampshire, Connecticut, North Carolina, and so on.  At 225, you will find me….and  a firm that is designed around finding the best solution for the client, and built for the long term.


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