After almost a year of avoiding attention, Phil Shaffer is talking and ready to share what he’s up to.
The cofounder of Graystone Consulting, Morgan Stanley’s $300 billion institutional business, left the bank with others to start an RIA in 2017, Halite Partners. But it was slow to gain traction. Unlike private clients, who often follow closely behind their financial advisors wherever they go, institutional money has many masters. Changes do not happen quickly.
So instead of hustling to build a new RIA from scratch, Shaffer realized that joining a longtime friend’s RIA would be a win-win scenario for both of them. Hamilton Capital, a Columbus, Ohio RIA that manages $2.6 billion, was already adding assets at a remarkable clip and setting itself up to compete for more institutional clients, he told RIA Intel.
Hamilton plans to grow its assets to over $10 billion in the coming years and to get there, it hired Shaffer to cultivate more institutional clients. He joined the 22-year-old firm as Managing Director of Institutional Services earlier this year and recently recruited and hired Lee Caleshu, the former chief investment officer of Halite, to join him.
Caleshu, also a managing director, will be the only immediate addition to Hamilton’s eight-person investment team that largely drew Shaffer to the RIA. The group “often” beats the benchmark indexes by analyzing asset class returns and proactively adjusting allocations according to a medium-term time horizon.
Shaffer and Hamilton Capital CEO and Chairman Matt Hamilton share an attitude toward investment management: Regular investment performance is a must for institutions that withdraw funds every year. Allocating money for the long-term and simply hoping for the best leaves too much to chance.
“He had built an investment team unlike none other than I’ve seen. I don’t see that in teams that I compete with, whether it be RIA or brokerage teams. Hamilton offers exactly what institutions need in my opinion,” Shaffer said.
Hiring and dedicating resources for an institutional business might not be without risk.
Facing rising data and compliance costs coupled with fee compression, Boston Advisors, an RIA that managed institutional and private wealth totaling over $2.37 billion, recently split in two and sold the halves. “The dynamics in the institutional investment management business have changed unbelievably, even in just the last three or four years, from our perspective,” Michael Vogelzang, president and chief investment officer at Boston Advisors, told RIA Intel.
But Shaffer and Hamilton remain unfazed about structural headwinds, insisting that institutional money will head their way. “We think we can be profitable, provide a great level of service and we are creating something that is differentiating in the marketplace,” Hamilton said.
The timing looks promising given that the outsourced chief investment officer industry has exploded in size in recent years and OCIO firms have taken on ever-larger mandates.
“More organizations continue to seek OCIO services today than I’ve seen at any point in my career,” said Phil Shaffer, in a statement.
The RIA strives to deliver the same level of service to private and institutional clients, something many institutions crave, according to Shaffer. Some might only want quarterly statements and an annual call but others are looking for a partner to navigate other issues. Like private wealth management, institutional is getting more holistic.
And it’s also just good business, Shaffer said. When board members of institutions see the level of care given to both an investment portfolio and an organization overall, they seek that out in a personal financial advisor. And referrals beget referrals.
“We know that this is profitable business, a good business for us to be in.”