Once a firm of registered reps, RIA expands to serve mass affluent in Boise and Salt Lake City

September 30, 2010 — 5:50 AM UTC by Steve Garmhausen

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Names: Mark Matley, Paul Salisbury, principals, The Insight Group Inc.

AUM: More than $250 million

Location: 3115 East Lion Lane, Suite 100, Salt Lake City, Utah

Years in business: 22 (Mark Matley) and 24 (Paul Salisbury); both at Insight Group for 18 years

The days of the general store in retail and general practitioners in medicine are largely over. Finding niches and specialties becomes important as an industry matures and, consultants say, the advisory business is no different. Some RIAs serve niches like AT&T employees, physicians or professional athletes. But many investors connect themselves more closely with a spiritual group than a vocational one. As principals of The Insight Group Inc. of Salt Lake City, Utah, Mark Matley and Paul Salisbury are finding success by advising members of the Mormon community of which they are part. It takes special planning to allow a youth to spend two years on a mission or to tithe 10% of your salary.

What differentiates your firm?

PS: Our team approach. Some years ago, we were a more traditional office with a number of registered reps. It just became very difficult to maintain quality and oversight, so through gentle nudges and attrition we pushed out the registered reps. We maintain an employee-based culture where everyone works for the same clientele. Then there’s our stability—me and Mark have been together 18 years.

About half of your clients are from the Church of Jesus Christ of Latter-day Saints. Is there a lot of wealth in the Mormon community?

MM: Yes. Since the beginnings of the church, we have been taught to be very industrious and educated. Our typical portfolio size is about $1.8 million to $2 million.

Is it important to your Mormon clients that you come from the same background?

MM: I don’t recall that ever being asked as we’ve had (potential clients) interview us. When an LDS prospect comes to us, they’re probably looking not so much at whether we’re LDS but whether our values and the way we think align with the way they think and with their values. As a whole, they tend to be frugal in spending, conservative in investing, not wanting to get into the deal of the day.

How involved do you get in the spiritual lives of your clients?

MM: We offer deep planning services, and ask a lot of questions. We ask about values and what they believe in, and that automatically comes out. With LDS clients, I’d say there’s a fair amount of discussion about church beliefs and spiritual beliefs. Paul and I are both Mormon; we’ve both done missions. We have a deep understanding of the religious and cultural aspects of the church.

Do LDS clients have unique needs?

MM: A big part of LDS life is our missions. When boys hit 19, they are encouraged to serve a full two-year mission, which they do at their own expense. And we have a number of clients who, when they retire, plan to go on missions as couples. The expense of that for a lot of families becomes a big planning component.

PS: Members typically give a tithe or 10% of their increase to the church, along with an additional monthly contribution to a welfare fund. Most often these donations are in cash and sometimes in appreciated assets. Additional church and humanitarian gifts to other projects come in both cash and appreciated assets. When our clients have appreciated long-term gain assets, we consider those in the gifting strategy as in-kind donations and help them plan accordingly to maximize tax strategies.

Which custodian do you use, and why?

MM: Most of the assets we manage are through SEI Trust. They hold clients assets and report on them, and they help us select managers for clients’ portfolios. We come up with allocations for clients, and they give input on which managers to use for each piece of the portfolio.

We use a trust company because we like the security of the assets. People are very concerned with where their money is being held, and trust companies have a high level of security versus a custodial company.

SEI has had its ups and downs over the past few years. Do you think the company is headed in the right direction?

MM: Very much so. We felt like they deviated a bit from their philosophy—they started looking outside their core philosophy to enhance returns, and that started to backfire on them a bit.

PS: Using SEI was probably one of the best decisions we’ve made. (SEI founder and CEO) Al West is an innovator, and really wants to get it right. When they’ve made mistakes, they have been transparent about it; I value that and our clients value that.

As we look around, I don’t see anybody that espouses the process we pitch to clients as well as they do. They are a trust company custodian, and the flexibility give us lets us accomplish a lot of things for clients, such as gifting appreciated assets, holding unique securities, our ability to waive minimums for clients so we can have single process.

What was the best day of your RIA career so far?

MM: The day we started the Insight Group. I’d always had a vision of having my own business.

PS: When I finally realized that we had attained and recognized the excellence of our team and how well they serve our clients. It took us 10 or 11 years to get into a pretty solid team approach.

What was the worst day in your RIA career so far?

MM:

One of the worst was when I left the first firm I’d worked for to join this one. There were bitter feelings over me leaving; some of the people I felt were going to be loyal and encouraging about my career change turned on me.

PS: It was a day in March 2009 when all the markets seemed to be imploding and there was a lot of concern about what was happening. It took a great effort to work with clients and maintain the disciplines—which, in fact, have panned out.

What’s the next big thing for investing or allocating on behalf of clients?

MM: (Because of the stock market crash) there was a lot of press about how asset allocation is dead. We didn’t believe that at the time and don’t believe it now. If anything is new for us, it’s exposing clients’ portfolios to more broad asset classes.

Whom do you look up to in the investment industry?

MM: It’s hard not to look up to Warren Buffet. I respect more than anything his convictions and ability to stick with his convictions. He has the patience to let things unfold the right way.

PS: Al West has been a great innovator. He has a deep desire to do the right thing for his clients. Early on when he started the firm, it was in the early days of computerization; they worked with banks, providing services that let them be more efficient. That has grown over the years into the largest back-office trust service for banks. We piggyback on those services.

I also admire how they have brought on individual money managers within a mutual fund or separate-account, and then monitored them—in a way that people in our industry talk about, but often don’t do.

What is your plan for growth?

MM: We started a new business six months ago called the Financial Insight Center. It’s geared to the mass affluent marketplace, those with $100,000 to $1 million of assets. We have a financial radio show that’s heard in Boise and Salt Lake City; it drives people to workshops. We use Insight Group technology, scaled down, and we’ve got four advisers—two in Boise and two in Salt Lake. One appears on each radio show.

The planning services are geared toward that marketplace, and we are using SEI models as opposed to our more strategic models.

PS: This initiative is really a way of getting the word out then bringing people in and helping them clarify their retirement. So often in that (mass affluent) market, it’s about products, with just a cursory overview as far as planning.

For more RIABiz coverage of SEI, see SEI turns a big corner but Genworth is still the big asset gatherer and After a decade of unsteady results, SEI Investments is attracting financial advisors again).


Mentioned in this article:

SEI Advisor Network
TAMP
Top Executive: Wayne Withrow



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