Since 2005, Shakespeare Wealth Management Inc. has refined its practice, aiming to attract and serve more affluent, sophisticated investors. The move has paid off for the Brookfield-based firm. In that time frame, Shakespeare’s revenues have increased by 50 percent, and its client base has grown as well.
Part of the move was switching to fee-only services, said Kevin Reardon, president of Shakespeare. That means the firm does not sell any of its own financial products.
Tailoring his practice to serve a more affluent client was part of the natural progression for Shakespeare Wealth Management, Reardon said.
“After 12-1/2 years, I was looking at how to get it to the next level,” he said.
The designation means that Shakespeare gives objective advice that is free from conflicts of interest, he said. That strategy has helped the company attract more affluent, sophisticated investors, Reardon said.
“They probably have an investment plan at work, but they want advice on their own assets and their work-supplied account,” he said. “They often own real estate, such as the building their business is in. They own their home and might have a second home. They want unbiased, objective advice.”
Shakespeare joined the National Association of Personal Financial Advisors this year, a national organization of fee-only financial advisors.
Clients generally need to have a net worth of more than $2 million,with about $500,000 in assets to invest, Reardon said.
“This client has more sophisticated investing needs,” he said. “We can spend the time to dig under the hood and look at things like their life insurance policies. It takes a lot of time and effort.”
For clients who require more complicated, innovative investment strategies, Reardon advises them to use financial tools such as exchange traded funds (ETFs). ETFs are open-ended investment companies, like mutual funds, that are traded like stocks or index funds.
“They’re transparent – you can see everything inside them,” Reardon said. “And you have complete tax control with an ETF. It’s a sophisticated tool for the high net worth client.”
For affluent clients who have a large amount of their assets allocated in one stock, such as an executive working for a publicly traded company whose compensation is partially made up of stock of that company, ETFs provide a unique way to balance that stock’s exposure to fluctuations, Reardon said.
Some ETFs have leverage designed in them, he said, allowing investors to short certain industries that show weakness or vulnerability.
“You can now buy an (EFT) fund that goes up when the market goes down – a short fund,” Reardon said. “The leverage allows that if the market goes down 1 percent, the fund may go up 2 percent. You can have leverage, and that means you don’t have to spend as much capital to get the same bang for your buck.”
Shakespeare Wealth Management has about $36 million under management now, with plans to grow to $50 million by 2009, Reardon said.
