SAN RAMON, CALIFORNIA - The South Asian community has plenty of successful entrepreneurs, professionals, and businesspeople. But are they being held back by an “affluence gap”—a lack of access to high-level investment advice, financial planning, and wealth management services?
Faraz Sattar has seen this gap up close. When he was CFO at Contango Capital Advisors, he helped provide a wide spectrum of sophisticated and diversified financial services to high-net-worth investors. But when he stepped out of the office and talked with friends, he saw that South Asian middle-class investors did not know about these services.
“At Contango, we offered an institutional level of service in financial planning and investment management,” says Faraz. “When I spoke with our community, though, I saw that South Asians were concentrated in risky investments. They were buying securties without understanding what risks were involved and without knowing about market upsides and downsides.”
A big part of the problem was that institutional investment firms simply ignored individual investors who weren’t multimillionaires.
“If you go to companies like Goldman Sachs or Merrill Lynch with $1 million or even $5 million, you get generic treatment. You don’t get institutional-level treatment until you’ve got $10 million or more,” says Faraz.
He saw the problem: How can middle-level investors get the kind of elite service that multimillionaires receive?
Accretive Wealth Management: A New Approach
Faraz answered this question by taking a momentous step. He left Contango to start his own firm: Accretive Wealth Management. Its mission: To give investors who have investable assets of $100,000 or more the high-quality financial planning and wealth management advice that institutional firms give to their $10 million clients.
Accretive does this by partnering with institutional money managers. These money managers cannot be approached by individuals who have less than $10 million to invest. Because of Faraz’s relationship with these partners, however, they will manage much smaller accounts for his clients.
“So, with another firm, somebody who has a $400,000 account would be invested only in mutual funds or exchange traded funds. We have institutional money managers that will manage their assets,” says Faraz.
“Accretive Wealth is very innovative because it is able to offer institutional-caliber investment solutions to clients who would not otherwise have access to them,” says Kris McCabe of Advisor Partners. “Through its relationship with us, Accretive Wealth is able to deliver comprehensive portfolios to match the needs and motivations of their clients whether it be managing risk or tax exposure; or a desire to increase dividend income or be socially responsible.”
A Full Range of Custom-Tailored Financial Services
“Accretive Wealth Management is a quarterback for all your financial needs,” Faraz explains. “Financial planning, investment management, insurance services—we’re a one-stop shop where clients can come and take care of all their financial needs in a very personal and professional manner.”
Some features of Accretive Wealth’s services:
Independence: Accretive Wealth is an independent advisory firm. Goldman, Wells Fargo, and other major firms often insist that their advisors put a big chunk of client assets into proprietary funds that charge high fees. Accretive does its own due diligence with its investment professionals and managers and never uses proprietary funds.
Tailored plans: Accretive Wealth creates a financial plan tailored to the unique needs of each client. The client then gets access to a customized website that aggregates all of their assets and liabilities, so the client can check their net worth on a daily basis. Investment accounts, IRAs, mortgages, credit cards – the client can see all transactions and balances for all of their accounts in one place.
Lower fees: When a client switches to Accretive Wealth from another investment advisor or firm, the company tries to find a way to lower fees, or at least keep them from increasing.
A Distinctive Approach to Sharia-Compliant Investments
“We knew that some of our clients were interested in Sharia-compliant investments and we wanted to offer them state-of-the-art investment options while adhering to their religious values, ” says Faraz. Sharia-compliant investing means that you exclude companies that derive 5% or more of their cumulative revenue from the following products, services, and activities: alcohol, tobacco, pork-related products, financial services, defense/weapons, gambling/casino, music, hotels, cinema, and adult entertainment.
Most Sharia-compliant investments are in mutual funds, but Accretive Wealth uses separately managed accounts (SMAs) through the Aperio Group. An SMA is opened in a client’s name and invested in stocks or bonds directly, instead of in a pooled investment like a mutual fund.
“The Islamic Values strategy allows clients to invest in the equity markets without sacrificing their values while achieving index-like returns in a low-cost, tax-efficient manner,” says Patrick Geddes, Aperio’s Chief Investment Officer. “The separately managed account [SMA] structure also allows taxable investors the opportunity to harvest tax losses that can be used to offset gains elsewhere in the portfolio, improving their overall after-tax return.”
Some of the advantages of using Sharia-compliant and other types of SMAs that Accretive Wealth offers are:
Ability to focus on an investor’s personal values and preferences
Portfolio customization in both the selection of investments and in the strategies. Of particular interest in this low-interest-rate environment are SMAs that focus on stocks paying high dividends, which can provide a much-needed income boost.
Harvesting tax losses that can be used to offset income from other sources.
The Road Ahead
With the economy making a slow recovery and a lot of uncertainty in financial markets, what does Faraz Sattar recommend for building one’s financial future?
“We are proactive in adjusting portfolio strategies to respond to expected market conditions, being more conservative in turbulent times. However, we think it’s important for clients to remain invested in the market because historically, people who pull out of the market in a slow period or a downturn usually reinvest too late and miss out on most of the recovery,” Faraz says.
To learn more, click here for Accretive Wealth Management.