MB on VC: 16 Insights About Wealth Creation and the Wealth Management Industry

Almost 20 years ago, Bill Harris and I set out on the path to becoming Registered Investment Advisors (RIAs). From the start, I loved so much about the profession:  ‍

• ‍The fiduciary standard.  The obligation to put other’s interests ahead of one’s own.  ‍
• The potential to do good.  The opportunity to help families create wealth and financial independence. ‍
• The application of financial science.  The potential to build a best-in-class investment platform. ‍
• The potential of technology to improve the industry.  A chance to create a technology platform that could offer an advantage for the advisors on our team. ‍
• The massive power of private market investing.  A way to help families capture the benefits of the Innovation Economy – building the capability of world-class private market investors into a wealth management platform. 

With that simple vision, we set out to launch our firm. Today, we have built one of the fastest-growing wealth management firms in the country. We rarely lose a client, and we have helped hundreds of families create wealth (not just financial security) like they never imagined.

Advisors from all over the country call us to ask about our highly differentiated platform. They want to know how we built it. What our allocation model looks like. And they ask whether they can gain access to our private market opportunities. Our response is always the same. We have always been happy to partner with Registered Investment Advisors who share our values and philosophy. Part of our support is the practice of sharing knowledge and data. In that spirit, this blog offers learnings from almost two decades of studying the wealth management industry, wealth creation, and private markets.   ‍

On WealthCreation 

1. Since the dawn of human existence, innovation has been the greatest driver of wealth creation. 
2. There is a tremendous difference between wealth creation and wealth maintenance. When selecting a wealth advisor, investors who appreciate the difference have an advantage.  
3. The only reliable predictor of future performance in private markets is consistent past performance. Past performance is not a predictor of performance in public markets.   
4. Beware of fund managers who sell you a story (sizzle) without the corresponding historical performance (steak). 
5. Savings plus thoughtful diversification is the game of millionaires. Risk-taking and thoughtful concentration is the game of billionaires.  
6. The best friend of wealth creation is large, blue ocean markets where buyers exhibit compulsory buying habits.
7. The arch enemy of wealth creation is competition. A close cousin is inflation. 
8. When evaluating private market investment managers, be sure to compare them to public market equivalents and appropriate private market benchmarks. 
9. The greatest single reason for investors to participate in private markets is because they are inefficient. And that enables good investment managers to drive abnormally high returns.  
10. The preponderance of academic evidence shows that, over time, no public market investment manager can consistently outperform an appropriately selected index fund. 

On the Wealth Management Industry 

1. There are no two ways about it… brokerage platforms are inferior to registered investment advisors when it comes to wealth creation.  
2. Access to high-quality investment managers in private markets is the single greatest differentiator for wealth management firms.   
3. Wealth managers who do not expose their clients to private markets are either uninformed, irresponsible, or lazy. (They also tend to be good golfers.) 
4. It’s counterintuitive, but investment firms that can create wealth tend to be better at preserving wealth as well.  
5. Most investment advisors cannot adequately advise their clients on private market investment opportunities because they do not have access to private market performance data.  
6. Most brokerage firms go to extraordinary lengths to dress up wealth maintenance as wealth creation.   

After two decades of working at the nexus between individual investors, their advisors, and innovators, we have celebrated many successes with our clients. Every step has been guided by fiduciary responsibility, informed discernment, and demonstrated acumen. What we know above all is this – wealth management is about relationships. They demand longevity and the ability to weather challenges. And that is true whether you’re an advisor, an investor, or a founder seeking a capital partner who cares about everyone in the ecosystem. It is why we like to say, “We are a fiduciary to investors and a steward of founders’ dreams.”

If you want to learn more about private market investing, wealth creation, or our deep trove of private market data, please contact us.

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