NorthStar Blog

27
Mar

Embracing Change and Taking Action

By Alma Piscitello, Executive Vice President, Strategic Advisor Services

As an avid reader with an eclectic library of books, it is difficult to pick a favorite book across all genres.  However, two books stand out as powerful frameworks for doing business: Traction by Gino Wickman and Extreme Ownership: How U.S. Navy SEALs Lead and Win by Jocko Willink. In my experience, openness to change, coupled with framework, action, and ownership provide a foundation for success, and these two books have had a major influence on how I counsel clients to embrace change today.

Earlier in my career, I greeted change with apprehension as I was uncertain as to the impact it would have to the firm, team, and ultimately me.  Learning to embrace change was not easy until I realized that change was going to happen whether I liked or feared it. I was so focused on how hard change would be, that I was limiting my potential to grow personally and professionally.  I took a dose of reality and decided to have an active mindset and be open to change. This self-actualization led me through a journey that has impacted my career and how I counsel investment manager clients today. I help them focus on creating a framework with actionable opportunities that can enhance business efficiencies.

Investment managers are creative beings that think outside the box, see possibilities, and create opportunities while navigating an ever changing environment. Their external focus on their portfolios may garner success that will lead them to expand their infrastructure to sustain their growth. Before they know it, they are bigger than they imagined and have to take a deeper look on where they’re going and how they can get there. Realizing that this change is needed takes self-reflection, backward and forward business assessment and strategic planning.  Meeting investment managers at this inflection point is my favorite time. This is the heart, the formation of ideas, the layout of framework.  This is the time to discuss vision and execution – not one person owns the execution of the vision. Working with the strengths of people within the organization and with partners to help lay out a clear and common purpose is exhilarating.

Creating a sustainable framework requires taking inventory, asking tough questions, and creating best/worst case scenarios. Do you have the right infrastructure, technology, partners, vehicles, and personnel to propel your business to the next level? Do you know when and where to make tactical investments and the cost benefit of those decisions?  These are all important questions that will help to layout a framework that will propel action.

Working with clients who have recognized and embraced change, and have also laid out a framework is refreshing and makes action planning a rewarding experience. One of my favorite quotes by Pablo Picasso is, “action is the foundational key to all success.” Utilizing this quote as the focal point for the Strategic Advisor Services Team, we co-create action plans with our clients to layout the path that will be taken, measure wins, and address challenges. The team asks pivotal questions in action planning: What does success look like? What is the firm and strategies’ competitive edge? What resources are available or will be invested in? What is the target market and the activity that will be driven to expand the footprint? These questions help formulate a plan by taking stock, working with the end goal in mind, and planning for current and future circumstances. I turn to you, the reader, and ask are you ready to take action? Whether that action is professional or personal, are you ready to put your action plan in motion and own the result?

 

7224 GFS-3/15/2017

2084-NLD-3/22/2017

23
Mar

Getting Started with Live Online Chat

In today's Orion Weekly, we'll let you know how to get going with Orion live online chat, why you should stay updated with tech, and more.

The post Getting Started with Live Online Chat appeared first on Orion Advisor Services.

23
Mar

An Alternative Mutual Fund’s Most Unusual Birth: A Case Study in How Gemini Works Alongside Alternative Managers to Achieve Long-Term Goals

Today’s fund administrators are capable of doing much more for investment managers than just assisting with back-office responsibilities. As demonstrated by The Gemini Companies (Gemini), modern “fund administration 2.0” which involves working closely with managers to actively assist with launching, managing, and growing funds.

Recently, Gemini facilitated a rare transaction that enabled a manager to launch an alternative mutual fund without having to create an investment company from scratch. Instead of bringing a new fund to market, the manager saved a great deal of time and money by assuming, with Gemini’s help, the role of investment advisor for an SEC-registered mutual fund that already had an established track record (and a five-star rating from Morningstar).

A Deep-Rooted Partnership

The teams at the investment management firm and Gemini have worked closely together for more than seven years. The management firm’s president served as a partner, executive vice president, and managing director of another alternative mutual fund manager prior to establishing his own shop in 2015. During his tenure at his previous firm, the manager and his colleagues noticed that their sub-advisors’ managed futures strategies performed well during the 2008 financial crisis. They decided they wanted to launch a managed futures mutual fund that incorporated strategies from five high-quality investment managers. At the time, the pain of the financial crisis was fresh, and alternative mutual funds, also known as “liquid alts,” were rare.

“At a time when everyone was gun-shy, Gemini was the only series trust provider which was willing to do what we wanted them to do—create a trend-following program and put it in a mutual fund,” recalls the manager. “We knew that Gemini had been expanding their services to other alternative managers, and they understood the nuances and leveraging requirements of alternatives. Seven, eight, or nine years ago, that was unusual.”

Working together, the industry’s first multi-strategy managed futures mutual fund was launched within the Northern Lights Fund Trust, with additional sales, marketing, and distribution assistance provided by Gemini. Thanks to Gemini—which, among other things, introduced the manager to custodians and independent broker-dealers with which they do business—the fund grew to more than $1 billion in assets under management in just 11 months. “Then, we launched half a dozen other funds in the Northern Lights Fund Trust, and we grew alongside Gemini as they expanded their staff,” says the manager.

‘Have I Got a Fund for You’

The manager founded his own firm in 2015 and describes it as “more of an advisor than a mutual fund manager.” The firm offers financial education, investment management, retirement planning and philanthropic guidance services for wealthy families and entrepreneurs, and builds customized financial solutions to help investors achieve their goals.

In 2016, an opportunity arose for the firm to launch one of its investment models within a mutual fund. A New York-based, SEC-registered investment advisor specializing in risk-managed investing had been acquired by another investment advisor in 2013, but still managed a mutual fund in Gemini’s shared mutual fund trusts. The investment advisor’s parent company decided it no longer wished to pursue the strategy in that fund, so the advisor contacted Gemini and redeemed all the assets under management—approximately $250 million—over the course of a month.

While the assets had been liquidated, the fund itself remained intact, and so was its track record and five-star rating from Morningstar. Andrew Rogers, CEO of The Gemini Companies, contacted the manager who had recently founded his own firm and suggested that his firm apply to become investment advisor to the abandoned fund and amend the fund’s investment strategy to align with one of his firm’s models.

A Transaction that Gemini Understands Well

Prior to reaching out to the manager, Mr. Rogers and his colleagues at Gemini had already helped several other managers assume the role of investment advisor for other existing mutual funds. “A manager may have a great strategy that they want to take to market, but by taking over an existing fund, the manager gains an experienced board, a track record of operations, and the infrastructure behind the scenes that’s already in place,” says Mr. Rogers. While completing regulatory filings and obtaining shareholder approval for this type of deal require patience from managers, they can immediately take advantage of their funds’ existing selling agreements once those processes are complete, enabling them to raise assets faster and decrease expenses for shareholders.

Mr. Rogers points out that creating a fund from scratch can take four to six months in a shared fund trust or another existing trust, and six to nine months in a new trust. However, launching a fund by taking over as investment advisor to an abandoned fund can take just 30 to 90 days.

Gemini: An Engaged Partner

Having worked closely with the manager for many years, Mr. Rogers was confident that the manager and his colleagues could benefit shareholders of the abandoned fund. In addition to offering investors a more diversified alternative investment vehicle, the manager proposed reducing the fund’s management fee from 75 basis points (bps) to 65 bps, while keeping in place the fund’s existing expense ratio cap of 1%.

“When you come in as an investment advisor, you have to do SWOT (strength, weaknesses, opportunity, and threats) analysis and figure out how your strategy measures up from a cost perspective and as a fiduciary to the fund,” says the manager. “This fund went from a single alternative strategy, which was long/short equity, to being a multi-manager alternative mutual fund—with long/short equity accounting for almost 50% of its portfolio. It’s now a more diversified mutual fund with lower costs for investors.”

For the manager, the capability to utilize the abandoned fund’s Gemini-negotiated selling agreements was an attractive attribute. “It’s one thing to launch a fund and put $1 million into it, but to break even you need to have $25 million or more depending on the expense ratio,” he explains. “You need selling agreements with various custodians and a whole host of related line items checked off before you raise money.”

Crossing the Finish Line

After the fund’s board approved the contract, Gemini outsourced the printing and mailing of shareholder prospectuses for the new fund to a solicitation agent, which also supervised the voting. On December 2, 2016, the manager’s firm surpassed the 51% approval threshold among fund shareholders to become the new investment advisor and begin managing the portfolio.

The manager is grateful to Gemini for helping his firm seamlessly manage the process of bringing the new fund to market. “I know the bad things that can happen when you launch a mutual fund, which is why the opportunity to take over a fund that was already launched and had no upfront legal fees associated with it was so attractive,” he said. “I know the people at Gemini, and I know the quality of their work, so I trusted them to guide us through the process, and as expected, their help was invaluable.”

The new fund kept the abandoned fund’s Morningstar category rankings. The fund also remains in the Northern Lights Fund Trust. “For me, there’s no reason to move out of the shared trust—Gemini provides services we need, including ongoing monitoring from an advertising perspective, which is critical because we want to make sure we’re complying with the SEC’s marketing rules,” the manager said.

The manager estimates that his firm saved between $50,000 and $100,000 in startup expenses and at least 90 to 120 days over the traditional fund-launch route, and he says his firm stands to save more time and money over the long term. “The fact that the fund already had several selling agreements in place was crucial because it’s especially hard right now to get a mutual fund on a custodial platform,” notes the manager. “They’re not looking to take on new funds until they figure out how the Department of Labor’s proposed Fiduciary Rule is going to affect them, so to become an advisor to a product that’s already on those platforms is very important to our future success.”

Fund Administration 2.0

Gemini did for the manager what it has done for many other clients in the past—act as an engaged partner to help launch, manage and grow a fund. “As more managers learn about the process of taking over an existing fund, and the advantages of entering the mutual fund market this way, there may be more managers in our trusts who would be willing to do what this manager has done,” says Mr. Rogers. “If and when they are, we’ll be ready to deploy Gemini’s engaged teams to make sure everything is executed properly.”

7222 GFS-3/15/2017

2082-NLD-3/17/2017

22
Mar

2017 Investment Themes

Learn more about CLS’s 2017 Investment Themes with CLS Chief Investment Officer, Rusty Vanneman, CFA, CMT.

21
Mar

3 Ways Outdated Advisor Technology Is Hurting Your Firm

You aren’t still running Windows 95 at home (hopefully), so why would you run technology built for the ’90s in your advisor practice? Staying relevant with your technology is as important as being modern in your marketing, client outreach, and how you operate with best practices internally. The perils of running outdated advisor technology can impact areas of your business you can’t even see. Here are the top three reasons you need to stay modern in your approach to advisor technology. 1. Security The most important reason to stay up-to-date with your technology is security. In the advisor technology industry, you’re often working between software that is locally installed on your computer desktop and technology delivered through a browser. You may know that second type better as a cloud-based app. Most desktop-based software does not include multi-factor authentication. Some might not require a sign-in when it boots up at all. This type of software architecture is a problem because anyone with access to the physical machine can log in and access the data it stores. Orion and other modern advisor technology apps have built a better way to secure your data. We use multi-factor authentication, which requires two confirmation points,...

The post 3 Ways Outdated Advisor Technology Is Hurting Your Firm appeared first on Orion Advisor Services.

20
Mar

Time for a Rebrand?

By Megan Boulter, Marketing Coordinator, NorthStar Financial Services, LLC

The doctor is in and it’s time for your brand’s marketing checkup! Over time, your company will evolve and change. External factors may have made an impact on your industry, or, perhaps it is just time for a refresh. It is important to ask ourselves questions to assess where we stand with our marketing. Are you still targeting the same market as you were last year? How has your company changed in the past three years? Do your marketing efforts reflect your company’s vision? You may need to revisit your marketing and branding efforts to make sure they still align with your company’s overall strategy. We have come up with some questions to help you assess where you are and where you need to be.

HAVE WE ACCOMPLISHED OUR MARKETING GOALS?

It’s time to ask some of those tough questions; have we accomplished our marketing goals? Have we generated the results that we were aiming for? It’s time to take a good look at the accomplishments as well as the faults in your company’s marketing efforts.

It’s important to think about how your brand is portrayed, both internally and externally. Miscommunication may have dimmed trust in the company or turned away possible clients. Broken promises reflect poorly on the company’s values, culture, and reputation. Companies who don’t portray their core strengths well, may be hindering new clients from coming on board. You must be able to pinpoint and successfully communicate what makes your company stand out, and be able to drive effective marketing efforts highlighting those strengths. Once you have assessed your marketing efforts, you can then move onto fixing any shortcomings as well as continue with the successful marketing efforts.

HOW HAVE OUR MARKETING NEEDS CHANGED?

When you are going through your brand’s marketing checkup, it is important to re-examine your strategic business plan as well. Has your company’s purpose, goals, or story transformed over time? Have your clients’ buying patterns or needs changed? Are you targeting a more specific market now? Do your marketing materials reflect those changes? What new materials do you require to accommodate changes and what existing materials do you need to modify?

Businesses evolve and that is the nature of the market. Product and business expansions, leadership changes, or periods of great growth or decline are just some examples of situations that may cause a marketing disconnect. Consistent marketing will build loyal customers. Sending a survey and getting feedback from clients is a great way to gauge external brand perception.

HOW ARE WE STAYING AHEAD OF THE CHANGE?

One of the most effective ways to prepare for the future is to evaluate how the industry is evolving. Where is your company in terms of trends, competition, technology, product, and service offerings? Pinpoint your competitive edge and highlight how your firm differs from the crowd. Let clients know about business and marketing changes that show you are being proactive and staying ahead of the curve.

WHAT ARE THE NEXT STEPS?

Where is your brand today and where do you want it to be in the future? After you have completed a thorough and comprehensive marketing assessment, you will have a much better understanding of what the next steps look like. List your long-and short-term business goals and steer your marketing initiatives toward achieving those goals.  Allocate resources accordingly. Review materials and marketing initiatives. Get feedback from clients and partners to gauge the effectiveness of your marketing strategy. Set specific goals, complete with the person or team to champion each initiative and set realistic target dates. You must be clear about expectations. Finalize your new marketing plan and stick to it.

2074-NLD-3/10/2017

7214-GFS-3/14/17

17
Mar

The Timing Game

Content provided by Grant Engelbart, CFA, CAIA, CLS Portfolio Manager

The market is always full of diverse opinions, and after the recent rally and multi-year bull market we’ve seen, now is no exception. Let’s look at an example. We all have friends who are a little bit crazy – let me introduce you to a couple of mine. Meet Timey McTimerson (“Timey”) and Chasey McChaserson (“Chasey”).

Timey gets very nervous when the market (as measured by the S&P 500) has a rolling one-year performance more than 20%. And so, when performance is high, he sells out for a month and reassesses his portfolio the next month. Chasey likes to see strong returns as a sign the market is heating up. He only invests when the rolling one-year performance is more than 10%. If it’s not, he sits on the sidelines. Now, these friends of mine might seem crazy at first glance . . . but are they really? It is very interesting the number of bulls and bears that come out of the woodwork after a large move in the market.

Chasey and Timey’s returns since 1990 are shown in the graphic below. Timey has more than quadrupled his money in 27 years, and Chasey has nearly six times what he started with. Scarily, both returns are roughly similar to those of the Morningstar Tactical Allocation category. However, an investor who sat in a value-focused index fund turned that dollar into almost $13 without lifting a finger (it’s worth mentioning that the S&P 500 would have returned $11.50). The point is: Timing strategies – even those much more complex than these – may work once or twice, but they hurt investors over the long run.

The value of financial advisors is huge to helping investors resist these temptations. It’s amazing how many individual investors only want to buy what has worked, or get nervous for reasons unknown. But we all can fall into this temptation, as overconfidence reigns supreme amongst financial professionals. Find the risk you are comfortable with and the approach that makes sense, and your goals will follow.

The “timing game” is, in fact, a fool’s one. Just ask my friends!

The market is always full of diverse opinions, and after the recent rally and multi-year bull market we’ve seen, now is no exception. Let’s look at an example. We all have friends who are a little bit crazy – let me introduce you to a couple of mine. Meet Timey McTimerson (“Timey”) and Chasey McChaserson (“Chasey”).

Timey gets very nervous when the market (as measured by the S&P 500) has a rolling one-year performance more than 20%. And so, when performance is high, he sells out for a month and reassesses his portfolio the next month. Chasey likes to see strong returns as a sign the market is heating up. He only invests when the rolling one-year performance is more than 10%. If it’s not, he sits on the sidelines. Now, these friends of mine might seem crazy at first glance . . . but are they really? It is very interesting the number of bulls and bears that come out of the woodwork after a large move in the market.

Chasey and Timey’s returns since 1990 are shown in the graphic below. Timey has more than quadrupled his money in 27 years, and Chasey has nearly six times what he started with. Scarily, both returns are roughly similar to those of the Morningstar Tactical Allocation category. However, an investor who sat in a value-focused index fund turned that dollar into almost $13 without lifting a finger (it’s worth mentioning that the S&P 500 would have returned $11.50). The point is: Timing strategies – even those much more complex than these – may work once or twice, but they hurt investors over the long run.

The value of financial advisors is huge to helping investors resist these temptations. It’s amazing how many individual investors only want to buy what has worked, or get nervous for reasons unknown. But we all can fall into this temptation, as overconfidence reigns supreme amongst financial professionals. Find the risk you are comfortable with and the approach that makes sense, and your goals will follow.

The “timing game” is, in fact, a fool’s one. Just ask my friends!

2344-CLS-3/14/2017

16
Mar

Orion Weekly: New Tech Coming Soon and New Ways to Communicate

In today's Orion Weekly, see some of the new tech we're releasing this year and also get up to speed with new ways to communicate with Orion service.

The post Orion Weekly: New Tech Coming Soon and New Ways to Communicate appeared first on Orion Advisor Services.

15
Mar

Q&A with CLS

Enjoy a Q&A with the key faces of CLS Investments.

14
Mar

Tech Preview: The NextGen Composite Reporting App

composite reporting

In today's blog, we take a look ahead with another Tech Preview. This time, you can catch up on what's coming soon in the nextgen composite reporting app.

The post Tech Preview: The NextGen Composite Reporting App appeared first on Orion Advisor Services.