Aligning Interests

This past weekend I relocated to Atlanta, Georgia to begin work at my new job. I will soon be working at Banyan Capital Management primarily as a portfolio manger and analyst, but I will also be responsible for many other things.

I am very excited to be a part of Banyan as I believe Banyan is part of a very small percentage of the total wealth management services out there that truly has the client’s best interest at heart. There are a number of factors that allow a wealth management service in general to excel above all others:

• Performs its own research and invests within its circle of competence
• Employees must “eat their own cooking” and should not hold any security its clients do not also hold
• Extraordinary responsiveness and service to clients; a small, non-institutional operation is best for clients
• Fee-based service as opposed to transaction or commission-based; how is a client better served by an institutional money manager that earns a large commission for selling a “product” as opposed to the independent advisor that earns only a low fee based on assets under management?

The above factors—just the first few that came to my mind—work in concert to align the interests of management with the interests of the clients. Management should invest client money as if it were their own. Without this alignment, management has little incentive to think of the long-term. Also, there is little incentive for management to focus on absolute returns—its much easier to seek to perform well on a relative basis.