From the June 2004 issue of Investment Advisor • Subscribe!

Checking In With Mark Spangler

The former chairman of NAPFA, a private equity investor, and president of Seattle-based Spangler Financial Group, Mark Spangler currently has some $100 million under management. Spangler, 49, chatted with Editorial Director William Glasgall recently about his practice and Tamarac Inc., a separate account portfolio management service where he is chairman.

Your practice is different than most. We have about 23 member families-Microsoft and biotech folks, pretty young, in their 30s. Members of the group have between $2 million and close to $20 million. They all have to be accredited investors. I never call anyone a client. They invest as members. We do pretty much everything together and are their sole manager--2000 took care of that. When someone comes to us and says, "You manage part of our wealth and we'll keep the rest elsewhere," we say, "We're not interested."

Where do you see the practice heading? It almost turns into a co-op. New members would have to purchase their share. I see myself in 15 to 20 years being able to step back and focus on private equity.

What's your current asset allocation? Fixed income 10%, long-only equity 25%, hedged strategies 25%, real assets-oil, gas, timber, real estate-20%, private equity 20%. Our biggest shift from last year to this year was in bonds. We cut them from 25% to 10% and put the cash into private equity and oil, gas, and timber.

Tell me about Tamarac. Advisors use it now as a tool to set up separate accounts and monitor and rebalance them. Today this is done pretty much one client at a time. It takes a great deal of work. But where I see this going is that money managers will be happy to give up their back office. There are a lot of hands in the till that don't add any value. Let's say the manager just gives you the stocks he buys. I buy or rent his model for 25 basis points. Custodians will take over the manager's back office, handle the trading, compliance, all the hassle. The overseer is the broker/dealer or RIA. Right now, a manager needs one back-office employee for every 500 accounts. With Tamarac, it's one per 5,000.

Are any managers on the system doing this now? At least a half-dozen.

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