From the August 2007 issue of Boomer Market Advisor • Subscribe!

High-net-worth access

"We'll pass $1 billion in assets-under-management in the next quarter. I'd like to get to $3 billion in the next two years."

For Angelo Alleca, it's no simple boast. The 37-year-old president of Summit Wealth Management has been on something of a spending-spree of late, acquiring RIAs in cities as diverse as Beverly Hills and San Antonio, Texas. Now, with offices in seven locations throughout the country, Alleca is reaching out to affluent clients through his charitable giving expertise. It's something he feels is central to helping him reach his rather ambitious goals.

"I've had an interest in the financial markets since the age of 13," he explains. "I started right out of college at the discount brokerage houses, and I moved up the ladder pretty quickly. That's where I met my partner, and we eventually formed our own broker/dealer."

Believing the registered investment advisor business model (and the fiduciary responsibility that goes with it) was the wave of the future, Alleca eventually sold his stake in the broker/dealer and used the proceeds to purchase two small RIA firms.

"I think brokers understand their model is a dinosaur, and I really liked the fee-only model," he says. "I always picture myself as the client. If you're your own client, what would you want your advisor to be? When you're a fee-only firm, you're always sitting on the same side of the table.

His new ventures -- one in Atlanta, and one in Chicago -- both had approximately $50 million in assets under management at the time, and he saw them a solid avenue for growth.

"Both firms were established in 1982, and they had a great history and longevity with their clients, something I could build from."

Today, Alleca looks for opportunities in areas with large concentrations of high-net-worth clients, but also areas in which he can make additional acquisitions.

"I want to make sure that we not only promise a lot, but deliver a lot."

Every acquisition means the addition of experienced staff. Summit has 14 CFPs, two in house attorneys and five CPAs. Each staff member has their own specialty, in everything from charitable giving to tax reduction strategies to parental care.

And one thing he's noticed about the RIA space is that it's still a very fragmented business.

"There are thousands of RIAs and just as many different business models," he explains. "And it's very mom-and-pop like. If you can bring more of an enterprise feel to the RIA market, you could attract the $10 million account. So, I thought, we should make acquisitions in large strategic cities that have growth and that we could make additional layered-on acquisitions. The average RIA owner is 57-years-old and without a succession plan. And, he's looking for the next stage in life."

One key acquisition was B.R. Chamberlain & Sons, a fee-only firm in Orlando that manages its own donor-advised fund, the B.R. Chamberlain Foundation for Public Enrichment. The founder, Peter Chamberlain, stayed on to assist with Alleca with his charitable giving strategies, and the interaction between the two is a main reason for the firm's -- and the fund's -- success.

"I thought it was the first step in helping us attract these larger clients," Alleca says. "I have the expertise in charitable giving and the expertise in tax planning, and they go hand in hand."

Chamberlain received his PhD from Walden University and did his money management training at the Wharton School of Business at the University of Pennsylvania. Unlike many of his contemporaries, Chamberlain has been fee-only since starting in the business 25 years ago. It's this sort of educational and professional background that Alleca looks for in the firm's he acquires.

"The source of our donor advised proceeds are our wealth management clients," Chamberlain adds. "Of course, we find the more successful we are for them with their strategies, the more generous they'll be with their charities. The chosen mechanism for that is the donor advised approach. I would categorize these folks as having interests both nationally and internationally. Some have state-oriented interests and some have local interests."

The donor advised fund, he says, can serve all these different interests in a single box. For the ultra wealthy, it's a flexible vehicle. They're giving to everything from the YMCA to college library funds, so it caters to a broad range of giving based on a broad cross-section of their customers' charitable interests. And, the fund can accept gifts other than money. Chamberlin lists marketable securities, real estate and percentages of land developments as just a few of the items the fund has received.

"I think that's part of why again the folks come to us. We try to be as flexible as we can in accommodating their personal financial situation in the process of casting the charitable mission that they're trying to accomplish. That's part of the art form of the relationship."

So in addition to flexibility, why do donor-advised funds work so well with retiring baby boomers?

Boomers, says Chamberlain, have a perspective that's broader than prior generations and they understand the importance of endowing and funding good work, especially those that are new and less established.

"It could be as simple as putting new windows and paint on a building. They're looking to make a difference. The better job we do, the easier it is for a person to feel a real freedom to give. They're not foregoing other financial goals they have. This giving is sort of layered on top of them."

In the interest of balance, Chamberlain says a major disadvantage of the donor advised approach is that the donor usually gets to the end of the money before he gets to the end of the things he'd like to fund.

"In the case of an endowment, you put $100,000 in an account, you get a sustained rate of return and then you're planning annually to make a gift of the revenue over a long period of time. You're trying to preserve principal and often when folks form endowments, they like getting other family members in and making it intergenerational. But we always laugh and say the life expectancy of a dollar in a donor advised account exceeds that of a teensy fly, but not by much."

At age 55, Chamberlain is solidly planted in the middle of the boomer generation, and instinctively understands them. For the younger Alleca, it's a bit more difficult. So how does he gain the trust of his older clients?

"Our staff ranges from age 68 on down, so it's not been an issue. But I think our business model helps us gain a tremendous amount of trust. We're a fiduciary. And being a fiduciary and a fee-only firm, we always put our clients first. Trust is not an age requirement; it's about how you run your business and the relationships you develop. We have very, very service oriented business model, so I think that's how it happens."

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