From the April 2008 issue of Boomer Market Advisor • Subscribe!

April 1, 2008

See Jane's $1.3 billion strategy

If you want to see Jane, you've got to get by Pricilla and that's no easy task. Jane Williams's executive assistant gave us a half-hour for the photo shoot, and not much more for the interview. For Williams, time really is money and the military efficiency with which Pricilla moves her from one appointment to the next is something to behold. But when you're managing $1.3 billion of other people's money (no, it's not a typo), it's the way it has to be.

Williams is into her 35th year in the business, beginning with Merrill Lynch in 1973. She and two colleagues left and started their own firm in 1982. In 1988 they offered a wrap account called "Investment Choice" and they've been strictly fee-only ever since.

"We average $6.5 million of our clients' assets under management, and their [average] net-worth is north of $10 million," Williams says. "We have 155 clients on the wealth management side and require at least $2.5 million in assets before we'll work with them."

High minimums, a low client base, a fee-only compensation structure and sophisticated investment strategies. Not exactly your run-of-the-mill advisor. So why, exactly, are we featuring her in our annual annuity issue? We come back to that in a minute.

The firm she heads, Sand Hill Advisors in Palo Alto, Calif., does a heavy business with public and private foundations and it manages $300 million in sub-advised relationships with trusts. It offers investment planning and risk management, retirement and estate planning, philanthropic strategies, financial consulting during divorce and it has a heavy concentration in working with women. The number of different services it offers gives it a broad view of the financial services industry. But Williams cautions those that would peg the firm as a mile wide and an inch deep.

"Even though we're in a number of areas, we're actually regarded as an extremely focused firm, she says. "A common thread is that the clients are usually going through, or have just gone through, a transition period in their lives, and that transition typically involves some sort of liquidity event, whether in be retirement, exiting a business, receiving a large inheritance, etc."

Which brings us to why we're featuring her this month. Anecdotally, we hear from an increasing number of sophisticated and experienced boomer advisors that they're taking a hard look at including annuities in their high-net-worth client portfolios; advisors that up until now have had a traditional bias against the product. Williams is one such advisor.

So why annuities, and why now?

"We see a driving need for safety and a flow of predictable income," Williams explains. "We're encouraged by some products that are more transparent than compared with the past. They are stacking the odds of success in favor of the client, rather than the vendor. As little as a year-and- a- half ago, I would have said 'no way, no how' to annuities. But now I'm taking a hard look at them."

On the institutional side, Williams says, platforms are beginning to offer annuity contracts structured in a way that fits with the firm's compensation model; meaning there are no commissions. They can recommend the product, and still sit on the same side of the table as their clients.

"We see a lot of clients come in with annuity products that we don't feel are suitable," Williams says. "But you have to be careful, because no one wants the here that they made a mistake. We like to unwind some of the contracts if it makes sense. But it's difficult with the way the surrender charges are structured, so very often, we unwind them a little bit at a time."

While she can't imagine where she would use them exclusively in a portfolio, she does feel the benefits of safety and predictable income (that's adjusted for inflation) is compelling.

"If we're going to use them, the commissions and marketing fees have to be stripped out. But what we're seeing is that more companies are open to this."

The fact that more companies are open to this might be due to William's influence. The firm clears through Schwab Institutional and Fidelity's National Financial. Like many large financial institutions, Fidelity has a "no-advice" model of business. As Williams puts it, "They provide information, they provide access, but don't advise their clients on what to do." Clients are then forced to seek help from an advisor, which presents a problem for the firm. If the advisor custodies his client's assets elsewhere, the money could leave Fidelity. With the wave of boomer retirement upon us, they realize the problem's potential. As a result they've started recommending a select number of advisors to their clients.

"We're on that list," Williams says. "Think about the validation that comes for your business when you have one of the largest financial institutions trusting you enough to recommend you to their clients. It's a no-advice model, but if you think about it they are actually giving advice in a round about by recommending us."

In addition to residing on the firm's recommendation list, Sand Hill also sits on Fidelity's advisor council, constructed of firms from around the country.

"Approximately 15 firms are wealth managers and 15 firms are investment managers that really concentrate on maximizing client returns," she explains. "We get together with Fidelity and talk about the things we face as advisors, and the products and solutions they're developing, and ensure there's a match."

You'd think with 35 years in the business and $1.3 billion in AUM, the near future would be about more golf and margaritas, and less about portfolio maximization and asset allocation. With Williams, you'd think wrong. When asked about her growth aspirations in the next three to five years, she doesn't hesitate.

"We want to double the assets under management in five years with a relatively small number of clients," she says. "We have a team-based approach and defined career path for employees. We have capacity, so we want to grow. And we're aiming high."

We may be journalists, but even we can do the quick math. This type of stratospheric growth isn't something they just hit upon. In fact, the plan has been in place for some time.

"In 1995, we started thinking about what happens next, and we investigated about how to begin transitioning the business. I credit our success to starting early, although I don't think the term 'exit planning' was even around at the time. It was not about us, it was about our clients. So we wanted the firm to continue even after we aren't here."

Williams says it wasn't about how much they could sell the firm for; that was a second or third tier consideration. After researching a number of firms, colleagues steered them to Boston Private Wealth Management Group.

"One thing about Boston is that you check you ego at the door," Williams explains. "Do right by your client and maintain your entrepreneurial spirit. They are highly autonomous in the way they treat us. They help us build our business, but we can still do it our way. The administrative process is a bit of a challenge, but the knowledge we receive form our peers and the resources they can provide us our terrific. Myself, my peers in Boston Private Wealth Management Group and even my competitors; we all want to raise the bar for the service and support we provide our clients. If we do it right, the market expands for everybody."

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