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Practice Management > Compensation and Fees

Native Son

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Yes, he does have brightly painted totem poles as part of his office decor. But you may as well toss out all your other expectations about Native American investment advisor Dean Parisian right now. If you’re expecting a calm, mystical presence with a penchant for incense, a reticent, self-effacing soul from whose office wafts the soothing sounds of waterfalls and wind chimes, you’d best look elsewhere. With one eye on the ticker symbols whizzing along the bottom of his TV screen, one eye on his laptop, and a phone jammed up against one ear, Parisian is talking, typing, and debating answering a second phone, which is also ringing. (So much for tranquility.) The “music” in his office is the hectic blare of a CNBC broadcast (so much for those wind chimes), and Parisian hasn’t stopped talking–perhaps “orating” is a better word–for 45 minutes (so much for reticence). He claims he was born in Minnesota, but his emphatic, table-pounding demeanor has all the ten-gallon-hat-sized bluster you’d expect from a born and bred Texan.

Parisian, 48, founder and head of investment management firm Chippewa Partners in Alpharetta, Georgia, is anything but shy about sharing his opinions–or his accomplishments, for that matter–and he comes off rather like a person who tends to “hold court” rather than hold a conversation. But just when you’ve decided he’s not your type, a few things may make you reconsider.

For one thing, he seems hell-bent on helping his fellow Native Americans. He established a mutual fund to enable Native Americans invest their money as a group under the direction of Native Americans. He’s crisscrossed the country in an effort to teach tribes about finance, trying to coax them out of overly conservative choices and into well-diversified portfolios managed on a fee basis; when he manages money for Native American entities, he gifts 10% of his management fee back to the tribe for college scholarships. He’s forming a business network for Native Americans in Georgia, and hopes to expand it to adjoining states. And he’s set up his own scholarship for Native American students at his alma mater, University of Minnesota-Morris; he calls it “sending the elevator back down” to bring the next generation of students up out of the poverty of Indian reservations.

He’s also a dedicated family man. He says his greatest pleasure is spending time with his wife and two sons, ages 10 and 6, and he reminisces with real affection about living with his grandparents during his college years–not something your average frat boy would be real keen on.

But what’s also impressive about Parisian is the fact that he’s even here, in charge of a lucrative investment management firm which he runs from a home office in a well-to-do Atlanta neighborhood, bearing a resume listing stints at Kidder, Peabody, Drexel Burnham Lambert, Thomson McKinnon, and First Union, plus occasional sojourns as an arbitrator for the New York Stock Exchange and the NASD.

What makes that impressive? Parisian, a member of the White Earth Chippewa band of northern Minnesota, grew up on remote, rural Indian reservations, moving from one to another as his father’s job in law enforcement for the Bureau of Indian Affairs demanded. As a child and a teenager, he was surrounded by the alcoholism, poverty, homelessness, and drug addiction that were rampant on the reservations. He spent his high school years on the Sioux Pine Ridge Reservation of South Dakota, which he describes as having “about 95% unemployment, 95% alcoholism, and suicide rates through the roof.” Sadly, he’s hardly exaggerating. Today, for instance, 90% of the reservation’s population is unemployed, the life expectancy of a Sioux Indian is 48 years (compared to the average American’s 75+ years), and more than 60% of the babies born on the reservation are born with fetal alcohol syndrome, according to the American Indian Relief Council, based in Rapid City, South Dakota. Growing up in a region where three-quarters of students drop out of high school, it’s impressive that Parisian even graduated from high school, let alone finished college. And coming from a family in which not a single member had ever owned stock, Parisian’s investment career suddenly takes on a new significance. He credits his “very loving and caring” parents for his success. “Without [their support], I might not have made it off the reservations at all,” he says.

From Broncos to Balance Sheets

Not that he always planned on being Mr. Finance; as a youth, Parisian intended to become a professional bronco rider when he grew up, flying from town to town in a two-seater airplane and performing on the regional rodeo circuit. Since the University of Minnesota didn’t have a rodeo major, however, Parisian had to settle for economics and education. After college, he gave law school a try for about a month, before deciding he “wasn’t cut out to be some toady in a law office,” he says. The father of a law school buddy happened to be the Piper in Piper Jaffray, and Parisian decided to “seek my fame and fortune” in the securities business instead.

After working in investing at Piper Jaffray and the other aforementioned firms for more than a decade, Parisian founded Chippewa Partners in 1995. The goal of the one-man firm was to provide investment management to Native American tribes and individuals.

It was an admirable goal, and you’d think there’d be nothing easier than to convince Native American tribes to hire a Native American to manage their money. But it has been a royal challenge.

The biggest obstacle is the tribes’ ingrained cautiousness, which perhaps isn’t surprising, given the number of times they have been taken advantage of in one way or another by just about everyone over the years. But many tribes are so shackled by the fear of losing any money, even short-term, that they’re blinded to the potential of higher returns over the long term.

To tribe after tribe, Parisian has explained the benefits of investing for the long haul, educating them about diversification and pointing out the hidden fees and commissions charged by many firms. He has an eloquent letter illustrating how eight Sioux tribes, who received $105.9 million in 1980 for the value of the land taken from them by the U.S. government, could today have $2.3 billion had they invested in a diversified portfolio of equities, rather than the $500 million they currently have after investing it in U.S. Treasury bonds.

Yet the message doesn’t seem to get through. Only a few tribes have asked to sign on the dotted line with his firm and its proffered diversified investment management; most tribes demur, and continue making ultra-conservative investment choices. Parisian can hardly contain his frustration. “Over 60% of the millions of dollars in my tribe’s 401(k) plan is in money market funds!” he exclaims, his voice rising. “How sad is that?! The fiduciaries of my tribe should be jailed for that. And yet they won’t hire me” to invest their money in a diversified manner. And the unnecessary fees his tribe is paying to an insurance company just make him madder. “I could have saved them thousands of dollars over the years in fees,” he says. “It just galls me to think about.”

Part of the problem, Parisian says, is that the people making the financial decisions for the tribes have absolutely no financial experience. “I go out and talk to tribal councilpeople who many times don’t even have checking accounts,” says Parisian. “Do you follow me? These are the people who are in charge, who are responsible for making decisions for a vast majority of Native American monies in this country. It’s really sad.”

Another difficulty is that “It’s the economy, stupid,” applies to tribal politics as much as it applies to national politics. As elected leaders, Native American tribal council members soon realize that their political fortunes are tightly tied to the tribe’s financial fortunes. “The goal of the tribal leadership is to stay in power. They want to be re-elected. And a very fast way to be tossed out of office is to take some tribal monies and put them in the stock market and have them lose value,” says Parisian. Rather than risk their seats on the council, tribal leaders avoid vehicles that could lose value for even a short amount of time, to the detriment of the tribe’s long-term financial health.

But perhaps the thorniest problem has little to do with finance at all. According to Parisian, many tribal leaders have a particular aversion to hearing advice from a Native American in a spiffy suit who no longer lives on the reservation and has made a successful career for himself. Being a Native American hasn’t helped Parisian’s prospects with most tribes; oddly enough, it may have even hurt him. “There’s tremendous jealousy in the Indian community. There’s a lot of jealousy [toward] Indian businessmen who have gone out, left the reservation, and made a fair amount of money,” says Parisian, noting that some tribal leaders seem to think, paradoxically, that he can’t be a good enough advisor for them if he’s a Native American. “And some people look at it as, if you left the reservation, you’re sort of a sellout. I don’t think I am; I visit my reservation every year, go hunting and fishing… but I can live anywhere in the United States I want to live. I’m not going to take my family back there [to live].”

The Four Winds Fund

Parisian says his biggest push on the Native American investing front came in 2000, when he helped establish and became co-investment advisor of the Four Winds Fund, the first Native American institutional mutual fund. As a money market fund, it was intended to be the first in a whole family of funds–equity, fixed-income, etc.–that tribes could invest in together with the knowledge that their money was being managed by other Native Americans. But the fund didn’t receive enough new money from investors to make it worthwhile. “The break-even point to make any money on the fund, for [co-investment advisor] Federated and State Street Bank and everybody else, was $100 million,” says Parisian. After a year, it was patently clear that the $100 million mark was still far off, “so we shuttered the fund,” he says. Parisian says high fees and a lack of marketing support caused the fund’s downfall; Federated Investors, Inc. wouldn’t comment.

Parisian exudes frustration when he talks about the challenges of Native American investing, and what with the cross-country trekking and countless presentations, the frustration is understandable. Yet he believes he’s done all he can do. “I’ve done my best. I can hold my head very high, and be very proud of the effort and the work, the money and the time [I've put in]. I’ve spent a lot of money chasing around the country trying to help people, and that’s all I can do.” He still hopes to someday establish and manage a no-load equity fund for Native American investors, in which he could gift a portion of the management fee to scholarships for Native American students. “That, to me, would be one of the most ideal situations,” he says.

Meanwhile, Back at the Ranch

If Native American clients are a minority at Chippewa Partners, who makes up the rest of the clientele? In order to build his firm’s assets under management, Parisian has turned to a more traditional crowd: wealthy individuals and families, 401(k) plans, and a few not-so-wealthy clients, too. While he accepts some projects on a retainer fee or hourly basis, most clients pay fees based on a percentage of assets under management, or–Parisian’s favorite compensation style–fees based on performance. Clients with more than $750,000 managed by the firm or with a net worth of at least $1.5 million are eligible for the performance-based fee structure, which entails a sliding scale of 0% to 1% of assets, plus 20% of profits. “I like to be paid on a performance basis, not just a fat old management fee,” he says. “I think I’ve got a world-class compensation arrangement. I’m not just there to take a 1% or 50 basis-point fee. I want to come in there with a 25 basis point fee and get plenty of upside.” Parisian charges the performance-based fees on investments with long/short exposure.

Parisian says that discipline is the hallmark both of his investing style and of his professional life. Rising every morning at 5:15 a.m., he reads three newspapers from front to back “before the average financial planner ever even wakes up,” he says. For the rest of the day and often on into the evening, “my job is to look out for my clients’ money, figure out what Mr. Market’s doing.” He spends a significant amount of time on the computer and talking by phone with analysts, brokers, hedge fund managers, and other investment managers.

One thing he decidedly does not do is financial planning–and he has a few choice words for those who claim to do so. “I just have to laugh at the whole concept of financial planning,” he says. “How can anybody stay on top of the nuances of what’s going on in the stock market, and annuities, and disability insurance? They can’t! And most of them are just there to sell anyway. I would say that more than 50% of financial planners are paid to generate transactions; most of them are still more worried about their own mortgage than their clients’ income. They’re all just geared to sell whatever’s hot.”

Parisian says he doesn’t so much mind planners who assemble a team of specialists (like an estate planning attorney, accountant, and insurance consultant) and act as quarterbacks for their clients, since he, too, encourages his clients to hire people who are specialists in their fields. “I don’t do quarterbacking; I do investment management,” he says. “But that’s fine if they want to do that.”

It’s a long way from the bleak, rugged hills of the Indian reservations to a lush, leafy neighborhood outside Atlanta, but Dean Parisian seems to have made the transition just fine. He makes a point of going back to the White Earth Chippewa reservation at least once a year, to take his sons hunting and fishing, and to teach them a bit about their past. And someday, some way, he still hopes to share a piece of his present life–his investment knowledge–with tribal leaders, and help them invest their way to brighter future.


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