If it has anything to do with money, Mike Tucci and Kristine Porcaro are able to handle it for their clients. Their firm, Lexington Wealth Management, with offices in the city of that name just outside Boston and in New York, is in its 10th year, but as Tucci likes to point out, they’ve only been using their current business model for six years.
When the two partners initially set up shop, the staff consisted of Tucci and Porcaro and a receptionist, and they primarily provided advice on asset management. It wasn’t until the fall of 2001 when they had what Tucci likes to call our “epiphany.” Like many advisors, they found themselves at a loss for what to do in the aftermath of 9/11. Fortunately, they had the good sense to discuss the problem with a client who was a psychologist.
She told the partners that the best thing they could probably do for their clients would be to just go out and talk to them. They could bring along charts showing how the markets have recovered from disasters, but their most important job, she said, was to talk with those clients, not lecture. “And that’s what we did,” recalls Tucci. “Some of our best relationships today are with those people who we just sat in their living room and talked.”
From that series of conversations, Tucci and Porcaro came to realize that they wanted to provide services that went beyond just managing investments and then reporting on their performance to clients. While that is still where the majority of their business lies, for clients who want more, the partners have more to offer. In describing Lexington, Tucci calls the firm an “independent, fee-only, open architecture wealth management firm. We start with that, and then say we go beyond what you expect us to do, working with many aspects of life. We provide holistic wealth management.”
For Lexington, holistic wealth management includes comprehensive financial planning; investment consulting; collateralized lending and mortgages; concierge service, where the firm acts as the client’s “personal CFO” and can include anything from bill paying, selling a business, purchasing a property, or planning a vacation; to wealth counseling and professional referrals to CPAs, estate attorneys, art appraisers, lending institutions, and whatever other professional services the clients may require.
“We don’t walk into every meeting with a psychologist,” points out Tucci, “although we do have one on retainer as a wealth counselor.” The first step in any client relationship for Lexington is for everyone to get to know each other. “We like to have meetings in people’s living rooms,” says Tucci. “We don’t wear suits and ties every day because we don’t think people want some stuffed shirt preaching at them. We get to know their family and become an extension of the family.”
Since transitioning to the wealth management model, Lexington’s compensation has been strictly fee-based. At this point the majority of clients are interested solely in asset management advice, for which the charge is 1% of the assets under advisement on the first $1 million to $10 million. For clients whose needs are more complicated and wish to draw on the full menu of services, an annual fee is negotiated depending on the type of relationship involved.
While the partners remain loyal to their initial customer base and say they would never want to end any of those relationships, for new business they are concentrating on a higher level of investable assets.
“At this point our profile client is in that $2 million to $20 million range,” notes Tucci. “I know it’s a huge range, but we grew up trying to implement the fee-only model and we wanted to do it very well. At the beginning we had smaller clients. We went to a complete fee-only model in 2001, and we decided to keep the clients we had, but to execute [a wealth management strategy] effectively it’s basically at $2 million and up that it’s going to work. People in the $2 million to $5 million range need our help much more than those in that $10 million-plus range.
“We feel they’re being underserved in terms of who they can work with and investment choices,” adds his partner. “They’ve needed to have $25 million-plus to be with the firms that are going to provide all these services.”
Women and Entrepreneurs
The firm’s client base boils down to two groups: entrepreneurs and women undergoing transitions (three, if you count women entrepreneurs). “It could be a woman who’s going through a divorce, or she’s recently widowed,” explains Porcaro. Tucci notes that the client mix was “by complete accident. We had no marketing plan or strategy.”