Jacob Gold and his advisory team advise about 600 households. That might not be as impressive if the team were bigger, but there are only three advisors at Jacob Gold and Associates in Scottsdale, Ariz. To take on this extraordinary workload, they use a simple system of models that employ different objectives, time horizons and risk levels, to match client accounts to appropriate strategies.
Gold describes the model system: “All of our clients fit into one or more of our 35 models and what we do is, of course, reach out to our clients on a regular basis, with weekly e-mails to regular one-on-one meetings, as well as quarterly investment conferences, but on a daily basis we’re managing those 35 models. So what we can wholeheartedly tell our clients is that we’re looking at their holdings on a daily basis because we’re managing it on a macro level. And that allows us to free up a lot more time to have one-on-one conversations and meetings with our clients.”
Clients are profiled based on their risk tolerance and age, and whether the account is using pretax money or after-tax.
Instead of confusing or complicating the process, Gold says the models simplify the way they help their clients. By using models, Gold says, he’s able to narrow his clients’ goals for a specific account. “Then we can back up and look at everything at a macro level.”
“The models have different objectives, so if someone has an IRA they might be in one of our more aggressive models, compared to their brokerage account which they may have a time horizon of five years or 10 years if they’re interested in using that money for a second home, or to buy a business, or their kid’s education.”
By streamlining the planning process, Gold is also able to focus more directly on the clients and how he serves them. The firm has a loosely defined minimum to invest of $500,000, but “there are always exceptions,” he says.
“If we have a client we really enjoy working with, and they go out of their way to refer someone to us, and their colleague is just starting out, we don’t want to say no to that relationship just because of their account value,” Gold asserts. Furthermore, an account may be small today, but in a few years' time, when that client is getting ready to retire and is looking for someone to help him do so, he’s likely to stay with someone he has a relationship with. “We’re very aware that we may be managing let’s say $100,000 for an individual, and that’s fine, but they may have $600,000 in their 401(k) and in five years' time they’re going to be retiring and if we have a great relationship with them, they feel comfortable with us, surely we’ll have an opportunity to possibly manage that 401(k) money, as well.”
That doesn’t mean he doesn’t have to turn away business, though. The firm takes a balanced approach to management, employing conservative strategies with stocks and bonds, and looking for market-like returns and less risk overall. If prospects approach him eager to take on a lot of risk, Gold will refer them to outfits such as Morgan Stanley, Raymond James, or New York Life, all of whom have offices in the same building as Jacob Gold and Associates.
Gold acknowledges that day trading and options are viable investment solutions, but admits they aren't his firm’s specialty.
“We tell our clients, we are not the sleek, exotic, or sexy investment firm,” Gold admits. “So if they’re going to come to us and they want to be swinging for the fences and take a lot of risk we feel like it wouldn’t be in their best interest to have us manage their money.”
Evolution of Change
The firm’s naturally conservative approach was an asset in the financial meltdown in 2008. It had “already been a long year” according to Gold, “but September catapulted the year into chaos.”
Since the crash, the firm’s approach has become even more conservative. They dialed down the risk in portfolios and put sizable amounts in cash. In 2009, they began to slowly dollar-cost average back through the markets. Gold and his staff called every client immediately after the crash, and held monthly conference calls throughout the year to keep clients up-to-date.
“Because of everything that happened in 2008, I do think we’re a stronger company; we’re more in touch with the pulse of our clients, what makes them tick, what makes them nervous, what excites them.”