How we can help
If there was a single take away from 2008, it should be that volatility matters. As you can see from the graph to the right, losses have an incredibly corrosive effect on future growth. Like volatility, large drawdowns (losses in your portfolio) can also have a devastating impact on performance. As losses increase, the gains and time required to recover grow exponentially. Lombard Street Partners strives for long-term investment success for its clients by focusing on the consistency of its returns and limiting exposure to major drawdowns.
Our approach to asset management is summarized below:
Four Pillars Of Our Asset Management Philosophy
Liquidity & Visibility
We strive to maintain a highly liquid portfolio so that most of the funds can be accessed in 1-3 business days. We also increase visibility by favoring liquid securities with intra-day pricing and a reporting system that allows you to see your holdings regardless of where they are held (custody).
Low Frictional Costs
The single easiest way to create outperformance is by reducing costs. Costs can either be easily seen like commissions and fees, or they can be hidden as a limited investment platform, 12b-1 fees, or loads on mutual funds. Our approach is simply using low-cost, passive / index strategies while avoiding ‘managed’ products because of the imbedded fee structure.
Expenses You See
- AUM fee (advisory)
- Mutual Fund fees
- + 12b-1
- + Money Manager
- + Loads
- + Trailing
- Redemption
- Trading Costs
- Margin Rates
Expenses You Don't See
- Commissions
- Interest Rates
- Limited Investment Platform
- Inferior Trade Execution
- Failure to Rebalance Assets
The Single Easiest Way to Create Outperformance is by Reducing Costs
The chart below shows the corrosive impact that fees have on your portfolio. This illustrates the financial impact of a typical 1.5% fund expense on an investment of $1 million over 10 years. At Lombard, we strive to reduce fees, allowing our clients to keep significantly more of their performance gains.
| Portfolio $ Amount | Fund Expense | $ Impact Over 10 Years |
|---|---|---|
| $1,000,000 | 1.5% | $160,541 |
| $1,000,000 | 0.35% | $35,556 |
Diversification
The first step of risk management is broad diversification across asset classes, geographies, and investment vehicles. Our portfolios typically include forty or more independent asset classes representing over 8,000 underlying securities to protect clients from concentrated exposure to any one risk source. Ultimately, we seek to find low correlated asset classes so that when one zigs, the other zags.
Diversification is a function of combining imperfectly correlated asset classes. Our goal is to enable our clients’ portfolios to participate in the growth of the worldwide economy while minimizing exposure to any one asset class, country, or specific economic event risk. A well structured, diversified portfolio will promote that growth while minimizing risk. Our typical portfolio is highly diversified compared to an average investment portfolio.
We build our clients’ portfolios from 48 independent investment vehicle categories and across 4 major asset classes. We build it considering factors that we believe influence risk the most: volatility (as measured by the standard deviation of return) and correlation (to market conditions, economic conditions, and other investment assets).
Definitions
GLOBAL EQUITIES: The tradeable stock or capital stock of a business entity represents the original capital paid into or invested in the business by its owners. Stock is distinct from the property and the assets of a business which may fluctuate in quantity and value. The growth of equities correlates to the underlying growth of the businesses.
REAL ASSETS (Inflation Hedge): In contrast to global assets, these are tangible or physical assets in nature (e.g. real estate, commodities, stamps, art, radio frequencies, water rights).
YIELD & RATES (Growth Hedge): Securities issued by governments or corporations, which pay a fixed or variable interest rate at regular intervals and repay principal on maturity.
DEFENSIVE (Market Hedge): Investment techniques and strategies that either capture risk premia (beta) and/or obtain excess returns (alpha) with low overall correlation to the securities in which they trade (i.e. equities, commodities or bonds). Capital paid into or invested in the business by its owners. Stock is distinct from the property and the assets of a business which may fluctuate in quantity and value. The growth of equities correlates to the underlying growth of the businesses.
Volatility Control / Reduction
Risk management is the foundational element of our process. Preserving capital in adverse markets and controlling portfolio volatility is critical to generating attractive long-term asset growth. Our allocation is tilted towards defensive / hedged strategies seeking low correlation to traditional assets. We also feel that it is important to systematically rebalance client portfolios to match their capital and risk needs.
Below is a chart of three portfolios: each with an identical 10% annualized rate of return over a 20 year period, but with varying levels of volatility. Which one would you choose?
Who We Are
Core Client Competencies
At Lombard, we understand fiduciary responsibility. Whether you’re a trustee of a QRP or managing your personal assets, the right equation to balance risk and growth is as individual as you. Many outside factors impact investing today, and our experience and knowledge of current products and legislative changes ensure that you don’t need to be a specialist to build the right portfolio for you. All of our clients are fiduciaries in some capacity, and we are expert at customizing our portfolios to meet each clients' needs.
Private Client
Our clients have worked hard to build their wealth. Our job is to help them preserve and grow that wealth. Lombard Street Partners has a very unique approach to wealth management that focuses on volatility containment. Our many years of experience and network of resources give us and our clients a competitive edge in our proactive approach to wealth management. Each portfolio is designed and tailored to meet the unique needs of our clients and their families. We make sure our interests are completely aligned with our clients at all times.
ERISA Assets
Qualified Retirement Plans play an important role in an individuals' total wealth picture. Our belief is that we need to take into account the individuals within the plan in order to manage the appropriate amount of risk. Lombard Street Partners has a great deal of experience and expertise in the design and management of ERISA related assets. We give our clients the tools to make educated decisions on how to best allocate the resources for their benefit and compensation programs.
Employee Stock Ownership Plans (ESOP) / 1042
ESOP’s can be a powerful tool to reward employees and a profitable way to manage a company. Regulations and ERISA laws can make managing an ESOP potentially cumbersome, and it is important to have specialized professionals who are adept at managing ESOP plans. The needs of an ESOP plan changes as it matures, and we understand and can plan for the various stages in your ESOP. At Lombard, we can help you manage your ESOP trust to balance the competing requirements of ERISA laws, employee’s needs and market volatility.
Why Work With An RIA
Why work with an Independent Wealth Advisor?
Lombard Street Partners is an independent Registered Investment Advisor. As an independent wealth advisor, our sole purpose is to help our clients protect and grow their wealth. We have an open architecture and are free of bias regarding the selection of investment managers, strategies and products. Being independent, we can choose the best products available, and are not restricted to choose only company-developed/sponsored products, like many advisors. We build each client portfolio to precisely meet each clients’ needs.
| Traditional | Lombard | |
|---|---|---|
| Transactional Costs | Competitive with most other large firms. Offering similar basic service options. | The ability to shop rates with multiple firms allows us to negotiate the absolute best pricing. |
| Reporting | Reporting tools have been designed to be used and accessed by 10,000+ advisors. Customization is minimal. The ability or willingness to report on assets not held by the firm is limited. | Reporting capabilities have come a long way with the development of the RIA channels and the Internet. We can seamlessly aggregate all your assets in one report. You can further customize your reports to view information that is important to you. |
| Proprietary Solutions | At times, firms offer products that are proprietary. Their advisors can be compensated for these types of products if sold to their clients. | We simply evaluate all investment vehicles based on the benefit to our client--not the payment we receive for selling it. |
| Research | Some firms’ research teams are very good at identifying market trends and research data in various market segments. However, “outside” research is discouraged because of compliance rules and the firm's research is often not focused on the needs of the client's portfolio. | We have access to research generated from our Wall Street partners. We have also found that there is valuable research being done outside the walls of large firms. We aren’t restricted from gathering data from the best minds, wherever they are. |
The Team
Chris Barlow
Managing Partner
Mr. Barlow has over 14 years of experience in the financial services industry. Mr. Barlow is the founding member of Lombard Street Partners. Over the last four years, Lombard Street Partners has worked with several sister firms to found and launch two hedge funds, and an options trading firm as well as an independent wealth advisory platform. Prior to his work at Lombard, Mr. Barlow worked at Merrill Lynch from 1997 to 2006. During his time at Merrill, Mr. Barlow advised on client assets of more than $450 million. Mr. Barlow received a B.S in Mathematics from Brigham Young University.
Scott Elisha
Partner / Head Trader
Mr. Elisha is the Head Trader and Options Strategist at Lombard Street Partners. Prior to Lombard, Scott was the Head Trader and Portfolio Manager at LOGe Solutions LLC. Scott spent one year at Citadel Derivatives Group and was the Head Trader on the Pacific Options Exchange. Prior to Citadel, he was a Principal at Wolverine Trading LLC for 10 years, one of the largest options market makers in the world. At Wolverine Scott was the Head Trader in charge of all index trading in the OEX complex on the CBOE from 1994-1998, and all trading in the San Francisco office on the Pacific Exchange from 1998-2004, and was also responsible for over 500 equity options as well as market-making in ETF's and structured products. From 1989-1994, Scott was a Senior Options Trader and Associate Director at O'Connor and Associates in Chicago. Scott is a wine enthusiast and lives in the San Francisco Bay Area.
Jack Harrington
Board of Advisors
Mr. Harrington came to the Lombard Street Partners with over 25 years of general management, investment and board experience in both private and public firms. His most recent 10 years of experience were as a General Partner of Advanced Technology Ventures (ATV), a venture capital firm with over $1.5B under management, and as a CEO of a start-up network management company, ObjectStream. During this period he was on the public board at Xicor, a firm acquired by Intersil for over $500M. He also spent 16 years at AT&T, most recently as Vice President responsible for the P&L of a $2 billion business unit. Mr. Harrington rose from an Account Executive, serving in multiple functional roles across the organization. Mr. Harrington graduated from Iowa State University with a BS in Biochemistry and holds an MBA from the University of Colorado. He also participated in the Program for Management Development at the Harvard Business School.
John D. Blatter
Board of Advisors
Mr. Blatter came to Lombard Street Partners with over 30 years of Wealth Advisory experience. He worked for Goldman Sachs and Company for 30 years in Private Wealth Management. Mr. Blatter received his M.B.A. in 1974 and his B.S. in Economics in 1972 from Brigham Young University. Currently, Mr. Blatter is an executive member of Northern California VOAD (Volunteer Organizations Active in Disaster) as well as serving as a member of the Interagency Disaster Alliance of Contra Costa County. Additionally, Mr. Blatter is on the Business Advisory Council for Utah Valley University in Provo, Utah.
Contact Us
Danville Office
Lombard Street Partners, LLC
931 Hartz Way, Suite 220
Danville, CA
94526
phone: 415.449.0595
fax: 415.727.4300
email: info@lombardstreetpartners.com