[One of the greatest cross-industry challenges in addressing a rapidly evolving business environment is overcoming a deep-seated resistance and a debilitating inertia towards change. The financial services industry particularly faces unprecedented headwinds: technological disruption, shifting client expectations, and resistance to change that hinders innovation and growth. Addressing these challenges requires financial firms to prioritize professional development to empower advisors and leverage practical Business Intelligence technology for data-driven strategies.

To better understand the new foundation that may be needed to address these industry challenges, we spoke with Mark Spina, Michael Silver, and Eric Sheikowitz, co-Founders of AlphaScale – an integrated professional development and business intelligence firm partnering with asset and wealth managers to deliver innovative training, coaching, and actionable insights for sustainable growth.]

Hortz: What specific challenges do asset and wealth managers face today that AlphaScale’s offerings address? 

Spina: The industry faces a projected 100,000-advisor shortage by 2034, turnover rates up to 90% for new advisors within three years, and a $156 trillion wealth transfer reshaping client needs across generations – Silent Generation (legacy planning), Baby Boomers (retirement income), Gen X (family balance), and Millennials (digital engagement). Advisors struggle with client acquisition, confidence gaps, and differentiation, while firms seek to optimize operations.

With firms spending billions on asset acquisition and advisor recruiting, investing a fraction of that in professional development is a sensible way to ensure better returns on those investments. We tackle these challenges through tailored coaching and training in live and asynchronous formats. 

Silver: With wealth management firms and advisors focused on this wealth transfer and their own businesses, it can be hard for asset managers to get their attention, even for the most compelling investment product ideas. We help solve this challenge by helping asset managers build value-add capabilities to propel advisor engagement.

This includes developing intriguing content and creative delivery to help asset management teams get in front of advisors and build real advisor partnerships. Given our vast experience working with advisors, we also coach and train asset management professionals on how to best initiate and build advisor relationships. 

Hortz: How does your firm’s approach to professional development differ from other providers? 

Silver: Our professional development blends high-touch coaching with scalable, asynchronous training, that research proves will boost productivity by over 80% compared to 30% for training alone. We deliver customized strategic tracks through dynamic formats – workshops, 1:1 coaching, peer dinners, webinars, and conferences – aligned with firms’ strengths and market goals. Tools like role-playing and client-specific audits ensure advisors master skills like Wealth Transfer Expertise or Digital Innovation. This dynamic approach drives deeper learning, confidence, and measurable performance gains compared to traditional, static training.

Sheikowitz: Clients work with us because we make growth simple, practical, and doable. We bring proven frameworks that take the guesswork out of running a business. We give advisors and teams clear next steps they can act on right away, and we hold clients accountable to the goals that are set. With deep industry experience, we tailor everything to the teams we work with. In the end, we help build stronger teams, deepen client relationships, and hit the results that our clients are after. 

Hortz: Can you tell us about your recent launch of AlphaScale Business Intelligence and its role in building a new foundation in supporting the industry? 

Spina: I’m thrilled to announce the launch of AlphaScale Business Intelligence, a dedicated unit empowering asset and wealth managers with data-driven insights and strategic solutions. The unit combines customized coaching, consulting, and advanced technology tools acting as a foundation to drive growth, optimize distribution, and enhance client engagement.

Through our partnership with WealthVista, led by Max Sparshatt and GK3 Capital, led by John Gulino, we integrate competitive intelligence to connect asset managers with their target advisor audiences. This Practical Business Intelligence approach ensures firms navigate complex markets with actionable strategies.

Our perspective on Business Intelligence is about turning data into a competitive edge – delivering tailored insights that empower firms to outperform in sales, marketing, and client relationships. We deliver this edge through structured Playbooks and can also sit alongside our asset management partners’ sales, marketing, product, and BI teams as an extension of in-house resources, amplifying capacity or allowing for the offload of time-consuming initiatives. 

Hortz: Why do you characterize your solutions as providing sales and service “alpha”? 

Sheikowitz: Our solutions deliver “alpha” through professional development and Practical Business Intelligence technology. Our coaching and training optimize advisor practices across three phases: Activation (strategic positioning), Optimization (streamlined processes and client experiences), and Acceleration (client acquisition and retention). These equip advisors with skills like active listening and demographic-aligned strategies, boosting revenue and loyalty.

AlphaScale Business Intelligence provides data-driven tools and insights to enhance distribution and client engagement, ensuring firms outperform in a competitive market. 

Silver: The Leaders Program enhances service with personalized, scalable systems, fostering client loyalty. By aligning with firms’ goals, our solutions drive measurable outperformance. 

Hortz: What aspects of your programs are tailored for asset managers versus wealth managers? 

Silver: Asset managers who walk into advisor meetings with just a product sheet and a slide deck need to rethink their game plan. In today’s market, that approach will not cut it. Advisors want partners who bring real value, not just pitches. 

Spina: For asset managers, AlphaScale Business Intelligence equips them with insights and tools, like competitive intelligence dashboards, to spark meaningful advisor conversations, build trust, and drive investment discussions—moving beyond product pitches to deliver strategic value. 

Sheikowitz: For wealth managers, our Advisor and Team Coaching focuses on client acquisition, confidence gaps, and differentiation. We teach six client-facing processes—discovery, financial planning, investment planning, implementation, monitoring, and review—through tailored strategic tracks aligned with generational needs, like Millennials’ digital preferences. This boosts retention, compliance, and reputation in the wealth transfer market. 

Hortz: How do you measure the impact of your engagements, and what metrics demonstrate value? 

Sheikowitz: We measure impact with tailored metrics addressing client goals: increased AUM, revenue growth, and reduced advisor turnover. Our professional development drives measurable outcomes: higher retention, faster AUM growth, and stronger advisor positioning.

Our engagements, averaging over five years, exceed industry norms, reflecting sustained value. Qualitative metrics include improved advisor confidence, client satisfaction, digital engagement, and addressing barriers like imposter syndrome and the “full-service dilemma.” Feedback questions like “How confident are you in meeting financial goals?” ensure alignment. 

Hortz: What are your plans for expanding services to better partner with your financial clients to help them lead in a changing industry? 

Spina: AlphaScale is evolving as a Modern Premier Professional Development and Business Intelligence Partner. We are enhancing our Leaders Program with asynchronous offerings, including a powerful new program focused on client service staff members. We are deepening our Practical Business Intelligence offerings through the launch of AlphaScale Business Intelligence unit and partnerships to deliver innovative solutions for the $156 trillion wealth transfer market.

Our upcoming Digital Leaders program will empower firms to adopt models for high-opportunity segments like Millennials. We invite financial advisors, asset managers, and wealth managers to follow us on LinkedIn for thought leadership on topics like The Future of Wealth Advisory, Data-Driven Practice Management, and Mastering Advisor-Client Relationships. 

This article was originally published here and is republished on Wealthtender with permission.

About the Author

Bill Hortz

Founder Institute for Innovation Development

Bill Hortz is an independent business consultant and Founder/Dean of the Institute for Innovation Development- a financial services business innovation platform and network. With over 30 years of experience in the financial services industry including expertise in sales/marketing/branding of asset management firms, as well as, creatively restructuring and developing internal/external sales and strategic account departments for 5 major financial firms, including OppenheimerFunds, Neuberger&Berman and Templeton Funds Distributors. His wide ranging experiences have led Bill to a strong belief, passion and advocation for strategic thinking, innovation creation and strategic account management as the nexus of business skills needed to address a business environment challenged by an accelerating rate of change.

[With interest rate cuts now a reality and expected to continue to trend lower, it may be time to explore traditional thinking on the topic of small cap stocks, effects of rate cuts, and their investment implications. Upon further study, there may be a larger reality to focus on.

We decided to reach out to Eric Kuby, Chief Investment Officer, Peter Gottlieb, President, and Brooke Kuby, Research Analyst of North Star Investment Management – a Chicago-based investment firm with an expertise on applying  a value lens to the small and micro-cap markets and developing non-traditional small-cap investment strategies – to hear their perspectives on the prevailing investor perceptions on small cap stocks, the nuances of the current market cycle, and the reinforcement of the need for a strategic versus tactical approach in active management of small cap markets.]

Hortz: What is the investment case for small cap stocks in a lowering interest rate environment? Are all rate-cutting cycles the same or are there other factors you need to account for?

Gottlieb: Small-cap companies tend to rely on shorter-term financing rather than issuing long-term bonds. As a result, the lowering of short-term rates improves their cost of capital and boosts their net income. The higher profits provide a nice tailwind for their stock prices.

Another aspect to consider, with 25% of small-cap value companies in the financial sector, is that a steepening yield curve improves the net interest margin for the banks, in that they typically borrow short while making longer-term loans.

Additionally, lower short-term rates boost consumer and industrial activity, benefiting companies in those sectors, which are also significant percentages of the small-cap value index.

Kuby: As to your question whether all rate-cutting environments are the same, we know that some strategists have been pointing out that rate-cutting cycles do not always lead to small-cap outperformance, but we think the factors that have led to this particular cycle should provide a nice lift to the category.

Examples of small-cap underperformance have more often come when the rate cuts have come during a crisis period, when smaller companies have been under challenging business conditions. This time, the economy is strong, and the rate cuts are coming to return policy to neutral from a restrictive level that was in place to combat inflationary pressures.

Hortz: Can you further share your perspectives on small-cap stocks in our current rate-cutting cycle?

Gottlieb: What is interesting about the current rate-cutting cycle is that there is both a strategic and tactical rationale making the case for small caps. On a strategic basis, small caps are trading at “trough valuations” on a relative basis on most metrics, such as the forward Price/Earnings multiple, compared to the rest of the market, which the following chart from Jeffries USA Equity Strategy Handbook outlines:

As value investors, we find that gap by itself to be a compelling reason for investors to allocate to the asset class where many currently have little or no holdings. Additionally, in a recent Barron’s article, LSEG forecasts Russell constituents to grow earnings by more than 50% on average over the next four quarters (five times the pace of S&P 500 earnings), while Jefferies projects 19.1% growth in 2026 versus 12.2% for large caps. So, you have inexpensive stocks with superior growth prospects.

Kuby: On a tactical basis, this chart below from Furey Research Partners demonstrates there has been a pattern over the last few decades of extended periods of underperformance, bottoming out when the consensus amongst investors is that small caps are dead.

That has proven to be the moment when the tide turns, leading to a lengthy period of substantial outperformance. We think we reached that moment earlier this year. The rate-cutting cycle provides a rationale for tactical investors to seize the moment. The tariff-related inflation concerns that have dominated the narrative, leading to restrictive monetary policy and putting a lid on small caps, have not materialized. The Fed has relented and shifted to a policy that promotes growth and should take that lid off the small caps.

Hortz: As investment managers, how do you address these different macro and market issues, concerns, and opportunities in the small-cap markets?

Gottlieb: There are always macro issues that raise concerns, yet the stock market has consistently climbed the wall of worry to reach new heights. The most important ingredient in being a successful investor, particularly in small caps, is your selection process. It is best to think strategically bottom-up than just tactically (timing), since stock selection refines even tactical players’ positioning in the best companies for the given environment.

Kuby: There are thousands of small-cap companies, many of which have poor business models and balance sheets or are facing significant headwinds. At North Star, Peter Gottlieb and I as co-managers have worked together for decades, constantly refining our research process to identify the companies that offer the best risk-adjusted returns. Over time, the breadth of the small-cap universe has led us to develop three differentiated strategies: a micro-cap strategy focused on under-researched value opportunities, a small-cap dividend strategy designed for income-oriented investors, and a small-cap value strategy targeting larger, growth-oriented names. 

Brooke Kuby: Our portfolio companies’ management teams also run their firms to address many of the current concerns in discussion. There are always going to be winners and losers, which is why active management can outmaneuver indexing in small-caps right now and across all environments. Stock selection is paramount! 

Hortz: Can you explain your stock selection process and how it is designed to uncover resilient companies?

Brooke Kuby: Our process begins with a disciplined screen for valuation, balance sheet strength, and cash flow generation. We identify companies trading at discounts on several metrics, such as EV/EBITDA, P/E, or free cash flow yield. My weekly screening and idea exchanging with fellow small-cap enthusiasts is designed to surface durable businesses trading at undervalued levels, with clear pathways to long-term upside.

From there, we evaluate every company through a Six Pillar process. We further examine the stock’s valuation, durability across business cycles, capital structure stability, a defined path to earnings growth, shareholder-aligned leadership, and a transparent, understandable business model.

We then stress-test these pillars through management calls. Engaging with management is a crucial part of our process. Preparation means digging into capital structure, segment reporting, and historical financial trends. I aim to move beyond guidance and test how candid and disciplined leaders are in navigating challenges. The questions I ask are designed to uncover the real drivers of decision making (“What makes free cash flow diverge from net income?” or “What keeps your customers from delaying purchases in a tougher environment?”). I am also aware of tone and transparency; avoidance, excessive optimism, or generic responses are red flags. Thoughtful, data-backed answers signal credibility.

This combined process addresses systemic risks that can derail value. It helps us detect whether reported numbers reflect true economic reality, surface risks like debt that may not show up in headline financials, and test how management plans to navigate inflation, labor tightness, or regulation. Just as importantly, it creates a documented trail of assumptions and management responses, which keeps our research dispassionate and accountable over time.

Hortz: Can you discuss a number of your portfolio companies that illustrate these points?

Brooke Kuby: There are several North Star holdings that are insulated from macroeconomic fluctuations.

Employers continue to face shortages of mechanics, welders, electricians, and nurses regardless of broader GDP trends. Lincoln Educational Services (LINC) is a career-focused education provider specializing in skilled trades and healthcare training across a network of U.S. campuses. Tuition is raised 2-3% annually, effectively offsetting inflation without meaningful enrollment loss.

Footwear is discretionary, but Rocky Brands (RCKY) has insulated itself from trade risk. Manufacturing in the Dominican Republic reduces reliance on Asia and helps sidestep potential tariff shock. Many peers manufacture in Mexico – if trade tensions rise, RCKY’s footprint (no pun intended) becomes a relative tailwind. There are several demand levers in place, with the XTRATUF brand growing faster than they can supply, and Lehigh, tied to workplace safety spending, growing faster than GDP.

Liquidity Services (LQDT), an online marketplace operator that helps governments and corporations manage, sell, and repurpose surplus and returned assets, is positioned as a “constant cyclical” business. When economies expand, retailers and governments liquidate excess inventory; in downturns, bankruptcies and cost-cutting fuel more surplus supply. Buyers on LQDT platforms are value-seekers, benefiting from inflationary environments. The model is an asset-light, digital marketplace with no direct tariff exposure.

Bank of Hawaii (BOH) is one of our highest-quality bank holdings. Regional banks depend on local economic health. Hawaii’s economy (tourism, real estate, and military spending) enables steady earnings growth and a well-supported dividend. Inflation is less of a cost-driver for banks compared to other companies, and regional banks tend to benefit from lighter regulation with lower compliance costs and greater flexibility in lending.

Hortz: Any other thoughts you would like to share about small cap investing?

Kuby: Investors should keep in mind that our bottom-up stock selection process has been uncovering higher and higher quality companies regardless of tactical reasons or specific market environments as we continue to track hundreds of names and maintain a constant pipeline of ideas.

Gottlieb: Even so, small caps today offer a rare setup: inexpensive valuations at multi-decade discounts to large caps paired with superior earnings growth prospects both in the near term and into 2026. At the precipice of another rate-cutting cycle, we believe this creates a compelling case for a reasonable allocation to a diversified basket of high-quality small-caps.

This article was originally published here and is republished on Wealthtender with permission.

About the Author

Bill Hortz

Founder Institute for Innovation Development

Bill Hortz is an independent business consultant and Founder/Dean of the Institute for Innovation Development- a financial services business innovation platform and network. With over 30 years of experience in the financial services industry including expertise in sales/marketing/branding of asset management firms, as well as, creatively restructuring and developing internal/external sales and strategic account departments for 5 major financial firms, including OppenheimerFunds, Neuberger&Berman and Templeton Funds Distributors. His wide ranging experiences have led Bill to a strong belief, passion and advocation for strategic thinking, innovation creation and strategic account management as the nexus of business skills needed to address a business environment challenged by an accelerating rate of change.

[Our innovation thought leadership interviews regularly explore the ongoing evolution happening in investment and risk management, but we also take deep dives into “niche” investment areas or specific strategies to learn from experienced managers with unique perspectives. We feel it is critical, in such a rapidly changing industry environment, to continuously re-examine and learn from different investment approaches and ways of thinking.

To that end, I feel it is time to review the perennial discussion on “quality” investing and focusing on “quality” companies. There are so many questions and qualifications around that word and the investment concepts or principles they refer to:

Does the investment designation of “quality” signify certain company operating absolutes or, in the real-world, does it refer to more of a broad range of characteristics and exhibit varying shades of gray? What is a good way to identify companies that truly meet the litmus test of “quality”? How is the competitive landscape of managers approaching and executing this investment strategy differently? How do sophisticated professional investors, including financial advisors, consultants, and due diligence analysts, wrestle with the connotations of the word and the implementation of an investment process around it? Also, how do those parameters around “quality” hold up against a cross-industry backdrop of rapidly changing business environments that history may have no guidance for?

To explore the mindset and execution of this investment methodology more fully, we were introduced to John Crawford, IV, Managing Director of Equity Investments for Crawford Investment Counsel – an Atlanta-based, independent asset management firm founded in 1980 that has focused on high-quality companies with a strong commitment to dividend payments to shareholders. We asked him to share his firm’s four decades of investment experience, research knowledge, and portfolio construction methodologies focused on quality companies.

In hearing their investment approach and experience with their clients, I sense a strong behavioral finance component at play here as well. I am reminded that even at a time of rapid change and growing complexity, explaining and executing on a simple, common-sense strategy can potentially be the most engaging.]

Hortz: How do you define what is a “quality” company?

Crawford: Quality is typically a subjective measure. While we all aspire to quality – and hopefully in all aspects of our life – in the investment business, it is typically measured with three criteria: financial strength, business consistency, and profitability. The most basic measures of those three criteria when it comes to stocks are balance sheet strength, earnings per share variability, and return on equity (ROE). Our portfolios skew high on both ROE and balance sheet strength, and skew low on earnings per share variability, which is a measure of consistency or predictability.

We do not have absolute levels for those different criteria that we seek to satisfy or that we mandate. Every company has its own optimal capital structure. Each business has different reinvestment requirements, end market exposures, and other factors to consider. So, there is not an across-the-board level that you can state. In some respects, “quality” is a relative term, whether you are looking at large cap stocks, small cap stocks, whatever.

Within the large cap universe, we believe the highest quality component of that is comprised of companies that have paid a dividend for 10 years. When you look at balance sheet strength, business consistency, and high ROE, guess what pops up like mushrooms around all those criteria? Dividends, and not just dividends, but usually rising dividends. There are some companies that “fit that bill” that do not pay dividends, but for the most part, you are going to find dividends associated with those “quality” criteria.

Hortz: What is the approximate size and nature of this universe of stocks?

Crawford: In the large cap space, we have determined about 350 companies that meet that criteria and have paid a dividend consistently for at least 10 straight years. We view the 10-year time horizon as meaningful because it spans a full business cycle, effectively screening out more cyclical and economically sensitive companies. A very high percentage of these companies have not just paid dividends for 10 straight years, they have also increased their dividend in most, if not all, of those years. You can ask if there is anything unusual about that, but I would say that is pretty unusual as rising dividends represent approximately 65% – 70% of those companies.

That tells you that once companies get into this “quality” universe, they have some really special characteristics, traits, and tailwinds to their business; not just from an economic standpoint, but they also have a propensity and a willingness to pay that dividend and return capital to shareholders. They are aligned with shareholder interests, and they reward shareholders through not only dividends but also share buybacks once they have reinvested back into their business, which obviously we need to see in order for the enterprise to profit and prosper over the long term.

In the small cap space, we reduce the dividend requirement to a preference for three years of consistent dividend payments, resulting in a broader universe of around 750 companies. While the relative quality of this broader universe is not nearly as high, our small cap strategy actually has quality characteristics similar to those of large cap stocks. The ROE is not quite as high as it is in large cap stocks, but earnings per share variability and balance sheet strength are comparable.

Hortz: What specific research criteria and selection process do you further apply on these quality companies to get to your high-conviction, “best ideas” portfolios?

Crawford: As you might expect, as a fundamental long-term oriented investment firm, we do all the traditional balance sheet, income statement, and cashflow statement analysis. We read all the company disclosure presentations, industry information, et cetera. This is all fairly typical for any fundamental firm, but we have internally developed a number of tools that we use that work particularly well with higher quality stocks.

Examples of this at a very rudimentary level would be that some of the screening we do is unique to higher quality stocks. But beyond that, we have a total shareholder return algorithm, what we call our “TSR framework”, which essentially is our version of price targets and it solves for how we expect to get paid from each component of the profit equation. So fundamental progress, valuation improvement, plus yield – it incorporates all those. We use a three-year horizon, and it works particularly well for higher quality stocks because the businesses are more consistent. The quality and consistency of the companies we invest in provide better visibility so the range of outcomes is narrower and the likelihood of success is better.

We also have a rating system that is designed to communicate to our team our conviction level on valuation, fundamentals, and overall rating so that everybody knows what the value proposition is on each company. We believe these measures help us optimize our company selection process.

Hortz: What kind of research process do you apply on the nature and quality of the dividends that companies distribute, especially as you have different dividend growth and dividend yield portfolios?

Crawford: We look very closely at companies that not just pay a dividend, but also those with dividend sustainability and an ability and willingness to increase it. We do not want to buy a company and have a dividend cut occur. You get into trouble when you reach for yield too much, or you buy a business where the yield comes along with some other factor that manifests in a risk to the company. It might be commodity price risk, or credit risk, or reliance on the capital markets to fund their operations. Or maybe there is interest rate risk, whatever it may be.

That due diligence and research process has resulted in very few dividend cuts in our portfolio over the 45 years we have been in existence. And so, we are analyzing company dividends paid out depending on the portfolio objectives of dividend yield versus dividend growth, as you referenced. We obviously are seeking companies with sound capital allocation policies, so we look at management alignment with shareholder interests.

An interesting point to make here is that what we really like is what the dividend signals to us and what that rising dividend signals to us, which to us is a tangible statement from the board that says, business is good, it is getting better, and the future looks bright. There is a great deal of effort that goes into this – we have a rigorous, time-tested process that includes significant foundational work and in-depth fundamental analysis – but it starts with that basic gesture, and as an owner of a business, we expect to get paid something out of the profits.

Hortz: How does this differentiate your approach from other quality and dividend-focused investment managers?

Crawford: Not paying a dividend is non-negotiable here at Crawford. Every company we have ever bought pays a dividend. Sometimes you get equity income strategies that say 80% of the companies have to pay dividends. Well, ours is a hundred percent. So that is a differentiator.

We are also price sensitive, value-oriented investors, while some dividend growth investors are not value-oriented. We are at the intersection of quality and value, and as a result of that, you get upside participation with well-run quality companies, but the insistence on dividends provides valuation support that protects you in down markets. I do think that is an attractive by-product of what we do.

Hortz: How do you apply your investment approach in each of your focus strategies? Do they have differentiated dividend-focused frameworks?

Crawford: A number of our investment strategies are objectives-based. Our Dividend Yield strategy has to have a yield in that eighth or ninth decile of all dividend paying companies, and we have pegged it at a minimum of around four percent. We have a requirement for income in that strategy as we do in our Managed Income strategy. When you move into the smaller cap strategies like our Small Cap strategy, you move down the cap spectrum, and the dividend or yield becomes much less important there. And the dividend is really a signal of quality, an indicator of business strength and alignment of management with shareholder interests. They do have differentiating frameworks.

We run different screens to help us identify candidates for different strategies and some stocks are owned in more than one strategy. I would say our Dividend Growth strategy is more of a quality portfolio where we are seeking attractive levels of free cash flow trading at a reasonable valuation with good visibility on future growth. When we move to the small cap space, what we are looking for there is to exploit the information advantage, but also capitalize on the quality premium that exists in small cap stocks. You want that tailwind of dividends and quality when you move down the cap spectrum.

Hortz: Can you walk us through a company example or two high-conviction quality companies?

Crawford: A good example is Johnson and Johnson which is a textbook example of consistency. Whether the economy is in a recession or expansion, you are going to take your medicine. The company has paid a dividend and grown it every year for 65 straight years. They have one of the few remaining AAA balance sheets, an ROE that is somewhere in the 30% range, the dividend yield is around 3%, and the stock trades at around 16 times earnings.

In the small cap space, the example I would give you is WD-40 company which is a single product company we all are familiar with and use. The company has extremely high margins, low earnings variability, rock solid balance sheet, a well-run business that is aligned with shareholder interests, and they are still expanding their footprint geographically overseas while announcing a few ancillary products that might prove to help with sales growth. The stock’s not cheap, but you often do not get really blue-chip quality merchandise in the small cap space at deep discounts. This one fits with our theme of quality at a reasonable price, which is where we think WD-40 falls today.

Hortz: What suggestions can you share with advisors on how to position and explain this investment strategy to their clients?

Crawford: I think our investment philosophy, as we explained previously, is looked at as a “sleep-well-at-night” portfolio. Our portfolios are user-friendly with income, low turnover, and recognizable companies. We discuss how the dividends provide some downside protection in rough markets and this is probably the strongest differentiator of our approach. But another significant appeal is that dividends do provide consistent income which still remains one of the primary objectives of many individual investors, particularly retirees and pre-retirees. Additionally, for clients who are in the “decumulation” phase, a benefit of rising income is that it enables spending today with the potential for higher spending in the future.

While advisors understand the quantitative benefits of our strategy, the end client may not understand the significance of the low beta, the above-average risk adjusted returns, and the positive alpha that we create. But intuitively, I think clients understand the common-sense, understandable approach to investing in what we do by focusing on quality and dividends. Sometimes simplicity can be more impactful and lead to clarity and focus, not to mention staying with a strategy.

Reception of our philosophy and process from our clients has been strong, resulting in a 98% retention rate. That makes the risk of abandonment very low — and by staying invested, they can fully benefit from the compounding that the capital markets have to offer.

This article was originally published here and is republished on Wealthtender with permission.

About the Author

Bill Hortz

Founder Institute for Innovation Development

Bill Hortz is an independent business consultant and Founder/Dean of the Institute for Innovation Development- a financial services business innovation platform and network. With over 30 years of experience in the financial services industry including expertise in sales/marketing/branding of asset management firms, as well as, creatively restructuring and developing internal/external sales and strategic account departments for 5 major financial firms, including OppenheimerFunds, Neuberger&Berman and Templeton Funds Distributors. His wide ranging experiences have led Bill to a strong belief, passion and advocation for strategic thinking, innovation creation and strategic account management as the nexus of business skills needed to address a business environment challenged by an accelerating rate of change.