3 min read March 2023 — Boston Financial Management (BFM) is an independent financial services firm that provides wealth management and investment advisory services to individuals, families, endowments and not-for-profit organizations. Invest: spoke with President & Chief Executive Officer Louis Crosier about the firm’s investment strategies, current trends and demands for the wealth management sector, community outreach initiatives, the role that psychology plays in client advisory services and the outlook and priorities for Boston Financial Management for the near future.
What are some highlights for BFM in the greater Boston area since you joined the firm two years ago?
My goal during the first few months of my tenure was to listen and learn, meet as many clients as possible, and spend time with our employees to get a full understanding of the culture of the firm. This allowed me to get a sense of our strengths, and how we could best serve and support our clients. Following this period we promoted several members of the team, refined titles, and ensured that what we already had in place was truly being recognized. I’m proud of the changes that came from this exercise, and in particular promoting additional gender diversity in leadership positions. I also put in place a simple motto, which is “Do great things for clients and for each other, all else follows.” That’s what drives our firm, and this mentality has contributed to the growth we have experienced. Since I joined, we’ve gained nearly $800 million in new assets, and have onboarded over 200 client relationships. To gain both assets and clients through the volatile markets of 2022 is a huge testament to our team, and I’m proud that so many clients have entrusted us with their financial well-being.
Additionally, late last year it was announced that BFM was selected to Forbes’ inaugural list of America’s Top Registered Investment Advisors. At No. 20 on Forbes’ list, BFM is the highest-ranked firm in New England, which is something that our team is exceedingly proud of.
What trends have you noticed in the wealth management sector?
A few trends have emerged over the past few years, chief among them is the need for comprehensive investment and financial advice. Clients have needs beyond simply investment management, though that of course continues to be an important part of our industry. Clients now require true wealth management encompassing investment management, trust and estate planning, and financial planning. This combination of services allows firms to develop deeper relationships with clients, and to provide targeted recommendations.
Personalization is another focus area. Each client has their own unique goals and preferences, and firms must be able to customize their offerings to meet these personal needs. The increased popularity of Direct Indexing speaks to this, and the ability to gain access to non-traditional assets and a variety of alternatives makes crafting truly personalized portfolios easier than ever before.
What’s the role of psychology in client advisory services?
There has always been a behavioral element to wealth management, and this continues to be the case. Our clients have worked hard to accumulate their assets, and so it is no wonder that wealth can be an emotional subject. We welcome these conversations and find them to be integral to developing an appropriate plan. As I mentioned a moment ago, technological resources can be incredible tools, but it can be dangerous to rely solely on any kind of software output without putting it in context and interpreting it carefully through conversation. In order to be effective, it is imperative to discuss a variety of topics with clients including their thoughts on spending, risk, charitable giving, and generational wealth transfer, just to name a few. One of our primary roles is to help clients stay on the right path and to reduce the impact of emotion on their investment decisions. Investors often make the wrong choices at the wrong time, selling securities following a market decline or buying at a market peak. Working with an advisor can bring a disciplined approach to investing and lead to better outcomes.
What investment strategies is BFM devising to benefit your clients?
We manage a variety of investment strategies that can be used in combination to meet the needs of our clients. This includes a dividend appreciation strategy, a mid-cap strategy, an income-focused equity strategy, an international equity strategy, global multi-asset class strategies, and customized bond portfolios. We also made a real effort this past year to add additional diversifying asset classes including private credit and private equity, as well as several hedge fund strategies that are less correlated to our equity and fixed-income offerings.
We also help manage positions that clients may bring to us either from a previous firm, or from a portfolio that they may have managed themselves. Rather than sell these legacy positions indiscriminately in favor of holding positions within our strategies, something which is often common practice in our industry, we manage these holdings in a tax-sensitive way and migrate to our strategies thoughtfully over time.
What regulations or legislations are you watching?
Non-competes and non-solicits have a very significant impact on our industry, and we continue to monitor the FTC’s proposed legislation to ban non-competition agreements. We believe that non-compete and non-solicitation agreements hinder competition and prevent advisors from migrating to a firm where they may serve clients better and be happier. Even the threat of enforcing a non-compete or a non-solicit can intimidate advisors from making a change, which hurts not only employees but clients as well. As I mentioned earlier, the firm’s motto is to “Do great things for clients and for each other, all else follows.” If advisors and clients reside at a firm that does not share these values, they should have the opportunity to easily migrate to a different firm, and limiting the power of non-compete and non-solicitation agreements is a way to facilitate this.
There are also a few regulations specific to Massachusetts that our estate and financial planning team is following closely including the Massachusetts millionaires tax and potential updates to our estate tax, both of which could have an impact on keeping talent in the region.
How does BFM leverage technology to better serve clients?
BFM has really embraced technology to support many functions within our firm. For instance, we operate in a paper-free manner to the fullest extent possible. Most documents can be signed and stored electronically, so they are easily found and accessible remotely. Technology also allows us to create customized portfolios in a systematic way. Our portfolio management software enables both our advisors and traders to continuously monitor client accounts, determine those which have deviated from their target allocation, and remedy them as needed. This software is also fully integrated with our CRM, which allows us to identify clients whom we haven’t spoken with for some time, and to connect with our prospects on a recurring basis. We also have a variety of resources that allow employees to be equally as effective outside the office as they are inside. All employees have access to company resources wherever a secure internet connection is present, and our phone system helps facilitate remote work.
What opportunities and challenges remain top of mind in the Greater Boston region?
We have an unbelievably diverse economy in the Boston area, and clients come from a wide range of professions. Of course, all regions have doctors, lawyers, financial services professionals, entrepreneurs, etc., but Boston has these in much greater numbers. This presents both opportunities and challenges and makes it important to maintain a skill set that is diverse, and which can address the needs of clients in different professions.
For instance, Boston has a robust tech industry with many fast-growing companies. Employees from these companies may have highly concentrated portfolios or stock options which vest over time. It’s important to have the flexibility to craft customized portfolios that address the needs of clients from a variety of walks of life.
In addition to new wealth creation, as outlined in the example above, Boston is also home to significant generational wealth. This can come with its own nuances, which is where expertise in trust and estate and financial planning can really make an impact.
What are some community outreach initiatives for BFM?
Our community involvement is continuously evolving, but one of our primary focuses is financial literacy. We’ve been working with an organization called Early Investors that brings financial literacy programs to the Boston Public School system, as well as the prison system. We also work to battle food scarcity in the region and support hunger relief efforts through our three offices in Boston, Cape Cod, and Portland, Maine. Our charitable work is often aligned with the interests of our employees. For example, one of our employees introduced us to an organization called HomeStart that challenges homelessness in the Boston area, and we recently participated in a cycle-thon for its benefit. Another one of our employees is focused on Alzheimer’s research, and so the firm has supported this initiative over many years.
What is your outlook for BFM and the greater Boston market for the next two to three years?
We are excited about the future of BFM and feel the firm is well-positioned for future growth. We suspect we will see continued consolidation in our industry both here in Boston and nationally despite rising interest rates. Consolidation can be unsettling for both clients and employees. Continued industry consolidation is helpful for BFM, as we do not anticipate selling the firm and have taken steps to codify the transition of share ownership to the next generation of owners to retain our independence. The turbulence caused by consolidation at other firms has allowed us to attract talented wealth advisors and managers from other firms in flux, and so while we are committed to remaining independent, we welcome consolidation elsewhere.
We believe the outlook for Boston is bright. While the region has its challenges such as dated infrastructure and transportation, these challenges are by no means unique to Boston, and we feel we are well-equipped to overcome them. Boston has proven to be incredibly resilient, and our combination of centers for higher education, robust healthcare, and position as a hub for technological advancement makes us excited for the future. We’re proud to serve both Boston and beyond.
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