AUM Advisors (a fictitious firm) is a Whistler-based investment manager for high net worth individuals. The employee-owned firm manages $800 million in segregated portfolios and has grown to a staff of 12 and over 1,000 clients. Founder Barbara Monahan built her business on expert fundamental research and personalized client service, but growth is stretching her team’s capacity, especially with new regulations and higher client expectations.

Monahan has continuously invested in technology over the firm’s 25-year history. She wisely implemented an expensive accounting system upgrade that is reaping dividends and her head trader has overseen a series of enhancements to trading and compliance systems. AUMA has a slick website with information about the firm’s investment philosophy and contact information, but the website lacks integration with client holdings and performance data or onboarding and KYC for new prospects.

AUMA seeks a client minimum of $500k and charges on average 1.7% of assets annually, however small-account exceptions have accumulated. A recent analysis by a summer student documented 135 accounts well below that minimum. The student went on to demonstrate what Monahan feared: these accounts were worse than unprofitable for AUMA.

Monahan has noticed an uptick in lost accounts that seems to be tied in part to demand from clients for continuous web and mobile reporting, but fortunately AUMA continues to land five new accounts per week. All this closing and opening of accounts is swamping her team in paperwork and there have been some close calls on missing documentation. Last summer Monahan overhead the student joking, “What ever happened to the paperless office?”

In her analyst days, Monahan’s edge was deep knowledge and relationships in the Canadian resource sector. As CIO, she knew it was the right thing to do for clients when she reduced Canadian equity exposure, but it’s harder to get enough alpha with so much of the portfolio in distant markets. Worse, it seems that clients care more than ever about returns relative to the benchmark and fees are constantly in focus.

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