Twenty years ago, on his second day as a broker, Brian Tremain came out of the closet. He was working for Merrill Lynch in Detroit.
Years later, in 1988, Tremain moved to Prudential Securities, finding the firm "tremendously supportive," he says. Prudential's Lexington, Ky., branch became the launch point for Tremain's unique portfolios.
In 1993, Tremain introduced Principled Equities Strategy, a socially conscious portfolio. The following spring, he started developing The Lambda Strategy, a socially responsible portfolio that also screens for companies with gay- and lesbian-friendly policies. In December 1994, Tremain offered it to investors.
First, Tremain ensures the company is not involved in alcohol, tobacco, nuclear energy, gaming or defense. Then he looks at gay-friendly policies, using four screens. Companies only have to meet one. "If they have just nondiscrimination on the basis of sexual orientation, that's sufficient to meet The Lambda Strategy criteria," Tremain says.
Other screens include domestic partner benefits for same-sex couples, employee groups for gays and lesbians and adherence to the National AIDS Fund. "That's a group of companies subscribing to a series of principles on how they treat employees with HIV," Tremain explains.
Tremain's strategy is to target 10 to 12 sectors, holding 15, 20 or 25 positions. "We have over 660 companies that meet the screens now," he says. The minimum investment in Lambda is 25,000 dollars, and the maximum fee is 3 percent.
Success Came Swiftly Initially, Tremain marketed The Lambda Strategy to existing clients and referrals. Traveling to his old stomping ground of Detroit with a goal of attracting 400,000 dollars in assets, he returned to Kentucky with close to a million dollars, says Tremain, now senior portfolio manager, first vice president of investments and a director's council member.
The growth continued, and Tremain needed help. Enter David Cupps, business manager for a law firm. The two met through the Lexington Men's Chorus, a gay group. Cupps joined Prudential in 1997 as a client service assistant, becoming a broker and Tremain's junior partner.
The partnership and the portfolio are working. "Principled Equities Strategy and The Lambda Strategy together have over 65 million dollars in assets," Tremain says. "In January 1999, we had 23 million dollars." Performance in 1999 was equally strong--78.2 percent versus the S&P's 21 percent.
Tremain focuses on money management and rainmaking. Cupps rebalances client portfolios and handles marketing and advertising.
Their registered sales assistant, Joey Rose, "is gay and very proud of what we're doing," Cupps says. A part-time project assistant, Joe Dietz, helps with promotional materials and portfolio evaluation.
"We have just brought on a third partner to our team," Cupps says. Ann Loggins will target institutions, endowments and foundations.
Tremain adds, "She's not gay. She has a gay brother." A veteran of the medical management industry, Loggins is getting registered and will be the internal contact for an alliance they're forming with Scott Nystrom, a retiring oncologist and long-time client of Tremain's. "He's going to be bringing clients in on a referral basis," Cupps says.
Currently, more than 50 percent of new business comes through referrals. "The rest is from our advertising and the events we attend like the National Lesbian and Gay Law Association convention, and the Gay and Lesbian Medical Association," Cupps says. They also sponsor events, such as Aspen Gay and Lesbian Ski Week.
"We market in the Gay and Lesbian Review," Tremain says. "And in certain gay publications around the country, like The Advocate." Their branch helps compose the ads and shares in the cost.
The firm also provides support through a program called Referring Financial Advisors. "Other Pru brokers can place money through us for their clients," Tremain says. "Some of the advisers are straight; some are gay."
Fees are shared, Cupps says. "We start splitting that fee 50-50 with them, and as they become more serious and bring more money into the program, then we make that split more favorable to them."
Although other firms market to the gay and lesbian community, none offers something similar to The Lambda Strategy. "We have a number of edges," Tremain says. "Performance is one of them," Cupps notes. "Product is another."
Tremain concludes, "Prudential is increasingly interested in the advantages that we have in the gay and lesbian market and in helping us promote that further."