ETF Special Report

Name: Mitch Stein,David Beyer Firm: The Beyer Group, UBS Location: New York, NY AUM: $570 Million Client households: 300 Industry experience: 50-plus years combined Regardless of their wealth, many of David Beyer and Mitch Stein's clients would prefer to drive a Toyota rather than a Mercedes. Well, sort of. Beyer refers to his three main financial tools separately managed accounts, mutual fund wrap

Name: Mitch Stein,David Beyer

Firm: The Beyer Group, UBS

Location: New York, NY

AUM: $570 Million

Client households: 300

Industry experience: 50-plus years combined

Regardless of their wealth, many of David Beyer and Mitch Stein's clients would prefer to drive a Toyota rather than a Mercedes. Well, sort of.

Beyer refers to his three main financial tools — separately managed accounts, mutual fund wrap accounts and ETFs — as “cars” because they all get the client from point A to point B, if only in a different manner and style. Beyer is the lead rainmaker in the Beyer Group, and Stein is a former equity analyst and the group's data wrangler. Together they can construct the proper portfolio no matter which “car” the client picks (advisory fee is the same for all). “It's just a matter of which car the client is more comfortable with.”

About half his clients choose the “Lexus,” UBS' PACE wrap mutual fund program; another 15 percent or so opt for the “Mercedes,” UBS' ACCESS separately managed account program. The Toyota, as Beyer calls his ETF portfolios, draws between 30 percent to 40 percent of his clients. “Some people like the fact that an [active] manager is there watching their money,” he says, “or to be there on those rare occurrences when the manager beats the benchmark.” Beyer says he has his own assets in all three, so he doesn't play favorites and only helps clients decide which is best for them based on their asset levels and risk tolerance.

Typical portfolio allocations are 80/20 or 75/25 equity and bonds, no matter which program a client uses. But to determine the exact asset allocation for ETF clients, they use PACE to generate the allocation model, substituting ETFs in place of the mutual fund managers. Besides the typical core growth and value asset allocations, they use 5 percent to 10 percent of the equity allocation for tactical strategies, which have included ETF REITs in the past several years, as well as energy ETFs. Beyer says, today, they're actually making portfolios a little more conservative with an emphasis on value and using WisdomTree's Dividend Top 100 index. “But for the most part all we're trying to focus on is cap and style, so the eight or nine main indexes are our core competency,” he says.

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