Endowments

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Sep 21, 2009 12:42 am

Do any experienced advisors ever go after small college endowments?  Just curious as this seems to be a great door to try and open (if you went to a local college, etc).  I know of two schools in my area, one that I attended, with $50M endowments, each...

 
Thoughts on this as to why or why not?  Would you go after it?
Sep 21, 2009 9:22 am

$50mm is a pretty big endowment to go after if you don't have experience with them.  My suggestion would be to partner with a fund company that has a specialty in doing RFP's with endowments.  And you don't just call them up and ask for the business.  You usually have to go through a routine RFP process every year or every few years.

 
A good exercise is to find some large non-profits online, and find out who handles their investments.  Then research those firms.  I am going to RFP with a big local NP.  Russell Investments handles it now.  NP's like PROCESS.  They want to cover their own a$$es, so they want a very defined process, even it doesn't necessarily produce the best returns, they want to be able to show they did DD, and the investment process follows a strict set of guidelines.  Many IPC's come up with their own set of investment guidelines (such as asset allocation, etc.).
Sep 21, 2009 11:10 am

Gotcha.  As you said, I don't have experience with them, so I wouldn't plan on it right away, I was just curious as to whether or not people did it.  And if you partner with an investment committee, how you charge fees (percentage of assets, flat dollar amount, etc) since there is another team working on it as well.

 
Thanks for your help
Sep 21, 2009 11:31 am
workinhard:

Gotcha.  As you said, I don't have experience with them, so I wouldn't plan on it right away, I was just curious as to whether or not people did it.  And if you partner with an investment committee, how you charge fees (percentage of assets, flat dollar amount, etc) since there is another team working on it as well.

 
Thanks for your help
 
I think he was referring to the investment committee for the non profit.
Sep 21, 2009 1:27 pm

Sorry, I didn't phrase it right.  He mentioned fund company, which is more what I was referring to.

Sep 21, 2009 3:32 pm

There are some advisors (teams) that focus solely on this type of business. My advice is to not spend too much time prospecting these types of accounts and focus on your core business. These type of relationships could take years to develop.

Sep 21, 2009 6:10 pm

Thans SB, that makes sense.