Former Lockwood Team Rolls Out New Investment Strategies for Indie FAs

Former Lockwood Team Rolls Out New Investment Strategies for Indie FAs

Donald Robinson, CEO and Co-CIO of Palladiem

Former execs of Lockwood Advisors have broken off from the Pershing affiliate to launch their own independent investment advisory firm—Palladiem Partners. Don Robinson, CEO and co-chief investment officer, said the firm will be focused on providing investment portfolios to end investors through independent financial advisors, including IBD advisors, RIAs and hybrids.

The firm will initially roll out seven multi-asset class investment strategies in the form of unified managed accounts, which can include ETFs, mutual funds, individual securities and closed-end funds. Five of the strategies will be core strategies, to include a mix of fixed income, equity and non-traditional asset classes, such as global infrastructure and commodities. The sixth strategy will be focused on income distribution, designed to support the demographic shift as well as a zero-interest-rate environment, Robinson said. The final portfolio will be an opportunities strategy, which will take down some risk constraints. This can act as a satellite component to the total portfolio.

The Palladiem portfolios will also allocate as much as 35 percent to alternatives, which the firm sees more as risk reducers than return enhancers, said David Feldman, president and co-chief investment officer. According to Feldman, the execs came from an institutional background, working with large pension funds and foundations and endowments. They sought to bring this institutional framework to smaller investors, and non-correlated or lowe- correlated strategies, such as alternatives, was one way to do that. Alternative mutual funds are advantageous in bringing institutional-type strategies to individual investors, Feldman said. “Alternatives are here to stay.”

In fact, according to a recent survey of advisors by the Financial Planning Association, 91 percent of FAs are using alternative investments, including commodities, managed futures, hedge funds and others. The FPA said advisors are drawn to alternatives’ low correlation to stocks and bonds:

Most commonly, financial planners are recommending REITs followed by commodities (not including gold or oil/gas) and funds of funds. While this holds true across the board, highly successful advisers (those with $200 million or more in assets under management (AUM) and/or those who work for a practice with $1 million or more in annual revenue) are differentiated by their use of hedge funds and options. They are twice as likely to use/recommend hedge funds and are nearly twice as likely to use/recommend options compared to their peers.

Given the regulatory environment and complexity of investing in this volatile market, many FAs are finding that they’re better suited to broader financial planning, so they’re outsourcing portfolio management, Feldman said. Advisors are outsourcing more, Robinson said, because they can’t be everything to everybody. The best ones focus on the relationship and growing their business, he added.

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