L.J. Altfest serves approximately 340 clients with a staff of 20, of which 12 are either investment or financial planning professionals.  Average client relationships are $1.4 million.  Schwab’s PortfolioCenter serves as the central portfolio accounting system, and Quickbooks is used for internal statements.  Virtually all assets are custodied at either Schwab or TD Ameritrade.  Several years ago a paperless office was implemented with Worldox, making compliance and information sharing much easier.

Financial Planning with Total Portfolio Management

Perhaps the most distinctive component of L.J. Altfest’s technology platform is the use of Integrate, a package that Altfest believes is used by only a handful of financial planners.  It is totally customizable, including the ability to support multiple tax rates and personal characteristics of their clients, and supports Monte Carlo simulations.  Lew Altfest developed the firm’s financial planning methodology, called Total Portfolio Management (TPMTM), and the Integrate system has been tailored to support the TPM approach, incorporating specific questions which are required by TPM.  Lew Altfest’s recently published book, which describes TPM, is available through Amazon. 

TPM’s uniqueness is its ability to look beyond financial assets and liabilities in the planning process, to incorporate what Altfest calls the “human assets” – factors such as a client’s livelihood (which might exclude certain securities or asset classes from a portfolio), desired life style, risk preferences, and other personal traits.  Altfest is confident that TPM has taken her firm’s planning process beyond the rest of the industry since its implementation, about a year ago.  “We take the opposite approach of a brokerage firm which, if it believes a security is good for one client, then it is good for all clients,” says Altfest.  “To us, every client is unique and we look at all assets recommendations individually, to see how they fit into the client’s life style and risk tolerance.”  All comprehensive clients get a detailed financial planning analysis, which takes on average 80 hours to prepare.

Selecting Actively Managed Funds and Individual Equities

Portfolios are constructed mostly from mutual funds and, where appropriate, individual bonds and alternative investments.  Separately managed accounts are not used.  Instead, Altfest is implementing an investment component consisting of individually selected equities.  A system was designed and back-tested with 12 years of data to insure accurate results, and is now being rolled out to clients.  Altfest notes that clients have become increasingly concerned with the costs of mutual funds, but does not plan to replace them with individual equities. 

Emphasis is placed on diversification, with no single position taking more than 5% of the portfolio.  None of the portfolio is indexed.  All forms of alternative investments have been used, including hedge funds and private placements.  Altfest finds that the limitation on the use of alternatives stems from the level of due diligence they must perform, which often includes on-site visits and extensive background checks. 

Investment results are presented to clients with quarterly reports.  But Altfest is constantly challenged to increase the clarity of those reports.  “A client contacted us, upset because she believed her annual performance was only 4%,” Altfest notes.  “It took a while for me to explain that this was a quarterly number, at which point the tension disappeared.”  Altfest has employed professional editors to improve the reports, and admits that there is an ongoing struggle to make things more readable.  “There are always some people who have trouble with numbers,” Altfest says.

Public Relations and Working with the Media

L.J. Altfest is a highly prominent firm, often quoted in print media.  Altfest believes the key to a successful public relations strategy begins by defining what is unique about an advisory firm.  In her case, it is the family nature of L.J. Altfest, which now has a second generation (her son Andrew) as part of the firm.  As a family-oriented firm, Altfest emphasizes a personal relationship with her clients, often attending weddings, funerals, and other social functions.  Beyond this, Altfest recommends establishing yourself as an expert in something you like which, in her case, is financial planning for women.  “The keys to working with the media are to be available as a resource, not to demand anything, and to recognize that you are a financial planner, not a rock star,” says Altfest.  “Be patient, get to know who is out there in your field, and start by establishing a presence in local media.”

L.J. Altfest’s visibility has been bolstered by several other books authored by Lew and Karen, as well as by education events, roundtables, annual events with fund managers, and special seminars held for clients. 

Financial Planning and Investment Management for Women

Altfest’s personal expertise, and an aspect of her role that she really enjoys, is in financial planning for women.  “What women lack is confidence,” Altfest notes.  “They have been told that they can’t understand financial planning or investments.  I hear this from women lawyers and CEOs, and my role is to give them the confidence to overcome this misconception, and to point them in the right direction.”  Altfest positions herself as a facilitator in group discussions, and is often surprised by what she hears.  She recounted a situation where two wealthy women friends believed that the other woman’s male partner (in one case a husband, in the other case a boyfriend) was the source of financial wealth.  Both were shocked to learn the truth –that the women were the ones with the financial wealth – illustrating the challenge of overcoming preconceptions about financial matters.  Altfest now educates women on a variety of topics, most recently how to negotiate the purchase of a car, and publishes three newsletters, one of which is devoted exclusively to planning for women.

Other than Altfest, not many financial planners can claim that they have a PhD in History, or that they earned that degree studying with Arthur Schlesinger, Jr.  Altfest credits her education with honing her analytical and problem solving skills.  She views her role as that of a historian – tracing back data to find things that people have never looked at.  It has also enabled her to become a “really good editor” and (although she hesitates to admit this) a pretty fast typist.

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