Unlike other industry players offering “integrated” wealth management, AM Global focuses purely on clients’ investment needs.

As the wealth management industry has matured, and clients’ needs have become more complex, the menu of services offered in the sector has also grown.

But what has happened in the process is a “dilution of investment focus and culture,” Steve Barimo of AM Global Family Investment Office told Family Wealth Report.

In a recent report by Cerulli Associates – entitled Addressing the Unique Needs of Wealthy Families – Donnie Ethier, an associate director at the research firm, said many industry executives agree that the term “multi-family office” has lost its allure because so many wealth managers use it to market their services.

Similarly, AM Global believes that the service model has become homogenized, having a detrimental impact on the quality of investment focus. Unlike other industry players offering “integrated” wealth management, spanning tax planning to family dynamics services, for example, AM Global focuses purely on clients’ investment needs.

Structured as a multi-family office, the firm was launched in 2012 by Barimo and Andrew Mehalko, both formerly of GenSpring. Today it serves 16 family clients, with approximately $300 million in assets under management.

“We realized over time that when you combine all the different disciplines what you end up with is a ‘conglomerate’ of activities that actually are very different,” Barimo said.

He emphasized that this is not a criticism, attributing it to the nature of what has seemingly become the “holy grail” of wealth management: integrated planning.

“We are of the view that, at least from an investment perspective, it's best to have a firm that is focused on an investment culture,” Barimo said. “We live and breathe investing every day. You need that culture where everyone is acutely aware of all the investment activities going on.”

While acknowledging that it “really is a narrow focus for a firm,” he noted that the type of people who resonate most with AM Global’s philosophy reflects its target client base: self-made entrepreneurs.

“These wealth creators are skeptical of institutions and the markets, but they are also willing to do things a little bit differently,” Barimo said. “They understand the business cycle, how to make money when things are good and how not to lose money when things are bad.”

Investment philosophy

While a strong advocate of diversification, AM Global focuses less on traditional forms of diversification and more on the underlying risk drivers, Barimo explained.

“We often see cases where people are grossly over-diversified, with US equities, emerging market equities, international equities, and then in each of those they are diversified by market capitalization,” he said. “Then they have three or four managers for each of the same, meaning they have thousands of individual positions that, in the end, are very highly correlated and probably don’t actually offer much diversification. In the end, you probably resign yourself to, at best, index-like performance – and after fees and taxes they are likely going to underperform.”

Another element of AM Global's investment philosophy is to not get emotional, which, according to Barimo, is probably one of the most crucial components.

“We try to be very objective about the market and in many ways try to avoid things that are popular or have been popular for a while,” Barimo said. “We try to put our thinking hat on and be 'contrarian' – not that we want to do the opposite of what everyone else is doing.”

(Contrarian investing generally refers to certain “crowd behavior” among investors that can lead to exploitable mis-pricings. It is essentially an investment style in which assets are bought when they are performing poorly with the aim of then selling them when they perform well.)

“The idea is to keep your emotions in check and understand the psychology of the market,” Barimo continued. “By investing in times of panic and cutting exposure when there is euphoria or greed in the market we believe will probably give our clients a better investment experience in the long-term.”

Unique perspective

AM Global’s investment-focused service model is certainly rather unique, but, like any wealth management approach, has its strengths and weaknesses.

“The positives here are that virtually everyone we talk to say they have had a mediocre investment performance at best, and they're not sure why, but that has been their experience. Having an organization that really can work as your family's CIO, I think they find refreshing,” Barimo said.

He added: “And I think they find it easier to determine whether value is being added because they can look at the investment process and see if it's adding value exclusive of all the other activities that are going on.”
A drawback, however, is that the firm still needs to connect and integrate with all of its clients' other advisors.

“It places a burden on those providers to be able to work within those parameters, and for those providers to reach out and be proactive,” Barimo said. “Those individuals or organizations, along with AM Global, collectively represent the broader family office to the family.”

“With this model I also think families have the ability to find the people that are best-of-breed to accommodate all their unique needs,” he continued. “But doing so they take on the burden of making sure that those activities are integrated.”