Personalized service the norm at Highline Wealth Management

New financial advisory firm surpasses $530 million in assets under management

Oct 8, 2007 @ 11:30 am

By Liz Skinner

The walls of Neal Simon's office at Highline Wealth Management LLC are lined with the images of people he and his wife photographed during their travels through China, Guatemala, India, Indonesia and Peru. The diverse faces on the walls remind him of his philanthropic goals and help him keep in perspective the daily trials of running his Bethesda, Md.-based financial advisory business. While the firm's clients don't need his charity — Highline's average client relationship is valued at more than $8 million — Mr. Simon's firm provides something beyond the standard financial plan and follow-up. Highline, which re-cently surpassed $530 million in assets under management, offers personalized client services such as mortgage shopping, the creation of donor-advised funds and selection of Section 529 plans, helping with investment choices in 401(k) plans, and even shopping for corporate jets.

Is there a financial service the firm won't touch?

“We don't pay bills,” Mr. Simon said. “We've been asked to by some.”

Highline provides these “con-cierge” services, as well as more traditional adviser roles, for an annual fee of 1% of assets up to $5 million. Clients with larger portfolios pay less than 1% of assets, Mr. Simon said.

He rejects advisory business models based on performance fees, saying: “They create incentives for the adviser to take too much risk.”

Highline's clients are concerned about wealth preservation, said Mr. Simon, 39, a New York native. The firm has carved a niche for itself among real estate professionals.

In fact, about 40% of the firm's customers are involved with the real estate industry. Highline is especially popular with this set because of real estate's unique needs, such as occasionally requiring large amounts of cash for projects.

The firm helps customers set up low-cost collateralized loans that use the client's investment portfolio as collateral, obtaining them lower rates than what banks would charge. It also has expertise in handling tax issues involving large gains when properties are sold, Mr. Simon said.

Additionally, Highline has a following among entrepreneurs, who make up another 40% of the firm's client base. The rest of Highline's customers are mostly foundations and institutions, Mr. Simon said.

Clients need at least $2 million to open an account at Highline, which began operations in March with $409 million in assets under management. Mr. Simon had been president of The Meltzer Group, a 100-person insurance and financial services firm based in Bethesda, before he started Highline with several associates from Meltzer.

The six-person firm has a continuing relationship with Meltzer, in whose office suite it is housed.

The portfolios that Highline typically recommends for clients carry about 40% of assets in alternative investments, including hedge funds, managed futures and debt arbitrage funds.

For in-depth knowledge of these instruments and analysis of their risk and performance histories, Highline depends on Fortigent LLC of Rock-ville, Md., which specializes in backing up advisers who target wealthy clients.

“High-net-worth clients are a much more competitive market,” said Gary Carrai, Fortigent's senior managing director for sales. “Advisers leverage us, which allows them to operate significantly more profitably.”

Wealthy clients often have a stronger appetite for alternative investments, in part because they have more money to invest, Mr. Carrai said.

Fortigent also incorporates in-vestment choices from smaller managers with strong track records. These managers may be focused on institutional investors and wouldn't ordinarily be available to financial advisers, Mr. Carrai said.

His firm provides due diligence, asset allocation research, portfolio strategy, consolidated performance reporting and consulting support to 35 advisory firms that have a total of $16 billion in assets under management.

Highline is one of the fastest-growing wealth management firms in Fortigent's network, Mr. Carrai said.

The individualized service that Highline provides its 62 client relationships has helped the firm in-crease its assets under management by about 30% in seven months, Mr. Simon said. In fact, most of Highline's customers have been referred by established clients.

“Our clients get a lot of attention,” Mr. Simon said. In addition to responding quickly to their needs, the breadth of issues that Highline handles for them keeps them satisfied, he said.

As for his own philanthropic fulfillment, Mr. Simon stays active in many local charities, including serving as chairman of the Montgomery County Community Foundation in Silver Spring, Md., and sitting on the board of the Community Foundation of the National Capital Region in Washington.

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