The HP Difference & FAQ

The Hamilton Point Difference

Because we are not affiliated with any banks, brokerage firms, or insurance companies, Hamilton Point is able to focus exclusively on managing money and not on selling insurance, annuities or other financial “products.”  As a registered investment advisor, our legal and fiduciary obligation is to put the interests of our clients first.  The firm’s principals align their interests with those of their clients by “eating their own cooking”, i.e. the firm’s principals manage their personal portfolios in the same fashion as Hamilton Point does for clients.

Our boutique size and in-house research allow us to be more selective than large financial institutions that control far more money than we believe can be invested with a high-quality focus.  This problem is often compounded by an excessive marketing and investment focus on benchmarks by industry participants.   At Hamilton Point, our foremost concern is the preservation of capital — not benchmarks.  We also believe our hybrid approach, which combines individually-purchased securities with selective use of outside managers and funds, is the best way to fulfill the investment objectives of our clients.  Hamilton Point’s approach strives to maximize control over critical factors such as quality, diversification, expenses and, if needed, taxes.

We have built a strong reputation around our firm culture, which emphasizes client service and interaction.   Clients are always serviced by investment professionals, and during business hours calls are answered by a human being – not a machine.  New clients come to our firm almost exclusively from referrals by current clients or professionals (e.g. accountants and attorneys), and we pride ourselves on developing close relationships with all of our clients.  This growth through relationship building allows us to further strive to minimize expenses for clients, since no “middle-man” or salesperson is compensated.

Who are your clients?

Our clients are located in seventeen states, with concentrations in North Carolina, Virginia, and New York, and include high net worth families and non-profit institutions. Among our clients are individuals who have sold businesses, inherited assets, and/or saved money throughout successful careers. Our nonprofit clients look to us for advice in customizing an appropriate investment and spending policy that we implement using in-house research to build high quality, endowment-like, diversified portfolios.

Who does your firm and its clients use for custodial, trading and reporting services?

Hamilton Point’s custodial relationship with Fidelity Investment’s Institutional Wealth Services Group links clients with a partner providing service, support and protection¹. Investments you entrust for Hamilton Point’s management are typically placed in custody of Fidelity’s clearing firm, National Financial Services LLC – one of the largest clearing providers in the industry. Fidelity Investments is a privately-owned firm, founded in 1946, with over $3 trillion in custodial assets. Our relationship with Fidelity gives us access to portfolio trading tools and provides clients with user-friendly online access to their personal accounts. Clients can — and some do — direct us to use custodians other than Fidelity.  Trades are done with Fidelity and with outside brokerages when needed.  Fidelity does not impose an account custodial fee. Their compensation is primarily via commissions/fees earned on the account from trades initiated by Hamilton Point.

Hamilton Point also employs the services of Advent Software for client and account reporting.

What are the fees and expenses involved?

For portfolios of $5,000,000 or less:  1.00% on the first $1,000,000 and 0.75% on the next $4,000,000.  For portfolios of greater than $5,000,000 and less than or equal to $20,000,000, the fee is 0.60% on all assets.  For portfolios of greater than $20,000,000, the fee is 0.50% on all assets.

Many portfolios managed by Hamilton Point have exposure to selected mutual funds (typically around 30%), all of which are no-load and have relatively low expenses.  When evaluating fees, it is important to ensure an appropriate “all-in” expense ratio is reported when comparing advisors.  We believe our utilization of in-house research to individually purchase securities for a majority allocation in most client portfolios, rather than using a pure “manager of managers” or “fund of funds” advisory approach, allows us much greater control over expenses.  We welcome the opportunity to review all expenses associated with a Hamilton Point managed account and compare them with the expenses of other investment options.

Does your firm construct portfolios using individually purchased securities or mutual funds?

The answer is that in most cases we use both.

A fully diversified balanced account will consist primarily of individually purchased securities, including corporate and treasury bonds, up to forty Global Core stocks, and up to thirty Equity Income stocks. These individually purchased securities generally comprise 70% of a client portfolio, and are selected based on in-house research conducted by the firm’s investment team.

Individually purchased securities are typically supplemented by appropriate exposure to selected asset classes using funds. Examples of asset classes accessed through the use of externally-managed funds include inflation-protected bonds, small capitalization equities, and international equities. For smaller accounts, Hamilton Point may use funds exclusively in order to accomplish diversification objectives.  Hamilton Point’s hybrid approach strives for greater control over quality, expenses, and, if needed, tax planning and/or other customized client investment preferences.

What sort of client contact and reporting should clients expect?

For Hamilton Point, listening to clients through regular interaction is a core value. Personal meetings are encouraged at least quarterly, and more frequent communication is welcomed. For daily account management and other inquiries, each client is assigned a member of the investment committee as the primary relationship contact.

For reporting, in addition to being able to view account activity on a daily basis online, clients receive monthly statements from Fidelity or their chosen custodian. Hamilton Point also provides concise summary reports on a quarterly basis to include appraisals, contribution and withdrawals, tax reports, and performance.

Do you provide financial planning services?

Yes, although we provide such services to existing investment clients and do not collect separate fees for services related to financial planning. Collectively, the Hamilton Point team has formal training and substantial experience in nearly all aspects of wealth management. In addition, Nathan Byrd holds the Certified Financial Planner designation, and Rick Woods holds the Certified Private Wealth Advisor designation, both of which are advanced wealth management certification programs.

Planning conversations and in-depth analysis are often a significant part of our highly customized value proposition. We most often work with clients on matters related to the sale of a private company, retirement income forecasting, or tax and estate planning. We have experience working with Annuity Trusts, Charitable Remainder Trusts, Private Foundations, etc. We typically coordinate work with clients’ existing attorneys and CPAs, but can facilitate introductions with other tax and estate planning professionals as needed. Our goal is to help coordinate all aspects of each client’s financial picture, including the components that we do not specifically manage as part of our investment services.

Read more about our holistic approach to wealth management here.

How is performance measured and reported?

Every client has a separate account or accounts, managed on a customized basis, for which we are able to provide performance on both a before and after-fee basis.

In addition, we maintain a performance composite for each of our Global Core Equity, Equity Income, Diversified Equity, and Balanced investment strategies.  A performance composite is an aggregation of actual client portfolios which follow similar investment strategies, objectives, or mandates, and is used to document the performance history of an investment strategy.   Strategy performance reported by Hamilton Point is from our composites and is never hypothetical, back tested, or simulated – a practice which we believe is too common and disingenuous.  Please contact us for more information.

Do you have minimums?

Relationships typically have the ability to be at least $1 million over time, though smaller initial accounts are considered.  Our larger family and non-profit relationships can exceed $30 million.