In the mid ’90s, George Hubbard was a commission-based fixed income and derivative salesman, and that business model didn’t sit well with him. He felt that his interests weren’t aligned with those of his clients. So he left and started Algonquin Advisors LLC, where he serves as founder, managing partner, and chief investment officer. With four partners and $1.1 billion under management, Algonquin today sets itself apart from the competition by having a management team with broad experience, a commitment to research, and a unique, proprietary investment strategy. Profile recently caught up with CEO John Hyman and Hubbard to discuss how Algonquin has made itself stand out among the investment crowd.
What is your overall financial strategy?
Hubbard: Every customer has different goals. Some want high growth; others want preservation of capital. We look at a client’s time horizon for their objective and measure their cost of living. That drives the investment plan. Then we strategically allocate funds across major asset classes and tilt it based on our view of the world and of valuations.
Hyman: We also have an open architecture approach. We’re not burdened with proprietary asset management solutions that might create conflicts, and that makes it easier and objective for us.
How does Algonquin’s focus on research differentiate it from the competition?
Hubbard: Three-quarters of our expenses are related directly to proprietary research. We hired John because of his research background, among other things. He helped us create an even stronger research platform than the one we already had.
Hyman: We have a top-down economic point of view, which we discuss in our biweekly investment committee meetings. Every quarter, we put together a formal document that describes our point of view, which is disseminated to all our clients.
That suggests a lot of problem solving.
Hubbard: I consider it more opportunity solving. There are always informal gatherings where we’re trying to solve a problem or create an opportunity. We’re constantly looking at the market, the economic environment, and government announcements, and we have to interpret those inputs. Then we put a plan together to use that information to construct portfolios and determining the kind of tactical tilts we will make based on that information.
What is the most common question clients ask, and how do you respond to it?
Hyman: One thing we don’t get is panicked calls when the market drops. Our clients have been with us for a long time and they understand the markets, where we’re coming from, and how we manage assets in both difficult and good markets.
Hubbard: Clients will have investment ideas or they’ll know somebody who is a fund manager, and they might like to invest with them. They will ask us to consider that investment. They want advice on whether it’s a good vehicle or manager to invest with, so we often do individualized work for our clients to help them make the right decisions on specific investment opportunities that come their way.
What are your plans for fueling future growth?
Hubbard: We are in the fourth year of executing on a five-year business plan. It began with building out our systems infrastructure, hiring additional research personnel, and building a more robust investment platform. With that in place, we’re now in a position to roll out that platform of services and core competencies to clients in the high-net worth, endowment, and foundation communities, and we expect to grow much larger over the next five years.
Hyman: From a research and client-experience perspective, we are investing in new tools that are automating the way we produce and disseminate information to clients, increasing both speed and efficiency.
How does your firm give back?
Hubbard: Each of us is involved in our own charitable endeavors. As a firm, in 2010 we sponsored and ran a fund-raising golf event outside Washington, DC, to support two very important foundations: the Intrepid Fallen Heroes Fund and the Troops First Foundation. We raised significant dollars for both those organizations, and all the employees here participated in making it successful. We are currently planning the next event for 2013.
