(Note, this story appears in the May 30th edition of The Atlanta Journal-Constitution. Arcus Capital is a client of Wilbert News Strategies.)
By Kathy Brister, for the AJC
Arcus Capital Partners' start was not auspicious. In fact, it was downright unnerving.
Days after Arcus' three partners --- W. Ross Singletary, Steven Edwards and Stephen Sloan --- opened the doors of their Atlanta wealth management firm in September 2008, the financial foundation of American investing began its worst slide since the Great Depression.
But the partners, all of whom had years of experience, forged ahead with their plan for a small, independent firm. And as the big firms stumbled, Arcus found a foothold.
Today, Arcus has about 50 clients and manages a collective $600 million in assets. Most of Arcus' clients come from the Southeast. The newest are entrepreneurs who struck it rich by selling their businesses.
Q: Talk about the clients who are coming to you for financial management after selling their businesses. What's the trend?
A: Three of our four newest clients came from these kinds of situations. It's not that surprising --- certainly capital markets are friendlier and debt financing is easier to come by than it was when we first started. . . . The deals that we're close to have been in a wide variety of businesses: communications, waste management, technology, really across the spectrum.
Q: Is there anything similar about these deals?
A: The companies all had large corporate buyers, and they all were started years ago. They were all started and sold by the founders, who we're now dealing with as clients.
Q: Is someone with an entrepreneurial background likely to be a more risk-tolerant investor?
A: A client like that may have had a very risky strategy, i.e., all of their assets in one basket --- one privately held company. But if the Dow is down 500 points, they couldn't look online to see that their privately held company was probably worth less as well. There is a bit of a transition going from that experience to one where your significant assets are market to market, minute by minute. . . . One thing we've found out through the years is nobody likes to lose money, no matter how aggressive they think they are.
Q: What do you think differentiates your firm from competitors?
A: We aren't incentivized in any way whatsoever to have clients invest in anything except what is in their best interest. If we want to make an allocation change, whether it's to get more aggressive or less aggressive, we don't get paid any differently one way or another, and our clients know that. It's very transparent how they pay us. In the big firm brokerage world, there's a lot of opaqueness.
Q: How does your compensation structure work?
A: We start with a percentage based on assets under management and scale down depending on the amount. One percent is the max, and the larger the asset pool, the smaller the percentage.
Q: Did clients move with you from your former employer, Credit Suisse, to Arcus?
A: Yes. That's really the $64,000 question in our business: Will your clients continue to work with you? That was very encouraging for us.
Q: Did that create some litigation issues for you?
A: We had some nominal issues that were settled very quickly and amicably.
Q: What questions do clients ask today that they didn't ask five or 10 years ago?
A: They really want to get a handle on where the assets are custodied. Certainly in the post-Bernie Madoff era, people ask a lot more about visibility into their assets, and I don't blame them.
Q: You got started in fall 2008, just before the economy nosedived. Describe those first days.
A: This is something we had thought about doing, for years, really. . . . We finally decided to pull the trigger and resign on Sept. 3, 2008. That was a Wednesday. Fannie Mae and Freddie Mac were nationalized that weekend. Then Lehman Bros. filed for bankruptcy a few days later. I looked at Steve and Steve and said, 'I know we all had high hopes for Arcus, but I never thought that within two weeks of opening for business we'd be worth more than Lehman Bros.' . . . Those were scary times, for sure. Had we waited another week or two, we probably would have been too scared to have left Credit Suisse, where we all had been for about seven years.
Q: Did your wife ask if you could get your old job back?
A: She was actually incredibly supportive. All of our spouses were.
More about Ross Singletary:
Job title: Managing Partner, Arcus Capital Partners
Age: 42
Hometown: Thomasville, Ga.
Current residence: Buckhead-Atlanta
Family: Wife Sally and four children
Education: BA-Washington & Lee University and MBA-Columbia University
Hobbies: Golf and attending my children's football, basketball, soccer and lacrosse games along with piano recitals and chess tournaments
Favorite philanthropy: Sheltering Arms Early Education and Family Centers
What you're reading now: The Dark Side of Camelot by Seymour Hersh and Losing Mum and Pup by Christopher Buckley
Favorite travel destination: Cape Town, South Africa (My brother-in-law recently got married there.)
Favorite movie (all-time): Star Wars Episode IV, Gladiator and Ben-Hur
Most-played song on your iPod or MP3: Anything by The Smiths, English Beat, James Brown, Frank Sinatra, Tom Jones, Steel Pulse or R.E.M.
Favorite thing about Atlanta: Eating at The Varsity and Jalisco's, Taking my Children to Georgia Tech Football Games, watching NYO Little League Football games and reading Furman Bisher (now on his blog).
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