In today’s economy, keeping a close eye on finances is more important than ever before.
With a volatile stock market, continual rise in living expenses and keeping on the lights at the office, ensuring your money is properly managed can make or break your business.
Fortunately, throughout the Greater Lehigh Valley there are asset management companies and investment advisers equipped with the resources to help manage your wealth.
A big player in the region is Cornerstone Advisors Asset Management LLC in Bethlehem.
Here to answer this week’s “Behind the List” questions is Thomas Scalici, CEO of the investment advisory firm.
Lehigh Valley Business: How long has Cornerstone Advisors Asset Management LLC been operating in the region and what are its primary services?
Thomas Scalici: The roots of our business go back a little over 30 years, but the original corporate entity was established in 1997. Today, we are one of the nation’s leading independent investment advisory firms servicing middle market institutions and wealthy families who have a fiduciary responsibility for the assets under their care.
If you look at our business mix, about 50 percent of our assets are in qualified retirement plans including 401k, 403b, 457b and defined benefit plans, about 30 percent are in endowments and foundations and about 20 percent with individuals. We also have a growing insurance practice that utilizes a fiduciary decision-making process as the basis when considering a variety of insurance products.
In 1997, we had a little over $100 million in assets under management. As of Dec. 31, 2017, that number exceeded $5.7 billion.
LVB: What have been some of the biggest challenges and opportunities that Cornerstone Advisors Asset Management LLC has encountered throughout its years in business?
Scalici: Bethlehem is not known as the epicenter of the financial universe, so finding qualified individuals to join our team has periodically been a challenge. I am proud that we have done an outstanding job of attracting talented people, teaching them the business and constantly challenging them to become the best version of themselves as possible.
This is one of the reasons we have longevity in our team, as half the company has worked for us for more than a decade. I think it is also why we have been named as one of the best places to work in our industry.
I believe one of our greatest opportunities is to continue to leverage our business model of striving to provide the highest level of fiduciary services to our clients with a focus on managing risk and expanding into markets that have historically been underserved.
Legislation and legal action are also driving activity, as there has been a proliferation of lawsuits against qualified plans for a breach of fiduciary duty. This is currently creating a lot of activity for us, as we are experts in this field.
Managing and mitigating risk is also a growth area for us. When you ask people what their rate of return was last year, they can generally answer it.
When you ask them to describe the level of risk they took to generate that return, the room gets really quiet. Many institutional clients cannot answer this same question, and that is one of their key areas of responsibility.
Our reporting and technology allow us to create transparency around all aspects of an investment portfolio, and this leads to making more informed decisions. Over time, this leads to producing better results.
Since returns are largely a byproduct of risk, it is critically important that any investor understands the types of risks they are taking, especially in markets that are more volatile.
LVB: What are some perks of being a Registered Investment Adviser? What licensures and designations are necessary to become a RIA?
Scalici: A Registered Investment Adviser, or RIA, is a firm that provides ongoing investment advice for a fee. Contrast this with a broker, who is generally paid a commission for a transaction.
One of the reasons we formed the RIA years ago is because we were spending most of our time with our clients in a leadership role, helping them make good long-term financial decisions. As a broker, we would not get paid unless they bought something, which was not always in their best interest.
As an RIA, we endeavor to serve our clients interest above all else, and that philosophy has never changed. RIAs with less than $100 million in assets under management register with their state’s securities division. Those with more than that register with the Securities and Exchange Commission.
As a representative of an RIA you are required to either pass the Series 65 examination and/or have certain designations such as the CFP [Certified Financial Planner], CFA [Chartered Financial Analyst] or ChFC [Chartered Financial Consultant], which are often accepted in lieu of the Series 65.
One of our core principles is centered around a culture of achievement, and, to that end, Cornerstone’s team holds 40 industry recognized professional designations. We go above and beyond the minimum requirements to better serve our clients. …
LVB: How does Cornerstone Advisors Asset Management LLC directly stimulate the local economy? How does it get involved with the local community?
Scalici: Cornerstone currently employs 29 people, and this number has grown nearly every year. We have hired half the firm in the last five years, so we continue to add good-paying jobs in Bethlehem.
Every single person within the company is involved in at least one volunteer organization, with many of us serving on multiple not-for-profit boards. Last year, we provided financial or volunteer support to more than 60 organizations.
Every member of the team gets paid time off to spend volunteering in the community, and we also offer a matching contribution as an incentive for people to financially support the nonprofit organization of their choosing.
Our employees live in the Valley and support the economy both directly and indirectly.
LVB: What does the future look like for Cornerstone Advisors Asset Management LLC? Does it have plans for growth?
Scalici: If you are not growing, you are dying, so yes, we have plans for growth.
In 2016, Cornerstone implemented an employee stock ownership plan so that every team member benefits from the growth of the organization.
In many ways, my partners and I have lived the American dream. We started with next to nothing and built a business we are all very proud of. It represents our life’s work. We felt strongly that the people who helped us build the company should have a similar opportunity.
Our future success will be a direct reflection of the quality of our decision-making and the types of clients we attract. That motivates us every day.