Victoria Bailey and Jonathan Usich, Managing Directors at
415 Group in San Francisco, agree that their favorite customer situations are the most complex. “It doesn’t sit well with us when someone wants to work on a small problem,” says Usich.
They have big problems with their Silicon Valley clients, who are mostly entrepreneurs and private equity managers with net worth ranging from $50 million to $500 million. Together with partner Will Lyon and five employees, they manage $6.5 billion, up from $2.25 billion two years ago.
barrons: What do you attribute your growth to?
Victoria Bailey: Our team has participated in most of Morgan Stanley’s direct listings in investment banking. Direct listings became popular in 2018; They are another way for a company to go public – the existing shareholders sell into the IPO on the first day of trading. As such, we have expanded our practice by advising executives involved in direct listings.
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What are you working on at the moment?
Jonathan Usich: I work with three generations of a family on estate planning for a substantial family fortune after one of the older people passed away. A simple matter is to write a check to each beneficiary and be done. But in coordination with the probate attorney and auditor, we develop a tax-efficient multi-generational plan. The beneficiaries have different ESG [environmental, social, and corporate governance] Perspectives, so we reflect that in the plan. This included a continuous conversation with the family over the last three weeks.
What do customers most want to talk about?
Usich: In general, clients want to talk about the situation in Russia and Ukraine, and then about inflation and the development of interest rates. We make sure they are properly allocated and isolated when it comes to cash flow for expenses.
What does this mean for the way you manage your investment portfolios?
Usich: We believe we are later in the economic cycle and want to be very cautious about capital allocation. Value and dividend-oriented stocks offer opportunities. We seek returns for investors through private real estate investments and alternatives such as direct lending to private equity investors.
As things heated up in Ukraine, we spent time with clients to make sure they had no direct contacts with Russia. We have looked opportunistically at international markets, with a focus on Europe.
How many of your clients have an ESG component in their portfolios?
Bailey: All of them but how much they have in ESG varies. Most clients come to us with a concentrated stock portfolio, often as a result of inheritance, and each of our clients is in the top tax bracket. This poses a challenge to transitioning to ESG while minimizing taxes. We have a bespoke equity index that we can use for tax losses and we use gifting strategies to manage taxes.
What is remarkable about the cooperation of your team?
Usich: When I joined the team as an analyst in 1997, having a partner who was my mentor was incredibly important to my career. I know how important it is to do the same to develop our team. We think a lot about keeping our talents and what makes them happy – not just the pay.
What is an example of how you are working on it?
Bailey: We have a regular support team call once a week and as our staff is all women it has become an all women call which I lead. Each week is different, usually starting with business-related topics.
We recently gave an in-depth look at fixed income because you heard us talking about it from a global macroeconomic perspective but didn’t get the nuances. We talked about parental leave. My favorite call was about New Year’s resolutions. We shared a business solution and a personal solution. It was insightful to hear what everyone wanted to focus on and helped everyone feel supported.
Thank you Victoria and Jonathan.