Tortoise Capital Advisors is a financial advisor firm based in Leawood, Kansas that has been providing investment management services since its founding in 2002. The firm’s team of advisors manages assets for individuals with and without a high net worth, as well as a number of institutional clients that include pension plans, businesses and charitable organizations.
Unlike a fee-only firm, which receives compensation solely from client fees, Tortoise Capital Advisors is a fee-based firm, which means certain advisors can also earn compensation from outside sources. In the case of Tortoise Capital Advisors, this refers to compensation earned by certain advisors who double as registered representatives of a broker-dealer; these advisors receive commissions for selling placements in private funds that the firm advises. This represents a potential conflict of interest, though the firm's fiduciary duty compels it to act in its clients' best interests at all times.
Tortoise Capital Advisors Background
Tortoise Capital Advisors has been doing business in the Kansas City area since 2002. The firm is a wholly owned subsidiary of Tortoise Investments, LLC, which is in turn owned and controlled by Lovell Minnick, a private equity investment firm. The shares that Lovell Minnick doesn't own belong to a group of institutional co-investors.
The advisor team holds multiple certifications, including the chartered financial analyst (CFA) and certified public accountant (CPA).
Tortoise Capital Advisors Client Types and Minimum Account Sizes
Tortoise Capital Advisors manages assets for high-net-worth and non-high-net-worth individuals, as well as investment companies, pooled investment vehicles, pension and profit sharing plans, charitable organizations, government entities, insurance companies, corporations and foundations.
To become a client of Tortoise Capital Advisors, you generally need to have at least $100,000 in investable assets and that number can range up to $250,000 in investable assets. However, the firm may make exceptions to this rule under certain circumstances.
Services Offered by Tortoise Capital Advisors
Tortoise Capital Advisors primarily provides investment management services to both individual and institutional clients in the area of energy securities and what the firm terms "essential asset companies." The firm describes essential assets as those that are crucial to both the economy and broader society. Examples of this are healthcare companies, wind/solar power networks, energy pipelines and more.
Additionally, Tortoise acts as investment advisor to several private investment funds and provides model portfolio services to several financial intermediaries. The firm also provides investment management services to participants of several different wrap fee programs. The investment strategies used to manage these assets are similar to those used to manage other client accounts.
Tortoise Capital Advisors Investment Philosophy
Tortoise Capital Advisors generally focuses its attention on investments in the energy sector or those concerning essential assets, as described above. When constructing client portfolios, the firm will usually stick to a long-term approach. However, short-term transactions may be considered if they make the most sense for the client’s personal situation. However, these strategies are typically much pricier.
The firm analyzes many different factors when selecting securities. These include each investment’s risk, cash flow, management, growth prospects, liquidity, market sensitivity and overall value. By combining these characteristics and analyzing them using qualitative analysis, quantitative analysis and relative value analysis, the firm can surmise a security's intrinsic value for a more accurate evaluation.
Fees Under Tortoise Capital Advisors
For the advisory services Tortoise Capital Advisors provides to separately managed accounts and private funds, the firm customarily charges a percentage-based fee of no more than 1%. For private funds, the maximum fee rate is 1.25%. Fees for Tortoise Funds range from 0.75% to 1.35%. Management fees at Tortoise are negotiable and may vary from these benchmarks in certain situations.
Tortoise Capital Advisors also uses performance-based fees.
What to Watch Out For
Tortoise Capital Advisors has no disclosures listed on its Form ADV, giving it a clean legal and regulatory record.
Tortoise Capital Advisors charges performance-based fees, which creates the potential for a conflict of interest. As the firm’s Form ADV states, “Conflicts of interest arise from our side-by-side management of performance fee-based accounts and non-performance fee-based accounts, as well as accounts with differing levels of asset-based fees, at the same time because we have a financial incentive to favor higher fee-paying accounts over other accounts in the allocation of investment opportunities. However, it is our policy to allocate trades in a fair and equitable manner so that accounts are not preferred or disadvantaged over time.” Further, Tortoise is a fee-based firm, as certain advisors may be registered representatives of a broker-dealer and earn commissions for selling or marketing private funds that Tortoise also manages.
While both performance-based fees and securities commissions create the potential for conflicts of interest, the firm is bound by fiduciary duty to always act in its clients best interests.
Tortoise Capital Advisors doesn’t offer financial planning services to its clients, preferring to focus solely on investing and investment management. If you require financial planning services, you can use our financial advisor matching tool to find an advisor in your area better suited to your needs.
Opening an Account With Tortoise Capital Advisors
Tortoise Capital Advisors makes it easy to reach out for an initial meeting. All you have to do is send an email to firstname.lastname@example.org or call (913) 981-1020. You can also speak to the client relations team at the firm by calling (913) 890-2132 or sending an email to email@example.com.
All information is accurate as of the writing of this article.
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