You have to be wealthy to be a client of Waterloo Capital Management: more than 75% of the firm’s customers are high-net-worth individuals. As long as you meet the $1 million account threshold, you can work with this eight-person downtown Austin advisor firm.
Who Should Use Waterloo Capital Management?
To start, you need at least $1 million in assets to become a client. After that, it’s what you’re looking for in an advisor firm. You would preferably be able to meet with this Austin-based firm once or twice a year, so proximity is generally preferable.
Next, do you align with the firm’s investment philosophy? Waterloo Capital follows the university endowment model. This means that your advisor tracks how universities are managing their money and uses that as a cue for your investments.
The firm is also one of the few that includes financial planning as part of your annual fee if you have an investment account. Clients can choose from services such as tax planning, asset protection, cash flow, estate planning and more. It’s up to you and your financial needs.
The company primarily works with high-net-worth families and individuals, but also offers services to trusts, estates, retirement accounts, charitable organizations, businesses and pension and profit-sharing plans.
What You’ll Pay in Fees
Advisor firms generally list fees as an annual charge, but bill quarterly. That means your assets under management will be billed four times a year. For example, if you have $1 million under management, your quarterly fee is $3,750 ($1,000,000 multiplied by 1.5%, divided by 4). Waterloo Capital Management’s fees might seem a bit higher (by around 0.25%) than other Austin firms. However, the company has a unique model for financial planning compensation. While most firms charge a separate hourly or project-based rate for financial planning services, Waterloo Capital has a rebate model. This means your quarterly fee bill will be reduced by the amount you paid for financial planning (generally between $1,000 to $10,000).
You can request services, such as mortgage analysis, refinancing, and financial plan implementation ad hoc at a $250 per hour rate. Those fees will be deducted from your quarterly fee if you have at least $2,000,000 under management.
You are responsible for paying brokerage fees in addition to investment advisory fees. This means mutual fund expenses, broker-dealers and any sales charges among other transaction fees.
What to Watch out for with Waterloo Capital Management
It’s hard to give a definitive answer to “what are the downsides to this firm?” because there aren’t any obvious answers. What constitutes a downside also depends on your perspective. For example, if you want a larger firm with specialty certifications, rather than a small-to-medium sized firm with only one CFP and CPA, you’d be better off elsewhere. However, some clients enjoy smaller offices (only eight people at this firm) and knowing the entire team.
The firm is known for having mostly high-net-worth clients. That might mean you’d be better served elsewhere if your assets are not significantly above the $1 million mark.
The last potential downside is that the firm is fee-based rather than fee-only. That means the firm can make money from selling products (such as insurance) and earning a commission instead of solely through annual fees.
Waterloo Capital Management Advisors: What to Know
You’ll only find eight employees at Waterloo Capital Management. Out of the 10 Austin-based firms we profiled, this was one of the smaller firms. The staff includes one certified financial planner, a chartered financial analyst and one certified public accountant (non-practicing).
John Chatmas, Jr is the CEO. He graduated from University of Texas at Austin with a degree in finance. He’s worked for Smith Barney, Morgan Stanley and Morgan Keegan & Company Private Client Group. He acquired Virtus, which became Waterloo Capital Management in 2012.
Bennett H. Woodward is the chief investment officer of the company. He’s worked in finance since 1982 and is a chartered financial analyst (CFA) and has an MBA from Emory University.
Most advisor firms have relationships with brokerage practices. Waterloo Capital Management recommends that clients establish accounts with Schwab. This is because Schwab provides the company with access to institutional trading and custody services as well as software and technology.
No advisor working for Waterloo Capital Management has incurred a disclosure or disciplinary action.
Waterloo Capital Management Investment Philosophy
Waterloo Capital uses fundamental analysis when selecting investments for client portfolios. Fundamental analysis entails evaluating the company that issued the security. This is done through studying the financial condition of the company and the quality of the company’s management as well as the overall economic and industry conditions.
The company prides itself on an allocation model that’s “structured, systematic and emotion-free.” The approach has four main tenets:
- The university-endowment model: Based on how endowment managers position portfolios, this model helps keep your assets protected during periods of volatility.
- Mathematical optimization: Waterloo’s tool analyzes trailing indices’ performance.
- Tactical overlay: This is the human touch that helps reposition portfolios in the face of changing market conditions, which means your advisors are watching your money for you and responding as needed.
- The final approach is keeping you, the client, at the forefront through constant conversation.
The firm looks at long-term investments rather than short-term trading.
Waterloo Capital Management Portfolio Styles
Your portfolio’s construction depends on your investment objectives. This means your asset allocation is tailored to your specific goals and needs. Your portfolio will be based on your discussions with your financial advisor.
Your account may include:
- Fixed-income securities
- Mutual funds
- Alternative investments
While your account is directly managed, meaning securities are bought and sold on your behalf, you have the opportunity to place reasonable restrictions on your account.
You also have the option for a non-discretionary account. This differs from discretionary in that you are involved in the management of your investments.
Starting an Account With Waterloo Capital Management
Get started with Waterloo Capital Management by calling (512-693-4330) or filling out a contact form on the company’s website. You’ll make an appointment to speak with a representative, either in person or over the phone to discuss becoming a client.
Waterloo provides: personal wealth management, retirement planning and estate planning. For personal wealth management, services include investment management, insurance, gifting to children, durable powers of attorney and more. Retirement planning will include a breakdown of your goals and financial needs. Estate planning helps you establish your financial identity and will help structure the accounts you have as well as create wills, trusts and other legal strategies for your protection.
Your situation and goals will dictate which services you need and your relationship with Waterloo Capital management. Most firms request meetings at least once a year to keep you updated on your financial status. However, how often you meet with your advisor depends on you. It generally can be as frequently or infrequently as fits in your schedule.
What Types of Clients Does Waterloo Capital Management Accept?
The firm accepts the following types of clients:
- Individuals and high-net-worth individuals
- Retirement accounts
- Pension and profit sharing plans
- Charitable organizations
- Corporations and other business entities
Where Is Waterloo Capital Management Located?
You can find Waterloo Capital Management a few blocks north of the Colorado River on Congress Street in downtown Austin. The company is one of two (the other is LBJ Family Wealth Advisors) in our top 10 located downtown rather than the Austin suburbs.