Keel Point Locks Onto Organic Growth

Keel Point focuses on ultra-high net worth clients with assets of at least about $40 million with its Horizon Family Office that has 22 families, as well as its private client division that focuses on affluent clients with assets of about $1 million to $40 million each, Mayes said. The private client division now has nearly 1,500 households as clients and represents the "lion's share of our revenue," he told ThinkAdvisor.

Since the 2015 merger, much of the firm's growth has been "organic," but there have been a couple of smaller acquisitions, Mayes noted. For one thing, there was the Chattanooga-based DeMoss Capital that Keel Point acquired in late 2015. That move gave Keel Point "greater reach" in the Chattanooga area, boosted its AUM in that market to about $150 million (about $89 million from DeMoss), and also benefited DeMoss clients via additional resources, family services and investment opportunities, Keel Point said at the time.

About three years ago, Keel Point also bought Capital Concepts, a 30-year-old practice in Huntsville that has allowed the firm to grow a separate business division providing corporate services for small to midsize companies, including health care and retirement plans, Mayes said. That division and Keel Point Asset Management (KPAM) in Washington and Huntsville, which outsources investment solutions and other CIO services to RIA firms, are both "growing" businesses for Keel Point also, he said, noting KPAM has about $1 billion under advisement. Across Keel Point's divisions, there are now about 75 people who work for the firm, he said. Although Keel Point won't reach its earlier goal of achieving $5 billion in AUM by the end of this year, he said "we are proud of the growth that we have seen" since the company merged with BlueCreek, including the $1 billion or so in assets under advisement it's gained, along with the approximately $2.1 billion in AUM, he noted.

Keel Point hasn't been affected much by the market volatility of last month, according to Mayes. That's "primarily because we are a goal-based firm" and "there's really not a lot of movement" happening along the lines of what's typically seen at retail investment-only type shops, he said.

Of other trends he's seeing, Mayes said one comes to mind quickly: "Traditional asset allocation portfolio management that has worked for the last couple of decades will not work going forward in a zero interest rate environment — or at least as close to zero as you can get environment. And therefore, clients are more receptive to more nontraditional fixed income alternatives, where they can have the characteristics of the risk characteristics of the fixed income component but also … have it added to the overall performance of the portfolio."

Keel Point specializes in nontraditional assets, he said, pointing as an example to the fact that his firm includes structured note components to "many of our portfolios" that can be used "across different asset classes to try to manage the overall risk range that we see with those asset classes." Another example is environmental, social and governance (ESG) investments, which he said are still in a "pioneering stage." Keel Point, however, started offering ESG investments to clients who are interested and "we're not hesitant at all" to do so, he said.

Mayes also predicted a recession is "going to happen," but he declined to predict when. Instead, he said: "I do know this…. How we invest money going forward is going to be very different from how we've invested in the last two decades."

Part of the reason for that, he said, is a "lack of awareness" among many individual investors who don't rely on fiduciary-dedicated firms like Keel Point about the importance of nontraditional investing to mitigate risk. He added: "When you see the institutional market moving more and more of their allocations towards alternative investments and away from traditional investments, you've got to wonder why clients are not — families are not — doing the same. And I think that part of [the reason] is that they just don't know that those are out there."

— Check out Navigating Volatility: 3 Strategies I'm Using Now on ThinkAdvisor.