BWFA Celebrates 20th Anniversary

At a recent meeting of our Client Advisory Board, members posed questions to Saxon Birdsong, President of BWFA, about the company’s history and where it is headed in the future.

Joe Garber: How did BWFA come about?

Saxon: After spending more than 20 years in the financial services business, and consulting to major financial service firms, it was apparent to me that consumers deserved a better deal than they were getting. With technology, it was becoming possible to deliver more personalized services at a lower cost. In addition, pension plans were being phased out, and it was clear that individuals would have a growing responsibility to finance their own retirements. The accumulation of wealth in IRAs and self-funded plans was also going to pose significant estate planning problems. I wanted to create a company that was more relationship oriented, and well equipped to deal with these changing consumer needs.

Joe Garber: How many of the original partners are still with BWFA today?

Saxon: The Company dates from 1986. Kevin Condon, Bob Cassel, and I decided to merge in early 1996. Kevin left the firm in 2002, when he moved back to Colorado. Rob Williams, who was working with me long before the merger, became a partner at BWFA at that time. Kim Anderson also came to the firm before the merger, and worked with Kevin. So, of the original 5 members, 4 are still with us after more than ten years.

Mike Nutile: BWFA has experienced dramatic growth. How has this helped clients and BWFA’s profitability since BWFA Investment Management fees have remained the same?

Saxon: It was a real struggle in the early years to provide the kind of quality service we were committed to and still stay in business. It took years to get to the point where the business was self-funding. We are just now at the point where the cash flow of the business is sufficient to pay the professional-level salaries for the high quality people our clients need. In addition, the tools and technology we have invested in are far superior to what other firms like us typically have, allowing us to provide a higher level of service. For example, when a client calls in, anyone who picks up the phone can see what is going on with that client and be able to help, so things don’t fall through the cracks.

Pat Quinn: To what do you attribute BWFA’s investment performance?

Saxon: We can speak to individual clients and prospects at length about our investment performance and are happy to do so. But, SEC regulations place severe restrictions on discussing performance in newsletters and marketing literature.

Our investment performance reflects the fact that we don’t have the pressures inherent in mutual funds and conflicts common in large institutional money management firms. We don’t have to take the excessive risks of chasing short-term performance, and we don’t have to plan around large cash flows, in and out, like funds do. That kind of pressure is counter to an investor’s best interest.

Our investment returns also reflect our solid processes, consistently applied over a long period of time. Good investing is simply knowing what you are doing, working at it consistently, and not being subject to conflicts of interest.

Dave Carter: How has BWFA’s investment philosophy changed over time? For example, when I began with Kevin Condon, I was in mutual funds. After the merger, these were replaced in most cases with individual securities.

Saxon: We continue to refine the way we invest for our clients. Early on it was apparent that investors would be much better off holding individual securities, if their accounts were large enough. Individual securities provide better transparency, more of your money is kept invested, you can lower taxes, you control turnover and associated expenses, you can execute gifting strategies better, you get the advantage of “breakpoints” in the fees you pay, and on and on. . . . Everyone knows that individual securities are better, but most firms simply don’t have the ability to execute the strategy.

Before the merger, Kevin had been using mutual funds. We worked with his clients to get those portfolios into individual securities, as well. It’s more work, but the advantages are undeniable.

Andy Kowal: What has been the most difficult challenge from day one, and what will be the defining moment of success going forward?

Saxon: The most difficult challenge is to maintain client confidence. What makes this business hard is that we have to do a thousand tiny things right, day after day after day. And if just one thing goes wrong, people are more likely to remember the one thing that went wrong. I understand this, but that’s the biggest challenge. You have to create a “high performance” organization with a cadre of people with shared values.

We gauge our success by the confidence our clients place in us. Our defining moment will be when we reach $250 million in managed assets by the end of next year. That’s a lot of confidence.