Mequon-based Next Generation Wealth Management Inc., a wealth management firm that specializes in working with clients with $1 million to $15 million in investments, is creating a platform to donate a portion of its revenues to charity.
The firm recently created Next Generation Philanthropy LLC, an entity through which it will donate funds, said David Braaten, founder of the company. The company also has created a separate checking account and tax identification for Next Generation Philanthropy.
Next Generation Wealth Management is determining the percentage of its annual revenues it will donate, said David Massart, president of the firm.
“As a percentage relative to most firms, and or what most individuals their tax returns donate, it will be greater than,” he said.
Next Generation Philanthropy will donate funds to organizations it identifies, as well as specific organizations that clients request. The firm has received due diligence on a large number of charitable organizations and is working through that information now, Massart said.
“The mission is to advance the quality of life to better each generation through education, health and well being, and the environment,” Braaten said.
Founded in 2005, the experience of Next Generation’s principals, their network of contacts, the use of technology and philanthropic ideas set it apart from other financial planning firms in southeastern Wisconsin, Braaten said.
Braaten, the firm’s founder, served as president of Strong Investments Inc. and previously worked as director of U.S. and international equity trading for Strong Capital Management Inc. and as a former member of the office of the chief executive of Strong Financial Corp.
Massart served as managing director at Strong Private Client Group and formerly worked as director with Wells Fargo Investments LLC, where he focused on building investment strategies for high net worth clients.
Shortly after Wells Fargo bought Strong Financial Corp. in 2004, the pair decided to start their own wealth management firm, relying on their experiences at Strong and Wells Fargo.
“Having worked directly with portfolio managers and analysts, being responsible for hiring and firing them as a former CEO, finding the best solutions for clients, was the challenge at Strong,” Braaten said. “We’re taking that experience to find solutions for clients, having the flexibility to find managers around the entire country. I grew up doing it. Managing managers is what we do and what we do well.”
Next Generation Wealth Management doesn’t manage its clients’ money in-house. Instead, it uses three different groups of money managers as custodians: Pershing LLC; Schwab Institutional, a division of Charles Schwab & Co. Inc.; and The Goldman Sachs Group Inc. Each of those three platforms employs hundreds of portfolio managers, whom Braaten and Massart peruse to find the best candidates for each client.
“We’re not managing money in-house for a reason,” Massart said. “If you look at the high net worth (asset management) world, people are looking for someone independent that has no conflicts of interest, someone who is looking not only at their investment portfolio, but is also in touch with other resources to solve their other financial problems.”
Many other financial planning firms are anchored to one platform of money managers. Not being restricted to one platform allows Next Generation to make recommendations that are truly in its clients’ best interests, Massart said.
“We have no preference where the manager is coming from,” he said.
Next Generation’s platform gives the firm access to hundreds of money managers, but the firm doesn’t use all of them. Instead, the firm picks three to five managers in each category it thinks clients will be interested in, Massart said, then researches those managers before traveling to meet them in person.
“We don’t rely on someone just giving us a research report,” he said. “If we hire someone, we’ll sit across the table from them while they tell us their story.”
The flexibility also enables Next Generation to make connections with money managers who aren’t tied into any of those three networks.
“That’s some of what our due diligence can uncover,” Braaten said. “We can find that diamond in the rough.”
Next Generation now works in a 7,000-square-foot office in Mequon. Braaten and Massart are searching for a new, smaller office that is more conveniently located for clients. Because the firm only has three employees, Braaten, Massart and recently hired chief financial officer Jeff Kralovec, it only requires about 2,000 square feet of office space, Massart said. The firm is now negotiating for space off of Highway 45 between Good Hope Road and the Zoo interchange, and plans to move by the end of the year.
Next Generation recently signed an agreement with Advent Software to adapt the firm’s software to get daily information on individual accounts with different money managers and aggregate that information into one report for clients.
“For clients that are looking to simplify their financial life, this gets them a single, aggregated report,” Braaten said.
Next Generation has been integrating the software since January, and it should be up and running in about 30 days. Its significant cost and complexity should be seen as an indication of Next Generation’s long-term plans, Massart said.
The firm aims to have 125 to 150 households or families as clients within the next 36 months, Massart said.
However, it’s not going to rush to get there, he said.
“Our measurement of success isn’t going to be solely the number of households or dollars we have under management,” Massart said. “It’s taking care of our clients, the communities we serve and our employees.”
“We’re looking for folks who are looking for long-term relationships, where they can get value from (our firm) today and when they want to pass things to the next generation,” Braaten said.
