The investment approach at Members' Wealth is focused on being simple. A simple investment philosophy, a simple investment process, and a simple feedback monitoring system. 

What separates Members’ Wealth Investment Process apart from many in the industry? 

“Being able to invest portfolios that are not just model-driven, but client-driven with purpose-driven rebalancing. I joined Members’ Wealth because I know just how ingrained this philosophy is in the fabric of their being. I knew I would not have to worry about it changing going forward. The only investment philosophy dogma they would have would be customization.” – advisor Tim Macarak, CFP® 

There is the evolution of portfolio management as you read about it in textbooks, and then there is my evolution in portfolio management. Since it is my evolution that directly influences the philosophy of the firm and ultimately the client, I believe that is what clients should be most interested in. 

The Foundation of My Investment Philosophy

As a young lad with my first $1,000 in hand from high school graduation, I went to a bank for investment advice. Mistake #1, RG (I will use initials to protect anonymity) sold me two mutual funds with nice paydays for him—commissions. I did not know any better, and besides, he was touting something like 19% returns. After all, it was the mid-’90s and tech was beginning to boom. Turns out he nailed it. Or the funds did at least. The funds more than doubled over the next five years. Because I invested $100 monthly through college from my minimum-wage job at the Uni-mart in my college town—that was 25% of my monthly wage, for the record—I had a nice chunk of change come graduation. Good fortune would have it that I graduated college in 1999, and by the time I started veterinary school and then decided to drop out in early 2000, I cashed in my funds to do some travel. The market subsequently collapsed and I was an investing genius 😉. Bought right and sold right. 

Lighting Didn’t Strike Twice

Lightning struck, and I was hooked. But it did not strike again. At least not the same way. Day trading tech stocks did not last long for me, and it was not long before I became a student of investing and left speculation behind. I read everything I could, including all the investment greats.

Despite my biology background, I eventually got an entry-level job at Vanguard where we had a library and a person with a little cart that would bring our books around. Now the book cart delivery was eerily reminiscent of the book cart delivery to prison inmates I had seen in movies. That was not the only similarity for me in working at Vanguard. Needless to say, my life there did not last long and I moved on. But I was indoctrinated in the benefits of low-cost passive investing. And while I went on to personally challenge those methods for years on end with some success and some failures, the time at Vanguard would be instrumental in my own personal portfolio management evolution.

Building on My Investment Philosophy Foundation

The next stop was Lockwood, where I met most of the people working here at Members’ Wealth today. So aside from the huge importance of the road stop at Lockwood for meeting key people in my life, I also was introduced to active investment manager selection. My job became finding active managers that could beat their benchmark with either higher returns or the same returns with less risk.

The Lockwood investment platform was structurally disadvantaged (in my opinion). So, I found myself banging my head against the wall in the sense that we basically could not invest in the best managers by structural impediment (there is a lot there and perhaps can be delved into in a future missive).

So, frustrated, I moved on and ended up in a large independent multi-family office. It was here that I found out what true high-quality active money management was about. But it was also here where I learned the importance of keeping costs in check, keeping investing simple, and blending active and passive investing. But given the size of the clients we worked with, I did not get to personally hone my skills because there simply was not much to do. In three years there, I trained for an Ironman, studied for and obtained the CFA® charter, got married, had my first child, and moved. It was good exposure, but I was bored. I moved on. 
Important Investment Lessons: Learning by Making Mistakes
And then I hit the perfect spot to go from analyst to portfolio manager and learn from making a lot of mistakes. I joined a small wealth management firm in mid-2007, right before the start of the Great Financial Crisis, as an analyst. Within three years, I was CIO and learned how to manage portfolios—trial by fire.

Academically, I was prepared; the street experience I lacked in spades. But I got it, and I got it quickly. I tried the academic way at first. I knew all and knew more than the clients. That’s why they hired me, right? No, that is not why. They did not hire me to be omnipotent; they hired me to thoughtfully guide them to their goals. Instead of listening to clients, at first I chose the path of Sisyphus.  

Lucky for me, I had one particular client (we’ll call him RS) that was more stubborn than me. While I managed to fool myself and my clients with my passionate delivery of high-level knowledge, there was one client who simply could not fall prey to my deceit. Mind you, my impassioned deliveries were genuine, not maliciously deceitful. I truly believed in my approach. Because my approach was right. It was just not right for RS, or over 50% of our clients for that matter.

After perhaps a year of trying to roll that rock up the hill, I relented and built RS the portfolio he wanted. It worked. He was happy; I was happy. He got to his goals. I was hooked. The weight of the rock lifted from my shoulders, and I was once again free. Free to build the best portfolios for everyone.

What I was missing: in my effort to school all clients in the one right way, I had to water down my efforts to a portfolio of mediocrity to appease all people. So rather than please everyone, I pleased no one and had to do a lot of talking and sales speak to support my efforts to boot. Boy, I was stubborn. But I was not alone. My one-size-fits-all model-driven approach was an industry epidemic, and I believe it remains so to this day. (Pockets of exception have been noted, but generally speaking, the larger the firm, the more scaled and modeled and less custom the approach—at least in my opinion.)  

The Approach to Investing at Members' Wealth

In starting Members’ Wealth—in being independent with a client-first approach—I knew we could live by:

1. A simple investment philosophy: At Members’ Wealth, we believe there is not one right portfolio for all clients, but there is one right portfolio for each individual client.  
   
   
2. A simple investment process: We ask the in-depth questions necessary to uncover the characteristics required to build each individual client one right portfolio. We construct a custom portfolio based on these characteristics. We outline the approach in a clearly articulated Members’ MyPlan.  
   
   
3. A simple feedback monitoring system: Our reports provide clients with simplified risk factor categories for their underlying portfolio investments, which we feel helps clients better understand their portfolio manager’s process in managing their risk unique to their tailored portfolio. This way, clients and their portfolio manager can make informed decisions together, and at any given time, a client can see if their portfolio investments are in line with their goals.

By allowing customization we can offer:

1. Custom portfolios (so important that I repeat it again)
2. Tax-loss harvesting
3. Single stock/concentrated stock management
4. Legacy investments retainment
5. Restrictions and constraints
6. Tax focused  
7. Opportunistic rebalancing
8. Social responsibility
9. Client input
10. Account aggregation and holistic view investing; incorporating both managed assets and outside accounts like 401(k)s or other retirement accounts.

That’s just to name a few.

But with customization comes choice, and with portfolio construction, there are a plethora of choices:

1. Passive / active
2. Large / small
3. International / domestic 
4. Stocks / bonds
5. Traditional / alternative
6. Public / private
7. Growth / value
8. Credit risk / interest rate risk

All can be solid investments for someone but not everyone. It is our job to figure out the right mix for each client.  

Customization is a key pillar of the investment process. But I would be remiss if I did not at least end with a short list of the other distinct advantages of working with Members’ Wealth for investment selection and portfolio construction:

1. Objectivity
2. Due diligence
3. Experience
4. Access
5. Aligned interests 

Each of these is a topic in and of itself to be explored on another day.

In conclusion, the only investment dogma at Members’ Wealth is that custom portfolios are what is right for clients. 

About the Author – Dane Czaplicki, CFA®

Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.

Dane received his bachelor’s degree from Bloomsburg University of Pennsylvania and his MBA from The Wharton School. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

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