Providing sophisticated, customized investment and asset management solutions as an External Investment Department
Joshua Gross is the president of Mill Creek Capital Advisors, an independent investment advisory firm with offices in Philadelphia, New York, Pittsburgh, and Naples, Florida. Since its founding in 2006, Mill Creek has developed investment policies for and managed the assets of a diverse portfolio of clients, including families, companies, endowments, and others. Josh has earned industry recognitions such as inclusion in Barron’s Magazine Top 1200 Financial Advisor ranking and the magazine’s list of America’s Top 100 Independent Financial Advisors.
Josh Gross spoke to Lori Reiner, Partner-in-Charge of EisnerAmper in Philadelphia, for this interview.
LORI REINER: Paint a picture for us about your team and what they each bring to the table, and why that’s important to your customers.
JOSHUA GROSS: Our senior staff is a composition of a lot of people who have all worked together previously over the last 35 years. Rich Stevens worked with Tom Chapin at Vanguard for Jack Bogle. Jack Bogle hired Tom Chapin out of Tuck Business School at Dartmouth. Tom was Jack’s understudy and then spent 22 years at Vanguard. He learned a lot of different roles at Vanguard in a lot of different size firms, all at the same place, and he also learned the highest standards of ethics. It was natural when we started Mill Creek Capital that Tom Chapin was our chief investment officer. We knew him; we knew what kind of person he was. We paired him with Claire Kendrick, who is a PhD in Mineral Sciences from Penn State University, and she has this notion of healthy skepticism that, in our alternatives, is absolutely critical, because we are investing in partnerships. She developed the fund-to-fund structure 20 some years ago at her old firm, and she has really perfected it in what we are doing today, so that every two years we have partnerships that she develops.
The combination of Tom and Claire allows the business people—Rich Stevens, Rich Lunsford, myself—to do what we need to do and know that we are in good hands every day with the investment side.
Q. Do you frequently work with other investment advisors or wealth managers, or other organizations that are also investing money?
A. We do, actually quite a bit for our clients. We know that our clients come to us and they’ve had long careers. They may have a college friend who’s in the business and they want to keep them. Our client is a CEO, and our job is to incorporate that other person—that friend or that other advisor—and try to even make them better. Sometimes, they end up becoming so good that as the client may have more liquidity events, we give more money to that individual.
Our job, as we think about is to be the general manager of a baseball team, and to decide: Does that friend play first base, and if so, how much should go to that particular asset allocation or that particular manager? Those are the bigger decisions. We’re very happy to work and be completely open architecture, because that’s a part of the financial equation for our clients.
Q. Investment strategy—what’s the approach?
A. The first strategy is absolute customization around a client. Our clients will have varying needs. We have clients that have sold a business, they have no other source of income, and they’re 100% liquid. This may be also with foundations, pensions, and an entrepreneur family that has completely sold out. That’s really critical. They’re thinking about this as the lifeblood for the family, for the pension, for the endowment—for the rest of time. We also have groups that have an operating business—families that still own an operating business. In fact, we may run their liquid wealth, but the vast majority of their wealth is in an operating company. When you see a scrap steel company, for example, our job is not to have an investment structure that declines at the same time that their scrap steel company goes through its own cycles. Our job is to provide sleep at night.
If we’re a good architect, we will listen to how you use the particular house. If we build you an amazing stairwell and you come in in crutches, we haven’t listened to how you’re going to use the house. Absolute customization, absolute objectivity; we have no vested interest in any manager that we select and any asset allocation decisions we make.
Before we even build, the third aspect is to truly be multidisciplinary. We need to understand both the investment structure and the investment world, but then how much has gone wrong when our industry doesn’t understand taxes. Uncle Sam wants 25% to 50%. If you don’t know the difference between an IRA, how that’s taxed and a taxable account and what happens to a Roth IRA, you are inheriting Uncle Sam and not doing your best job. So, we need to understand trust in the estate planning, taxation—What’s going to happen with the family?—and be absolutely objective.
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