Advisor Success Story–Bryan Ohm

Bryan Ohm and Tom Damasco commit to the cutting edge of finance.

Bryan F. Ohm of Ohio-based Modern Portfolio Management likes to tell the story of how a $1 million client turned into a $4 million client— even after Ohm had turned down the initial sum to begin with! The prospective client had been referred to Modern Portfolio Management, but Ohm would not let him invest until an initial consultation was done. Once Ohm understood the investor’s needs, risk tolerance and how his wealth might best support his values, the $1 million was accepted. “We couldn’t do it any other way,” Ohm points out. “If you are a professional person, you have a methodology and a discipline. If you don’t apply them, then your business is not working properly.”

Soon after, MPM received another $3 million from the client. “We were very pleased with the outcome,” Ohm says. “But the most important part of the effort is to stick to what we have decided to do and not deviate from it. We believe our firm is built around best practices, and we intend to move ahead by continuing to emphasize those practices.”

One such best practice is modern portfolio theory (MPT), which emphasizes risk management and seeks to smooth out volatility over time. By analyzing the volatility of certain sectors and then determining a client’s “risk horizon,” a diversified portfolio can be assembled that has the potential to reduce market risk while providing returns that meet expectations.

MPM uses Dimensional Fund Advisors to provide the analysis and the sectors that can be blended to provide a portfolio that adheres to client preferences. But DFA does not provide individualized tracking and reporting to clients, so MPM has taken on that responsibility itself. Interestingly, MPM’s software and services have become so efficient that they are used by other firms as well. The company now has relationships with a number of other advisors who provide MPT-style services to their clients and use the firm’s reporting package as well.

In total, MPM has over $650 mil­lion under management—roughly half of which is under the firm’s roof, while the other half resides with advisors who purchase the firm’s various MPT services. The firm counts approximately 300 clients of its own, and its affiliates are estimated to manage wealth for a similar number of investors. The revenue is anchored to assets under management, and Ohm and his partner, Tom Damasco, believe that prospects are good for both the in-house management businesses and their professional services component.

On the wealth management front, MPM has used the services of wealth management consultant CEG Worldwide to sharpen its business objectives, and now shares those skills with its affiliates. It also seeks to educate affiliates and potential professional clients about various aspects of DFA and MPT. “DFA has proved an invaluable resource when it comes to the real-world implementation of modern portfolio theory,” Damasco points out. “CEG Worldwide has proved most valuable on the wealth management side of the equation.” Ohm agrees that the combination of DFA and CEG Worldwide provides the firm and its affiliates with the best of both worlds. “Once we understood that we could implement asset allocation using DFA, we never looked back,” says Ohm. “And then CEG Worldwide came along and gave us the tools and frame of reference to provide a full spectrum of services to our clients, above and beyond the pure investment approach, and we started to believe that we were building a whole new level of professional associations. Ohm adds, “This is a great place for us to be, but we’ve always had a commitment to the cutting edge of finance when it comes to giving our clients the most grounded, academic and up-to-date strategies. And we’ve also always wanted to get to, and stay at, the forefront of client service.”

Wealth management gives the firm greater formal and theoretical control over client assets and placement, says Ohm. By taking clients through a detailed Discovery Meeting, MPM can align investments with investors’ most important needs. The wealth management model also allows Ohm and Damasco to coordinate all the various facets of a client’s financial life.

Both Ohm and Damasco worked at big Wall Street firms before meeting each other and finding out that they wanted to branch out as independents. “When we started, many years ago, we were in a position where our added value had a lot to do with the individual equity opportunity that we could offer our clients compliments of the firms for which we worked.”

Ohm contrasts that approach with today’s. “Now we offer clients a cutting-edge investment focus, plus a broad array of wealth management techniques designed to ensure that clients are best positioned to have their wealth track their values. By looking at a portfolio holistically, and then by implementing what we recommend on the client’s behalf, there is no doubt in my mind that the quality and quantity of our services is far in excess of what we used to provide.”

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