Jonathan Leidy

Jonathan Leidy is the first point of contact at Marin County-based Salient Wealth Management, LLC, one of the oldest, privately-held wealth management firms in the San Francisco Bay Area. As such, he believes in educating clients about the wealth management process— including, most fundamentally, its focus on aligning and supporting client values with wealth.

The results have been gratifying, certainly from the point of view of Salient's asset growth. When Leidy arrived three years ago, Salient had less than $250 million under management. Today the firm manages some $600 million on behalf of its clients. "We've seen growth because the leadership of this firm put together an outstanding package of services that adds value toour clients' lives and portfolios," Leidy explains.

Leidy approaches wealth management not only from the perspective of analyzing values in order to properly position wealth, but also from the point of view of what that wealth can do—an approach that he calls social capital. The idea of social capital is that improperly aligned wealth not only has the potential to deprive an individual of assets, but also of tangential wealth benefits that may be just as important.

Consider, for example, wealth that is concentrated in a few large investments, and therefore may be subject to considerable volatility. An individual with such a portfolio is not taking advantage of that wealth on numerous levels. Moreover the potential benefit of that wealth to family, friends or the community at large is not being fully leveraged. The damage is not merely confined to the asset itself, but its future earnings as well. The longer the wealth is improperly situated, the less impact it can have going forward.

Leidy says he has been pursuing this concept of wealth as social capital because he believes that misaligned wealth has consequences far beyond loss of principal. It's part of what he considers "capital coalescence."More recently he has expanded his dialogues with clients to focus on the second core concern: legacy. He states that everyone possesses, as well as transacts, using four essential types of capital:

• Financial. Money and anything that can be directly converted into it.
• Personal. This reflects one's knowledge, values, history and ideas.
• Human. This embodies the knowledge, values, history and ideas of those closest to you as well as the bonds that you share with these individuals.
• Social. Often encapsulated as the "greater good," this includes the groups, networks and culture that both inspire and reflect one's value system.

Using these four types of capital as building blocks, an individual can move beyond the security dialogue and begin to craft a more balanced or "coalesced" legacy. "Often clients feel that capital coalescence engenders large philanthropic overtures. I tell them that enhancing their output in many of these areas couldn't be less costly," he says. "Moreover, many charitable strategies can be engineered to be additive, benefiting all four capital segments—in essence, expanding the pie."

Leidy's parents are educators and Leidy himself, a math minor and business major in college, enjoys the interplay of academic theory and real-life success. For Leidy, the business of investing only begins with the numbers. However, he is often more concerned with outcomes than process.

Leidy's mathematical facility has led him to explore music in addition to finance, and he has arrived at similar conclusions in that field. "Solid technique is important," he points out. "But what really matters is the result, the creativity that can be expressed as a result of using the knowledge effectively. In a way, I am illustrating to clients how fairly abstract ideas can be put into practice for their benefit. If you believe in the power of those ideas, as I do, then you're kind of living your own value system."

Leidy did not arrive at his current conclusions all at once. Before coming to Salient, he worked for Charles Schwab. It was through his work there that he became acquainted with Salient, established by Richard Stone in 1983. When he decided to leave Schwab, he approached Salient, partly because of Stone's use of Dimensional Fund Advisors' asset-class funds. "Dimensional's approach always impressed me," he says. "Using modern portfolio theory to design an investment program just felt right on both an intuitive and practical level. But the next step was wealth management, and I'm pleased to say that I have significantly enhanced that program for our firm."

Leidy received valuable help in that area from California-based wealth management coaching firm CEG Worldwide, which he was introduced to by Dimensional Fund Advisors. Using wealth management processes and skills supported by his experience with CEG Worldwide, Leidy leads new client discovery meetings for Salient. As a Certified Financial Planner and member of Salient's Financial Planning Committee, he also remains actively involved with the development of customized client strategies on an ongoing basis.

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