Jack Calhoun, Jr. and Dennis Covington

Trust is a key element of success for Jack Calhoun, Jr., managing principal, and Dennis Covington, principal, of the Atlanta, Georgia-based firm Capital Directions, a financial advisory practice with approximately $750 million in assets under management. "Trust is essential in any kind of business, especially this one, and certainly when you are facing the challenges presented by the current economy," says Covington.

The emphasis on trust has led the firm clearly in the direction of wealth management. That's because the wealth management process itself fosters trust by aligning clients' wealth with their values and key goals. It does this by focusing on what is most important to the client and his or her loved ones rather than just the bottom line, which will always fluctuate. "Communication is the key to successful wealth management," says Covington. "When you ask clients questions about their history, their values and what they want to accomplish most in life, you have a deeper conversation with them in 15 minutes than you might have had with friends of 15 years."

Capital Directions focuses on three distinct areas. The first area is a traditional wealth management business specializing in serving entrepreneurs with more than $2 million in investable assets who face business, retirement and estate planning challenges. The second, called "Advisors Access," assists other advisors by outsourcing the management of client 401(k) plans—thereby allowing the advisors to better focus on the wealth management process and their clients. Because most 401(k) plans continue to receive new assets each month regardless of market conditions, the program helped Capital Directions weather the recent downturn and helped advisor-clients gather more assets during a difficult environment when other sources of assets had dried up. The third is a turnkey asset management program called the "Partners+ Program," which provides portfolio management, trading, reporting, and asset-gathering support to RIA firms and leading regional CPA firms that offer investment advisory services to their clients. "The support programs enable advisors and CPAs to focus on those things that they are uniquely good at, and outsource the rest," notes Covington.

From an investment standpoint, Capital Directions avoids active management strategies. Instead, the firm's principals adhere to an investment philosophy that is firmly grounded in both Efficient Market Hypothesis and Modern Portfolio Theory. This allows the firm to diversify portfolios both within and across a wide variety of asset classes, minimize fees and transaction costs as much as possible, and maximize clients' after-tax returns. "We find that our approach helps clients stay focused on their progress toward their goals," adds Covington.

The pair's focus on serving entrepreneurs has deep roots. Calhoun's father, Jack J. Calhoun, Sr., founded Capital Directions in 1985. Calhoun, Jr. joined the firm in January 1993 and took the reins of the company in 2003. Under his guidance, the firm has grown from $70 million to $750 million in managed assets. Calhoun, who has a background in journalism, has written extensively on the subject of prudent investment management and has been featured in The Wall Street Journal, Investor's Business Daily, The Atlanta Journal-Constitution, the Atlanta Business Chronicle and is the author of a book, "The 12 Investment Myths: Why Individual Investors are Failing Miserably and How You Can Avoid Being One of Them."

Covington's father, the owner of a technology-shipping firm, is also a successful entrepreneur. Covington joined the firm in April 2000 following five years as a Senior Institutional Consultant with TIAA-CREF, the world's largest private pension system, and three years as a staff accountant with KPMG Peat Marwick. Today, he leads the firm's wealth management practice. He also led the firm's integration of its corporate work flow and portfolio management systems, efforts that played a significant part in the firm's recognition in 2006 as one of the industry's Best Managed Firms based on the research commissioned by the Financial Planning Association and conducted by Moss Adams LLP.

While Calhoun and Covington were successful separately, their long-time friendship made it intriguing for them to consider working together. Their larger families were involved as well: Both men's wives were close friends long before the two became business partners. "They told us that if we didn't do well, we had better not damage their friendship or we'd be very sorry," laughs Covington. "So that's been a motivating factor."

Covington says their experience with wealth management has been enhanced by the firm's exposure to CEG Worldwide, a leading advisor coaching and training firm that focuses on wealth management strategies. "CEG Worldwide has been an integral part of our success," Covington says. "I attended their programs and everything they suggested was grounded in market research of the highest quality. As a result, we now have systems in place that fully support our wealth management approach. And the strategies that we use have been even more finely tuned so as to give the client the best possible experience. We look forward to more success with the wealth management process in the coming years—for our clients and the firms we support."

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