Ted Rupp With Kovitz Investment Group

Intro: [00:00:03] Broadcasting live from the business radio studio in Chicago, Illinois. It’s time for Chicago Business Radio. Brought to you by firm space, your private sanctuary for productivity and growth. To learn more, go to firm Space.com. Now, here’s your host.

Lee Kantor: [00:00:21] Lee Kantor here, another episode of Chicago Business Radio. And this is going to be a good one. But before we get started, it’s important to recognize our sponsor firm Space. Without them, we couldn’t be sharing these important stories. Today on Chicago Business Radio, we have Ted Rupp with Kovitz Investment Group. Welcome, Ted.

Ted Rupp: [00:00:40] Thank you for having me.

Lee Kantor: [00:00:41] I’m so excited to learn what you’re up to tell us about Kovitz. How are you serving folks?

Ted Rupp: [00:00:46] Sure. So Kovitz Investment Group is a full service wealth management firm that’s been around for nearly 20 years. We manage about 7 billion in assets for around 2200 different clients and doing everything from individual stock selection and fixed income selection all the way through kind of full scale financial planning.

Lee Kantor: [00:01:07] Now, at the beginning, was it always that way, a full service firm, or was it something that evolved over time as the needs of your clients grew?

Ted Rupp: [00:01:17] It’s actually evolved quite a bit over time. When we first launched back in 2003, we were primarily just a stock and bond firm, just doing pure kind of investment management for our clients. Shortly thereafter, about a year later, we had an individual join our firm that had a much more kind of detailed financial planning experience from his time at Deloitte and another company called ACO. And he really kind of turned us into kind of full scale financial planning firm moving beyond just kind of investment management.

Lee Kantor: [00:01:51] On your website, the headline is Covets is a value based wealth management firm. Why is value based important enough for you to kind of headline your website with that language?

Ted Rupp: [00:02:03] Sure. So it’s it’s a bit of a play on words to a certain extent, given that we’ve always had kind of a value tilt in kind of how we select public stocks. But that being said, we feel it goes beyond just stock selection into kind of how we value our clients, our employees, and how we portray that in kind of our everyday actions.

Lee Kantor: [00:02:25] So what some examples of how it plays out in the culture of your firm.

Ted Rupp: [00:02:30] Yeah, so great example, kind of more recent example is we actually participate in the Crain’s Best Places to Work initiative. So that came out just a couple of weeks ago and we’ve only done that for the last couple of years now. But it’s been a great tool both in terms of kind of benchmarking ourselves against our peers. But I’d almost argue more importantly is we get a great survey of our employees that comes along with it on an anonymous basis, and the results of that survey are really utilized to help us drive value to our employee base, listening to them, making sure that we’re competitive on benefit packages, pay, communicating things properly, that sort of thing.

Lee Kantor: [00:03:10] And in today’s tight kind of job market, having a culture and a big why is really compelling when people are choosing where to work and where to spend their time.

Ted Rupp: [00:03:21] Yeah, exactly. It’s an incredibly competitive market. Maybe softened a touch here in the last few months, but still at that point where we need a lot of different aspects to appeal to prospective candidates, particularly given that while we are nearly 100 person firm that’s still small compared to a Goldman Sachs or other people in our space that have a much more well-recognized brand name.

Lee Kantor: [00:03:48] Now when the economy is kind of chaotic like it is today and there’s so much volatility, is that a good time for firms like yours?

Ted Rupp: [00:03:58] Definitely. That’s how we’ve really grown in the past. It’s during times of market turmoil like this where I’d say both kind of from the employee aspect, where there are kind of really good candidates out there that are typically available that are might not have been available before that we want to kind of pounce on. But really in terms of gaining new business as well and new clients, this tends to be a time where some advisors will free will kind of freeze up when speaking to their clients and are more apprehensive about actually reaching out because their clients might not be happy with how their portfolios have performed during this period of time. But we on the other hand, really try to take a much more proactive approach and really kind of make it known what exactly is happening, why it’s happening, our belief in kind of where things are going from here. And luckily that’s really kind of proven out that once those customers are clients, get comfortable with what we’re telling them, that’s when they’re sending referrals our way as well.

Lee Kantor: [00:05:09] Now, is it a time when, you know, when the market’s going up and up and up and it’s a bull market? Everybody’s system is kind of working, but when there’s turmoil like this, then all of a sudden, you know, yesterday’s plan isn’t so great anymore. Are people kind of self-aware enough to say, hey, you know, maybe that I was just kind of riding this wave and that it is better to have kind of a trusted advisor like covets on my team to protect me from myself. Because a lot of those people that are individuals that are going out there, you know, with their gut or their system, you know, this takes a steady hand during this time in order to really benefit, you know, down the road.

Ted Rupp: [00:05:52] That’s exactly right. It’s I often say that I think that the biggest value that we provide to our clients is actually kind of in the behavioral finance world of really just kind of keeping our clients from doing something that they they shouldn’t be doing because they’re acting based on emotion, not based on kind of rational business sense. And because of that, it’s it definitely puts us in a position where we’re able to capitalize on things. And a perfect example could be on a day like today where you have certain stocks where earnings are coming out and the certain stocks might be getting decimated and it would be very hard to go buy those stocks at a time like this when a lot of people are getting out of them. So it’s it’s really allowed us to have kind of a much more open dialog with our clients and help them understand exactly why we’re doing things.

Lee Kantor: [00:06:49] Now, is that just built into the service with covets that you are going to do these kind of wellness checks maybe throughout the year so you can kind of remind people, Hey, we have a plan here, and I’m not going to just make knee jerk moves because of a headline.

Ted Rupp: [00:07:08] Right. It’s it’s all about creating that initial financial plan and managing the portfolio to perform against that plan over time. And even in times of turbulence like this, just reminding everybody of why they have the plan and what exactly we’re doing in order to make sure that that can still be achieved.

Lee Kantor: [00:07:31] So how do you kind of keep those lines of communication open? You mentioned that you that your firm is reaching out to people proactively during this time where some firms are, you know, just hiding under the desk and hoping it goes away.

Ted Rupp: [00:07:45] Yeah. So it can be done in a variety of ways, I think. Clearly, as of the last several years, more and more firms are leaning heavily on communicating through just electronic means and whether it be emails or newsletters or anything like that. But really, I think what matters most now is just picking up the phone and having that that live conversation with someone rather than relying on them reading something that’s just kind of been published to them. Well, it’s great to have both. At the end of the day, I think the the live conversation matters the.

Lee Kantor: [00:08:23] Most because at the heart of this, it’s a relationship, right? This isn’t they’re not just kind of lines on the spreadsheet. These are human beings that have needs and they have an outcome they desire, and they’re hiring you to help them achieve that.

Ted Rupp: [00:08:37] Yeah, exactly. It’s it’s something that needs to be revisited often and probably reinforced even more often than it’s being revisited. So it’s just a constant process.

Lee Kantor: [00:08:49] Now, part of we talked a little bit about how the culture of the firm is important and immersing yourself in the community seems to be important also for covets. Can you talk a little about your work with the social venture partners of Chicago?

Ted Rupp: [00:09:07] Yeah, so I got involved with social venture partners about seven years ago and it takes a venture capital style approach to investing in the nonprofit space. And I’d say kind of similar to my involvement in that a lot of our other partners at the firm had kind of their own causes that they were actively involved in. And so about three years ago, Mitch Coates and I were actually attending a function and we just kind of said to ourselves, Why can’t we do something like this? And so what we actually did is we put together an organization called the Coates Cares Foundation, and the thinking there was that it would be a good way for us to get our employee base kind of involved in thinking about the nonprofit space, but at the same time kind of leaning on a lot of the people that we work with in the business community raising dollars that way. Holding an event to raise additional dollars and then using kind of a similar approach to what we do with social venture partners, where we actually then go invest in non-profits in the Chicago area.

Lee Kantor: [00:10:21] So how has that worked for you?

Ted Rupp: [00:10:25] It’s worked out very well. It probably could have gone better if COVID had not kind of derailed our event, I think, two different times. But luckily we appear to be back on track. We have. So we’ve held one event so far. We have our second one planned for May of next year. It’s a casino night at theater on the lake. And so first event went great. And we all know that you kind of work out the kinks on that one. And so I expect the second one to be even better.

Lee Kantor: [00:10:57] Now, how is the nonprofit community? Are they gravitating towards this? Is that, you know, kind of treating a nonprofit or like a startup? Is that idea at least resonating with folks?

Ted Rupp: [00:11:11] Yeah, it’s it’s a strategy that’s been employed by or deployed, I should say, by by several organizations, kind of like social venture partners. But yeah, it’s something that I think is is great because it gives people like our 100 employees a look at what’s going on in the nonprofit space, allows them to then either volunteer their time or donate their dollars to those causes. And at the same time being part of something that’s a bigger initiative that can have kind of a more material financial impact on a firm.

Lee Kantor: [00:11:49] Then. Are the nonprofits open to the that concept, though, of iterating, you know, kind of cutting loose the things that maybe aren’t working, Maybe they have to kind of mash up or maybe they have to consolidate. Is that because that seems a little not like typical nonprofit thinking?

Ted Rupp: [00:12:09] I think it depends. And yeah, I think that there are definitely those that are open to a lot of that. That way of thinking, those tend to be the ones that I know, at least through social venture partners that we’ve gravitated more towards. But yeah, it’s, it’s a constantly evolving space and it’s it’s a very fragmented space as well where you have a lot of groups doing similar things, but kind of in their own unique way and just making sure that they can kind of work together well enough to have the biggest impact right now.

Lee Kantor: [00:12:47] I think that’s fantastic. I wish more nonprofits would take that kind of mindset of let’s join forces instead of each of us just, you know, kind of touching one little point on the elephant. You know, we can all grab the elephant if we all do work together.

Ted Rupp: [00:13:03] Right? Yeah, exactly. I think a big challenge is typically you have a very strong nonprofit leader that that ultimately is incredibly passionate about what they do and how they do it. And it’s not always necessarily the easiest thing in the world to to kind of meld those together. But yeah, certainly there’s there are examples of where that’s happened and had just a really outsized impact on the community.

Lee Kantor: [00:13:34] Yeah, I, I especially during a downturn in the economy, this is where they should be joining forces and kind of working together instead of kind of being splintered.

Ted Rupp: [00:13:45] Correct.

Lee Kantor: [00:13:47] Now, getting back to. Can you talk a little bit like walk me through the onboarding. Are your clients? I would imagine they are. They’re moving if they’re coming to covets. They’ve had a wealth management firm and they’re moving to you. Is that accurate?

Ted Rupp: [00:14:02] Oftentimes that’s the case, not necessarily all the time. Particularly, our Orange County operation tends to have a lot of kind of more of the do it yourself camp. But yeah, for the most part, a client typically coming to us has been with some other sort of wealth advisor in the past.

Lee Kantor: [00:14:24] And is the reason they’re moving is that what we discussed earlier, there wasn’t those lines of communication weren’t open, they were frustrated. Maybe they wanted to do something and they weren’t getting their attention they felt they deserved.

Ted Rupp: [00:14:37] I think that’s a big reason. Sometimes it’s it’s purely just investment performance related as well. I think one of our biggest differentiators is a lot of what we do on the investment side of things are our own proprietary strategies. So I think we can speak very well to the investment piece of the equation rather than just kind of relying upon kind of more high level either asset allocation pieces or I guess I would say just kind of particular managers that somebody is selected, whereas we can speak to the individual stocks selected or particular strategies that we’re in charge of.

Lee Kantor: [00:15:20] Now, when you come when they kind of choose you to be part of their trusted advisory team at that point, are you kind of quarterbacking this or are you just a role player on their team? Because I would think that kind of the wealth is is at the heart of a lot of the decisions they’re going to make as a family regarding legacy, regarding health care insurance, not just, you know, the investment dollars.

Ted Rupp: [00:15:49] Right when we onboard the client, there’s a very lengthy questionnaire that they complete for us, the kind of details as much as they can on their financial situation. And we’ll go through and evaluate that in a variety of different levels, whether it be something that may be kind of on the more basic side, like insurance all the way through kind of tax and estate planning. And then based on kind of the outcome of that and the financial planning work that we do in terms of kind of what they’re looking to accomplish, we’ll then help coordinate with the various outside parties, whether it be tax accountants, estate planning attorneys or or something along those lines to really kind of help bring everybody together.

Lee Kantor: [00:16:36] Now, are your clients like what is the profile of an ideal client for you? Is it a business owner or is it somebody who’s inherited money or are they celebrities, athletes, all the above?

Ted Rupp: [00:16:49] Yeah, we’re we’re definitely more in the all of the above camp. I would say our our current base of clients tends to focus more on kind of executives, business owners and professionals. But yeah, certainly kind of our typical client really just kind of looking at the numbers has about three and one half million under management with us. We do have $1,000,000 minimum. And so really kind of anybody that’s that fits that profile that really does want to get kind of very hands on. Financial planning seems to be a good fit for us.

Lee Kantor: [00:17:27] So what do you need more of? How can we help? Do you need more employees? You need more clients. You need more nonprofits to serve. How can we help you?

Ted Rupp: [00:17:38] Yeah, well, ultimately, I think just being on the show here and getting our name out there helps with all of those things. You never know which one you’re going to need at a particular point in time. So yeah, it really just kind of being on here is great. And for anybody that’s listening that would like to hear more, just feel free to visit our website and we’d love to talk to you.

Lee Kantor: [00:17:59] And then what’s the URL for the website.

Ted Rupp: [00:18:02] Is W-w-what that’s k0v is and Victor I is and Tom Z is in zebra dot com.

Lee Kantor: [00:18:11] Well, Ted, thank you so much for sharing your story. You’re doing important work and we appreciate you.

Ted Rupp: [00:18:16] Yeah. Thank you very much for having me.

Lee Kantor: [00:18:18] All right. This is Lee Kantor Will next time on Chicago Business Radio.

Intro: [00:18:23] This episode of Chicago Business Radio has been brought to you by firm space, your private sanctuary for productivity and growth. To learn more, go to firm Space.com.