A Focus on Quality in Everything We Do
Built for Stewardship
Isthmus Partners is an SEC-registered investment advisor that serves as a fiduciary putting clients’ interests first and foremost.
We specialize in serving a specific kind of client: one who desires the peace of mind that can be gained only by knowing experts are personally watching over his or her assets and are dedicated to quality in every aspect of financial planning and investment management.
Many are business owners, executives and professionals who have established an expertise in their own fields over many years and now wish to ensure the fruits of those labors carry forward through their lifetime and to the next generation or other beneficiaries.
Quality First and Foremost
Prudence, honesty and integrity are at the core of the Isthmus Partners culture.
To build and run a firm dedicated to quality requires expertise, as reflected by our heavily credentialed and highly experienced team. The high level of quality we offer is amplified by our independence, which enables utmost personalization, flexibility and discretion.
Independence also enhances our vibrant spirit of entrepreneurship, by which we give constant attention to implementing best practices to ensure the highest standard of client service.
Isthmus Partners is 100% equity financed and owned by its partners, who have significant personal capital invested in the firm’s strategies.
Founding partners David A. Hackworthy, Victor E. Rodriguez, Frank J. Gambino, CFA and Joel C. McNeil, CFP® have worked together since 2003. In 2014, they founded Isthmus Partners as an independent asset management firm. The origins of Isthmus Partners client assets date back 75 years. Built on honesty and integrity, we have applied the same high quality core investment tenets for over three generations.
Our company name is both a geographical reference and an expression of our purpose. An isthmus is a strip of land connecting two larger land areas, usually with water on either side. Madison, Wisconsin—built on the isthmus that connects lakes Mendota and Monona—is one of only two major U.S. cities built on an isthmus.
We adopted the name because we’re proud of our city and for the symbolism of our partnership with clients to provide peace of mind and to connect them with their financial goals.
Comprehensive Planning for Peace of Mind
Everything we do for a client is rooted in a personalized financial plan. To develop a comprehensive plan, we begin by learning how our clients live their lives and how they wish to live them in the future. Then, we deliver solutions that allow for peace of mind.
Our planning and counseling process is best described as Discover, Design, Deliver.
Investment Counseling Process
- DISCOVER—Risk Tolerance & Financial Planning
- DESIGN—Portfolio Allocation & Investment Policy Statement
DISCOVER — We serve clients in all decades of life, including those accumulating assets in their working years and those in retirement. Many of our clients are multi-generational families seeking to preserve and grow wealth to benefit each generation in different ways.
We often work with successful business owners or other professionals who have excelled at transforming their drive, insights and resources into cash flows. Then, at some point, they arrive at the decision to shift gears: to sell their business or retire. This may be liberating—but it is often frightening as well, because no longer are these financially successful people trusting their own talents to generate cash flow and grow their wealth.
Instead, they come to us for financial planning and investment counsel delivered with the same high level of care they poured into their businesses or professions. In this way, our clients are freed to pursue other dreams and provide for philanthropic causes and the next generation. We become their confidant, carefully constructing and executing on their financial plan.
To be our clients’ partners, we need to genuinely know and understand them. We become personally acquainted with their lives, both now and their plans for the future. We gauge their risk tolerance using what we believe is by far the best and most illuminating tool in the industry, FinaMetrica®. Many people are surprised by the results—while at the same time intuitively recognizing their accuracy.
From there, we inventory all existing assets and carefully structure a goals and needs-based plan built around clients’ income requirements over time.
DESIGN — The best way to think about investment portfolio allocation is similar to how a business owner operates: what assets should I employ to meet my liabilities and generate a profit? What division of capital among my assets will give me the most favorable outcomes? What are the unseen risks?
As with businesses, the answers to these questions vary widely in investment planning. Therefore, we strictly avoid shortcut methodologies such as grouping clients into generic risk tolerance “buckets.”
Since our planning process fully embraces the individual, we develop a customized Investment Policy Statement specific to each client.
That document governs portfolio allocation. It is the design made possible by the prior discovery. We see the Investment Policy Statement as embodying our role as a fiduciary—a clear expression of the investment plan we believe is the best possible path forward.
DELIVER — Once a financial plan and Investment Policy Statement are in place, the next phase is deliver. Here, the most prominent aspect of our services is investment management. Click here to read more about our proprietary core equity strategies and our approach to fixed-income investments.
In addition to investment management, we deliver ongoing advisory services solutions to clients. For example, many clients have some assets—such as employee stock plans or employer-sponsored retirement plans—that may be best left in custody elsewhere. We watch over and coordinate these in addition to those assets we actively manage in our strategies.
And for all clients, our Client Services professionals are available to help address whatever financial needs may arise. Their expertise is complemented by powerful, cloud-based software available directly to clients to monitor their accounts and even, if they wish, to perform predictive analysis based on current assumptions of their progress toward long-term goals. These tools are often especially helpful when visualizing potential future effects of capital market fluctuations. At every turn, our purpose is to help clients achieve and maintain peace of mind.
How We Partner with Clients’ Other Trusted Advisors
To best serve our clients, we often work closely with their other trusted advisors.
In many cases, our skills and resources are aligned with clients’ estate planning attorneys, especially in the initial planning process, to ensure the financial plan we develop is fully consistent with our clients’ long-term desires.
Other examples include our work with clients’ accountants and tax attorneys to optimize the timing of investment sales and to provide direct online access to statements and other pertinent information. Another example is our work with bankers to help facilitate monthly cash needs and trust officers when implementing more complex trusts.
In all these ways and many more, clients benefit from a team of experts with complementary specializations.
The Isthmus Forum
What is a Fiduciary?
What does it mean to be a fiduciary and why aren’t all professionals who provide financial advice and guidance held to the same standards of care? For the past several years, there has been an effort underway to have financial advice and guidance, whether provided by a broker-dealer, insurance agent or registered investment advisor, unified under one fiduciary rule. We’ll explore the history of the rule and provide insights into how it is evolving today.
When is the Correction Coming?
As investors, we need to anticipate that equity markets will decline, as well as recover. This is, simply put, the ebbs and flows of market activity. However, the timing of such is nearly impossible to predict. If it were this simple, we’d all achieve this task. It is far more important to stay true to your financial plan and its corresponding investment policy.
Capital Gains & Capital Pains
Few of us like surprises, especially at tax time. As we are in the midst of tax season, investors are busy reviewing investment results and witnessing the impact of taxes on their taxable portfolio’s performance.
What’s Your Benchmark?
Many investors have jumped on the index bandwagon in recent years believing that it is no longer possible to beat an index. The fact is, with a little research, investors can find managers who have exceeded their respective index over time. Active management allows for the opportunity to add value over time.
A Dedicated Focus on Quality and Valuation
Our investment management strategies, like all of our services, are focused on quality first and foremost. From an investment perspective, quality refers to financial characteristics of individual companies such as durable earnings, low debt or high return on invested capital.
Our approach emphasizes capital preservation by focusing on companies we believe are likely to generate solid results throughout the market cycle. We do not chase returns or follow the herd into the latest momentum-driven stocks.
We’ve invested through multiple market cycles and measure our success by the fact that, with very few exceptions, our clients have stayed for the long-term, even when our focus on quality securities is out of favor as an investment style. Our clients recognize that we practice a discipline and honor our convictions.
Furthermore, because we purchase individual U.S. securities for clients, our model is efficient with regard to both transactional and management fees.
Isthmus Partners Proprietary Core Equity Strategies
We conduct our own research to select both large and small U.S. companies for individual purchase. We seek stocks that are both attractively priced and offer upside potential. Our process begins with our proprietary ExRI℠ methodology to generate sector specific quality screens that focus on factors or sets of factors that have historically led to excess returns. By using our proprietary process, we identify companies that meet our valuation and quality criteria and have attributes that may lead to excess return. We then narrow the universe of investable stocks to a smaller group for closer scrutiny.
Then, we conduct extensive fundamental analysis including analyzing financial statements, modeling future cash flows and participating on earnings calls. We establish target prices we expect a stock may meet over time and continue to closely analyze each stock we select for investment. We sell when a stock meets our target price or when our investment thesis changes. Typically, our turnover is low relative to many mutual funds and other investment strategies.
We employ this disciplined process across large and small cap core equity securities and have a GIPS-compliant (Global Investment Performance Standards) track record for each. Contact us for more information.
LARGE CAP CORE EQUITY
- Target 35 to 45 large-capitalization U.S. stocks
- Market cap greater than $2 billion at time of initial purchase
- Benchmark: S&P 500 Index
- Investment process characterized by risk control and patient objectivity
- Managed with tax efficiency in mind
SMALL CAP CORE EQUITY
- Target 55 to 65 small-capitalization U.S. stocks
- Market cap between $100 million and $2 billion at time of initial purchase
- Benchmark: Russell 2000 Index
- Investment process characterized by risk control and patient objectivity
FIXED INCOME — One of the ways we structure clients’ portfolios to match their specific risk tolerances is by varying the relative sizes of their equity and fixed-income portfolios. Within the bond allocations, we focus on U.S. Treasury and FDIC insured certificates of deposit, along with the highest-quality municipal and corporate bonds. We are conservative in our approach to fixed income, as we believe our investors are best served by primarily concentrating risk in their equity allocations.
INTERNATIONAL EQUITY — We believe most investors are well-served to have a portion of their equity portfolios allocated to non-U.S. stocks. This is the one area where we allocate to pooled investment vehicles (mutual funds managed by third parties) rather than purchasing individual securities on behalf of our clients. Although we don’t directly manage the international stock allocations, we closely monitor and evaluate the third-party managers. As with all our services, we serve as a fiduciary to clients.