Cresset By Kenneth Corbin

Charlie Maxwell planned to go to law school right after college, but a bout of mononucleosis put that plan on hold, and he decided to try his hand in finance, going to work with Cigna in Tampa, Fla., in 1986. Nearly 40 years later, he's at the top of his field.

Maxwell is co-chairman and co-founder of Cresset, a registered investment advisor with $65 billion in assets from high-net-worth and ultrahigh-net-worth clients. Maxwell works directly with more than 300 client households with around $3 billion in assets, though he spends much of his time onboarding new clients and matching them with the Cresset advisory team that can best meet their needs. A "100-year firm" is how Maxwell and other Cresset executives describe the enterprise.

"When you have a 100-year vision, your duty is to take care of the client first, make this a great environment for the employees that work in the business, and provide a great return to the shareholders in our business," he tells Barron's.

Barron's : How did you get into the industry?

Charlie Maxwell: I went to work right after college in the financial-planning industry, and I learned fee-based financial planning before most firms even knew what that was. My boss was an ex--Air Force guy, and he was all about process. He taught me about asset allocation, estate planning, business agreements, buy and sell agreements, executive benefits, insurance disciplines.

I had a really world-class training in the Tampa office of Cigna, spent three years there, and then I moved to Minneapolis with Cigna and was there from 1990 to 1999. That's when I started my first RIA, which became Meristem Family Wealth, which Cresset acquired. So I've been in the industry since 1986, and I've been trained in a multidisciplinary wealth management approach.

I watched the commoditization of the investment industry, and I knew that the model of giving holistic advice was where I wanted to be. The vision behind the first business I started was not only managing assets, but also understanding the client's estate, their balance sheet, their business, their cash flow, charitable planning, tax planning, and their approach to risk management.

What services beyond investing are most in demand?

Clients are really looking for a proactive process. We use what I call a time-and-action calendar, which lays out all the services we're going to provide to a client today as well as having a menu of services they can pull down later.

You may have a liquidity event today at 65. And you're thinking, "I need to take these proceeds and invest them," and you do, but you might also have a lot of estate and gift planning to do. You might want to explore more around philanthropy. You may now have assets that are flowing down to your kids, and you need to bring them into the discussion about the family wealth.

Risk management has become a really important issue as it relates to property and casualty -- look at the fires in California or the insurance markets in Florida. Families are faced with looking at not only what is the cost of my insurance, but can I get insurance? I think families are more interested in firms that can provide a holistic process and answer questions about financing, about insurance, estate planning, giving, and so forth.

What's worrying your clients these days?

It's an interesting time. We just had an inauguration, and any time there's a change in the White House, clients are going to try to interpret what the policies of the new administration are going to do to them -- not only personally, but professionally and financially.

There's a lot of sorting out being done right now to understand what impact things like tariffs, deportation, or various other policies are going to have. You may have two clients with very different views about the outlook for the country and the economy. I think an advisor's job is to really bring perspective to these families and make them focus on their global balance sheet, their approach to risk, their risk appetite, and their liquidity position. Advisors can help them see how much leverage they have in their lives and make sure they understand how well they're positioned. This kind of sorting out is very typical in a postelection cycle.

How are those conditions affecting your investing strategy?

When there's uncertainty, it provides a great opportunity to make sure our clients have the right liquidity posture. If we are going to have a lot of volatility, our clients do better when they know that they have three to five years of all their cash-flow needs accounted for in relatively high-yielding cash instruments. Then we make sure they have some high-quality fixed income to give them assets in years two, three, and four should we have a dislocation. Making sure the liquidity base is covered is always rule No. 1 in a volatile environment.

What market segments look attractive to Cresset?

I think we've seen a broadening in the equity markets over the past four or five weeks, where small-cap and international are actually outperforming the S&P 500. As tech has come off a little bit, we've been proponents of reducing our U.S. large-cap growth exposure and adding more high-quality dividend-paying stocks, small-caps, and emerging markets to broaden the equity exposure. We think returns might be higher in those categories than in the U.S. large-cap space.

How are you viewing alternative assets?

One of the hallmarks of Cresset is our capabilities in the private-asset space. Cresset Chief Investment Officer Jack Ablin talks about private credit as a relatively attractive asset class. That's typically loans to lower-middle-market type companies that have private-equity sponsors. We're not the only outside capital in that business, and those return assumptions are still in the double digits on an income-oriented return, and probably less risky than equities. We recently funded a real estate debt strategy, thinking that returns on that were more favorable than on the equity side. We're always looking at ways that we can use our access and our scale to get our clients positioned with private assets that may have less volatility than the public equity markets and more return potential.

If we can get our client families to accept the illiquidity that comes with private investments, we can unlock investment themes that they haven't been exposed to if they've been a typical retail investor with a 60/40 portfolio. If we can get clients to invest from 10% to 25% or 30% of their investible capital in private assets and they're willing to lock up that capital for a period of time, we think they're going to get paid for that illiquidity as a premium to the traditional equity markets and the traditional fixed-income markets, or even buying public REITs [real estate investment trusts].

Our work is to say, within that category of private assets, what's included? Is it private equity? Venture capital? Private credit? Real estate? Infrastructure? You could go on down the list. Then, how do we thoughtfully help you over the next three to five years become allocated in that space? It's not just what are we going to do today. It's going to be how do we build the plan over time? Our job at Cresset is to find the very best managers and then come in at scale where we can oftentimes influence the economics in favor of our clients.

Thanks, Charlie.

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