As we celebrate the 18th anniversary of our founding, I’d like to look back a bit, at how it all began…
During the early 2000s, Shari Greco Reiches and I both worked in the Chicago office of a NY based money manager. Shari and I go way back, having met in college at the University of Illinois, with both of us studying accounting, passing the CPA exam, and working at Arthur Andersen.
Our resumes had a lot in common, but most importantly, I realized that we both came from hardworking backgrounds and cared deeply about our clients.
One day during late 2004, I was chatting with Shari in her office, and I mentioned a professional colleague that we both knew. He ran a firm that catered to families that were worth $100 million or more. I said, Shari, why don’t we work for him and start a division for what I called “regular” families that needed financial planning and investment management?
She looked me in the eye and said, why do that for him? Let’s start a business ourselves!
Without any debate or hesitation, I said let’s do it, and we started planning. We are very analytical; we do a lot of planning.
We were going to build a firm based on the simple principle of doing what was in the best interests of the client. That meant leading with financial planning, becoming our clients’ trusted advisor as they made important decisions, and it meant abandoning the investment philosophy of trying to pick stocks in hopes that they would beat the market. Both evidence and practical experience showed that owning funds that tracked the markets’ performance closely was a far more effective strategy.
Back in 2005, our strategy was ahead of its time; today it’s well known that this approach, which we call Value Added Indexing®, outperforms most “active” fund managers.
We quit our jobs and started the firm in August of 2005, sketching out plans over bagels and coffee at the Panera in Glenview. We filled out the registration forms and hired lawyers. We interviewed custodians, money managers, found a lease, ordered computers... Neither of us could figure out how to use the postage meter. I narrowly avoided a workplace injury teetering on a chair trying to change a light bulb. (Start up tip — call maintenance.)
We knew we needed to take this time to get all the details correct. We opened our doors to clients in January 2006, starting with exactly nothing under management. While we were convinced we had the right approach, it wasn’t easy. I remember talking to one of my old clients, and he said your approach makes sense, but here’s the problem — it’s boring. Why not put 90% of clients’ funds in your strategy, and put the remaining 10% in a hedge fund that invested in Thailand? Why Thailand, I asked, I don’t know anything about Thailand. It doesn’t matter, just do something exciting, he said.
I’m glad I didn’t follow his advice. We stuck to our principles.
Today Shari and I are proud of our team of 14 people, working with about 400 families, managing over $850 million. We now call our wealth management approach The Maximize Your Return on Life Solution. So much has changed. But one thing has not.
We will always work in the best interests of our clients.
David Rappaport, CFP®
David is the Co-Founder of Rappaport Reiches Capital Management. He acts as personal CFO to entrepreneurs and corporate executives, providing organization and clarity in their finances. Please connect with David below. He loves to talk about investing, financial planning, and Aspiritech, a non-profit hiring individuals on the autism spectrum.