Building a Family Practice Over 40 Years 

Lewis and Karen Altfest of Altfest Personal Wealth Management

By Kevin Adler

The story of New York City-based Altfest Personal Wealth Management is unusual, if not unique, in the annals of early Fee-Only firms.

Soon after Lewis Altfest launched his advisory business in 1983, his wife, Karen, marched through the door and declared that she would take a significant role as well. They have led the firm ever since. “We complement each other,” says Lew, the firm’s CEO and holder of a Ph.D. in investment analysis, as well as the CFA^®, CFP^®, CPA^®, and PFS^® credentials. “I’m more analytical, and she’s more social.”

With both parents as principals, the business was family dinner table conversation to the extent that their son Andrew is now president and will continue to run Altfest Personal Wealth Management when Karen and Lew retire. “In our family, there was no separation of talking business and pleasure,” says Karen, executive vice president, who also holds a Ph.D.

When Lew left a partnership at a Wall Street investment firm to become an independent financial advisor, the family’s cash flow turned negative. But he says neither he nor Karen wavered in their conviction they were doing the right thing. “Karen approved. I’m indebted to her and her support,” he says.

As the firm gained clients and Karen talked with Lew about the operation, she realized she could help it reach its potential. “We brought different things to the table. You want somebody who can look at your portfolio, but you need more,” she says. “I named myself the ‘client advocate’—and I made it my job that they got what they needed and were treated with respect.” To boost her financial planning skills, she added a CFP^® to her Ph.D. in history.

Clearly, the partnership worked. Altfest Personal Wealth Management has 700 clients and $1.6 billion in AUM served by a staff of 40.

Early Days of NAPFA

Like so many others, the Altfests turned to Fee-Only planning because they didn’t like the models operating at the time. “Financial planning was, Number One, sales motivated. The financial planner was the guy who sold insurance or was a broker,” Lew says.

Lew attended NAPFA’s first meeting in 1983, and he and Karen became regular contributors to the organization. They were immediately hooked by the client-first principles and the sharing of information about comprehensive planning. “It was so enriching to have a peer group; I couldn’t imagine figuring it out all by ourselves,” says Karen.

However, getting the message across to service and product suppliers to the fledgling Fee-Only sector wasn’t easy, Lew recalls. “I remember an insurance broker I brought in and asked how much the client should buy. He said as much as he can afford,” Lew says.

Today, it’s a better environment. Advisors and clients are more sophisticated, and so are the tools to serve them. “Clients are looking for a broader base of activities on their behalf, including such areas as insurance and estate planning. Industry software has enabled more detailed calculations and more personal attention, given the competition at lower fees,” Lew says.

In the technology space, Altfest Personal Wealth Management has its own contribution in the form of FP Alpha, a software product developed by Andrew Altfest (see Andrew’s article, “My firm’s technology-assisted path to growth,” in the August 2021 NAPFA Advisor). FP Alpha uses artificial intelligence to read wills, trusts, tax returns, and insurance policies and then visually summarize them and present financial planning recommendations for advisors. After its own advisors used the software and contributed feedback, the firm now licenses it to others while continuing to refine it and add functionality.

FP Alpha improves a firm’s efficiency and scalability, Karen says. “You’re not spending an afternoon poring over somebody’s estate plan because the AI technology reads it for you, tells you what’s in there, tells you what’s missing, and gives you hints on saving money on taxes,” she says.

Designed to work with an advisor’s existing software, FP Alpha integrates information across the financial planning process, which enables an advisor “to cover more territory,” Karen says. “To me, it’s the future.”

Diverse Clients, Diverse Staff

Being efficient is critical for any firm, but especially large ones like the Altfests’ that work with clients with wide-ranging needs. The Altfests describe their clients as coming from “a broad base of New Yorkers,” but with a concentration of people in the medical profession and women.

“Their needs vary but commonly include investment management, comprehensive financial planning, retirement planning, and estate planning,” Lew says. “They come to us because of trust in our knowledge, straightforward help, and, often, personal relationships.”

In the early years, Lew’s investment management followed the deep-discount strategy developed by Benjamin Graham and the value orientation built on Graham’s ideas by Warren Buffett. Over time, Lew decided to add stakes in “growth companies at discount prices.” Also, in recognition of the opportunities outside the U.S., the firm’s diversification strategy includes “large” positions in developing markets.

Tactically speaking, the firm began with mutual funds but now also uses individual stocks and ETFs, as well as some private placements for select clients.

Most recently, the firm has moved into private real estate deals, identified and managed by four staffers under Andrew’s leadership. The firm purchases individual distressed homes, fixes them up, and resells at a profit. “Real estate is one of the biggest financial assets in the country, and it provides true diversification,” Lew says. Buying and fixing homes “is like buying value-oriented stocks,” he adds.

Appropriate to the firm’s roots in Lew’s and Karen’s partnership, investment management at Altfest Personal Wealth Management is a family operation. Lew hired Mayukh Poddar, who had been at Goldman Sachs, and he was pleased when Mayukh proposed hiring his wife, Sush, who was at Morgan Stanley. “They’re very sharp people,” Lew says.

Natives of India who came to the United States for advanced degrees, the Poddars reflect another aspect of the Altfest firm: diversity. “We hire staff with brains who can help us,” Lew says. “We’re located in perhaps the most diverse city in the world, and we have taken advantage of this situation.”

In addition to several current staffers from India, team members come from China and the Dominican Republic. Diversity is nothing new at the firm. In 2006, Financial Advisor magazine wrote a cover story about the Altfests’ multicultural workforce and hiring practices.

Karen says she looks for people who have a desire to succeed. “Everyone here is smart, so new people have to fit in on the day we hire them,” Karen says. “We will help them learn to do the job. We’ve encouraged a lot of people to complete their CFP^® and a few to study for MBAs.”

Finding new talent takes being attuned to many channels. Lew and Karen taught financial planning courses at Pace University and The New School for many years, and they were often approached by students who were seeking internships or jobs. Some of those hires worked out extremely well, as people have stayed with the firm for 20 years, Karen says.

Nonetheless, hiring and retaining excellent people remains the firm’s biggest challenge, Lew says. One solution is to create career tracks to keep people onboard—and that continuity will keep the firm strong whenever Lew and Karen choose to retire, though Lew says he has “no plans to stop providing financial advice as long as I am capable of doing so.”

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Giving It Away Fee-Only financial planning has come a long way since Altfest Personal Wealth Management was launched in 1983, the year that NAPFA started. “I remember attending a large financial planning meeting in which the speaker introduced the one other Fee-Only planner in the room to roaring laughter as he said regarding product sales, ‘He is a person who gives it away,’” Lew Altfest says. But Karen Altfest says the Fee-Only advisors got the last laugh. “I never believed those naysayers who said you won’t be here in 20 years—they’re probably not in business.” Today, consumers have a better understanding of conflicts of interest, fiduciary responsibility, and comprehensive planning. As a result, Lew says, “Advisors who just do investments or superficial planning will have a greater and greater difficulty staying viable.” NAPFA played a major role in that evolution, both in educating the public and supporting independent-minded professionals who saw a better way of doing business. “Right from the start, I knew this was a group that would support us,” says Karen. “We used to take our son to conferences, and he would play chess with the vendors in the exhibit hall. It was like having a room full of cousins. It helped give us the confidence to go forward.” Everyone shared information, Lew adds. People didn’t hide behind proprietary methods or profess to have “secrets” on how to cut taxes or beat the market. The point was to come up with ways to help clients meet their financial and personal goals. Crucially, as NAPFA grew, it remained welcoming and inclusive, Karen adds. “This is hard to do when you get bigger and you do not know everybody by name. But this is how you keep everybody engrossed in what you’re doing and wanting to help,” she says.

 

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Altfest Personal Wealth Management

Location: New York City 

Website: Altfest.com

Year founded: 1983 

Number of staff: 40 

Number of clients: 700

Total assets under management: $1.6 billion 

Typical clients: Broad base of New Yorkers, but large concentrations of women and medical professionals 

Typical client needs: investment management, comprehensive financial planning, retirement planning, estate planning

Typical investments: mutual funds, ETFs, individual stocks, and some private investments. Also, direct real estate investments. 

Favorite financial planning website: Advisor Perspectives, Rethinking 65 

Favorite nonfinancial planning website: Washington Post

Piece of advice to fellow NAPFA members: “Know your strengths and delegate your weaknesses. Make sure your clients know you have a strong personal interest in them. It is why we use the name Altfest Personal Wealth Management.”