Investment giant CLS Investments minds the store so advisers can go about their day-to-day business
Marc Pfeffer is chief investment officer of CLS Investments, the award-winning exchange traded fund strategist firm that is hyper-focused on the ETF landscape. The firm was founded in 1989, founded managed funds in 1997 and bought its first ETF in 1998.
“We have continued to expand since then,” Pfeffer says, “We are working with several thousands of advisers, partnering with them offering distribution, compliance, marketing and technology.”
Pfeffer joined the firm in 2011, having been a Goldman Sachs portfolio manager and then founder at money management firm Milestone Capital Management. Milestone was ultimately acquired by CLS in 2011, which is when Pfeffer was formally introduced to the ETF industry.
“I had personally invested in ETFs. In terms of investing for clients, I hadn’t started until I joined CLS in 2011. I think ETFs are a vital tool for both individuals and advisers to utilise for managing money for themselves and their clients.”
Since 2011, ETFs have seen enormous growth. “ETFs have only expanded in terms of liquidity, the sectors they invest in, costs have decreased and also have tax advantages – there are so many benefits to ETFs,” Pfeffer says.
“If you want exposure to the financial industry you can find multiple ETFs for that. Active ETFs, which give you access to the best managers or passive, and very low-cost ETFs, which allow you to pick up a basket of financial stocks. There are over 2,000 and you can create an individual diversified portfolio with just ETFs,” he says.
CLS works with advisory firms or large financial institutions looking to outsource their CIO, with a personal touch.
“Every client or adviser is different, but generally speaking, it seems like they want to buy everything. When they come to us, they are looking for the support and expertise to discern what ETF is best for their needs. They also have access to CLS products.”
That said, he doesn’t observe specific trends in demand from his financial adviser client base. “Everyone wants something different and it’s different from a client who is at retirement age or has sold a business or is looking to accumulate wealth – it just depends on the client,” Pfeffer says.
“What they want is the foundation of knowing someone is minding the store so they can focus on what they need to do day-to-day.”
Pfeffer says risk tolerance dictates what advisers invest in and that’s a big way CLS helps clients. During the period of market volatility in March 2020, he says that business held up pretty well.
“We say to clients, ‘don’t take the short-term approach’ so, if they were diversified, focused on the long term, and they experienced a bout of volatility, they have come back in a big way.
“We used it as an opportunity in certain areas to add to risk, with values in the market we hadn’t see in a long time. We also saw opportunities to tax harvest or sell out of one ETF into another one - which we haven’t seen in a long time.”
In addition, the work from home phenomenon was not an issue for the firm either or for its clients with everyone having to be creative about communication.
“Technology is the critical thing,” Pfeffer says.