Investment firm founder finds home in Carthage

Technology is allowing Forman to escape St. Louis for a slower pace in Carthage without neglecting his business.

The business Forman helped found – Buckingham Asset Management – is a pioneer in passive management. He is still involved in the firm’s day-to-day operations and conducts new business development for a subsidiary.

He spends a week each month in the office, a week on the road visiting clients and two weeks telecommuting from his home office.

A new approach

Forman started Buckingham with four associates who wanted to help affluent clients. He was working as a real estate syndicate. His partners included two certified public accountants and a business owner.

“None of us had a background in investing other than we were investors and not satisfied,” Forman said.

The company now employs about 94 and manages $1.8 billion in investments. Clients include individuals, not-for-profits, trusts, pension plans, small companies and retirement plans.

Forman describes the firm as investment advisers rather than broker dealers. The difference, he said, is broker dealers sell stocks and employ sales people.

“That’s how the industry works,” Forman said. “The problem is that most people do not realize it.”

An investment adviser, like a CPA, works for the client, he said. Buckingham, he said, promotes passive management. The theory is to try to capture the returns of the market rather than trying to beat the market.

“It has been a small piece of the market, but has grown over the past 10-to-15 years,” he said.

Passive management was a rare concept when Buckingham Asset Management opened. The firm’s breakthrough came when the founders discovered Dimensional Fund Advisors – a group of Noble Prize winners looking for like-minded advisers.

“We were one of the early advisers who adopted passive management,” Forman said.

“And, because we are a CPA-based firm, we started with a trusted relationship with about 2,000 clients.”

Diversification protected the firm’s clients from giant losses when the technology bubble burst.

“I think the key was creating an environment where everything was on the same side of the table as the client,” Forman said.

Two clients – including Larry Swedroe — became partners in the firm. Swedroe’s monthly column appears in Joplin Tri-State Business.

Today, a typical client has about $1 million to $10 million invested with Buckingham.

The business itself has diversified offering a wealth management division, estate planning, credit protection, and network of experts to help educate clients.

“Wealth management has been the new direction of the firm,” Forman said.

The advancing age of many of its clients is prompting Buckingham to provide financial education for clients’ children and providing clients’ guidance for retirement and managing last 30 years of life.

Forman said Buckingham is also teaching clients’ how to be charitable.

“There are tax benefits but it is also the right thing to do,” he said.

New service, new home

In 1997, the company added BAM Advisor Services to provide CPAs an outsource infastructure to provide investment services. Now BAM Advisors assists 110 firms with $8 billion managed.

Three years ago, Buckingham responded to client requests and formed an insurance arm. The service operates under the same principles of not actively selling to clients.

“It is only sold if it fits the risk profile,” Forman said.

New home

When searching for a new home with his wife, Patti, and three daughters, Forman drew a radius around St. Louis and considered communities within a reasonable driving distance. That’s how they discovered Carthage.

They found a home built in 1910 and “we pulled up and this was it.”

Forman still serves as the adviser for 60 clients and leads new business development for BAM Advisors. He said he usually spends a week in the office and a week traveling.

He said he was surprised by Carthage’s affluence and said the only drawback to the area is limited access to commercial flights.[[In-content Ad]]