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First Manhattan has been building portfolios with individual stocks since 1964, and the firm is looking for advisors who are interested in doing the same.

The article excerpted below was published in RIA Intel on March 14, 2022.

First Manhattan, a $20 billion, privately owned wealth manager in New York, is bucking an industry norm and looking for financial advisors who can cherry-pick stocks and deliver excess returns for their clients.

Because brokerages have eliminated trading commissions and thus lowered the cost of building an investment portfolio with individual stocks, customized portfolios designed to boost returns, lower taxes, or cater to a client’s preferences are now in vogue. But some say that the newfound interest in separately managed accounts and direct indexing is overhyped, and that the vast majority of wealth management firms and practices are ill-equipped to build custom portfolios for clients and should instead continue to lean on mutual funds and ETFs.

Zac Wydra, a portfolio manager and the CEO at First Manhattan, says his company is on the shrinking list of wealth managers who are still willing and able to deliver alpha.

“We’ve always led with the portfolio management and the research, and I think that will very much continue to be our ethos and our primary focus,” Wydra told RIA Intel. “However, we have a real sense of urgency about adding value…whether it be better stock pickers, holistic planning, [or] better infrastructure.”

The independent wealth management firm has been building portfolios with individual stocks and bonds for wealthy families and institutions since 1964, and today it believes in the practice as much as ever. First Manhattan now has 120 employees, and only about half are primarily client-facing. The others are in-house researchers who span all market sectors and operations professionals who support the advisors.

Wydra said that to retain its existing advisors and attract new ones, First Manhattan has been investing in its infrastructure, technology, and services. Advisors are now expected to have thorough financial planning skills, so First Manhattan has hired certified financial planners and other professionals, which allows advisors who manage portfolios to focus on that task and maintain an edge.