Review of Congress Wealth Management

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Updated on Thursday, March 5, 2020

Congress Wealth Management is a registered investment advisor (RIA) headquartered in Boston with additional locations in Arizona, Connecticut and California. The firm, which oversees nearly $1.8 billion in assets under management (AUM), has 12 employees performing investment advisory services.

These advisors work to create customized portfolios for their clients, who must have at least $500,000 in investable assets. The firm describes itself as a “manager of managers,” as it often builds portfolios using funds run by other investment managers.

All information included in this profile is accurate as of March 5, 2020. For more information, please consult Congress Wealth Management’s website.

Assets under management: $1,794,294,014
Minimum investment: $500,000
Fee structure: A percentage of AUM, ranging from 0.50% to 1.25%; hourly fees; fixed fees
Headquarters: 155 Seaport Blvd.
3rd Floor
Boston, MA 02210
www.congresswealth.com
(617) 428-7600

financial advisor

Overview of Congress Wealth Management

Congress Wealth Management launched in March 2009. The firm is run by a team of financial professionals, and its management team has majority ownership of the firm, which they hold through two LLCs for legal purposes.

Congress Wealth Management has a total of 22 employees, 12 of which provide investment advisory functions. The firm’s employees hold a mix of certifications, including the chartered financial analyst (CFA) and certified financial planner (CFP) designations, as well as JD, master’s and other advanced degrees.

What types of clients does Congress Wealth Management serve?

The vast majority of the firm’s AUM currently comes from serving high net worth individuals. However, Congress Wealth Management also works with a number of non-high net worth individuals as well as a handful of charitable organizations, pension and profit-sharing plans, corporations and other business entities, trusts and estates. The firm has clients from a variety of industries including technology, medicine, higher education, entertainment and finance. Congress Wealth Management takes clients from a range of backgrounds and ages.

To work with Congress Wealth Management, a client must have at least $500,000 in liquid, investable assets. One of the firm’s representatives told us Congress Wealth Management used to require new clients to have at least $1 million in investable assets and would only accept clients with $500,000 if they were referred by Fidelity. The firm is changing that policy, however, and now accepts clients with at least $500,000, even without a referral.

Congress Wealth Management can also make exceptions at its discretion based on factors like a long-standing relationship with the firm, expectations that the client will grow their AUM and the type of strategy and investment advisor selected.

Services offered by Congress Wealth Management

Congress Wealth Management’s main service is providing investment and wealth management. Nearly all of the firm’s clients use a discretionary management system, meaning Congress Wealth Management has the authority to make trading decisions on their behalf. Only a small number of the firm’s accounts are non-discretionary, which means the client must approve all trades.

Congress Wealth Management often works as a “manager of managers” for its clients, meaning it builds a portfolio of funds run by outside advisors and then supervises the arrangement to make sure it meets their clients’ goals.

Additionally, Congress Wealth Management offers financial planning services, both as part of one of its investment management agreements or as a standalone service. For extremely high net worth clients, Congress Wealth Management also offers a family office service to help with more complex issues like estate planning, charitable giving and wealth distribution.

Here is a full list of services offered by Congress Wealth Management:

  • Investment advisory services and portfolio management
  • Financial planning
    • Trust and estate planning
    • Charitable planning
    • Tax planning and management
    • Cash flow forecasting
    • Spending analysis and budgeting
  • Pension consulting services
  • Seminars and publications
  • Collaboration with clients’ lawyers, accountants, etc.

How Congress Wealth Management invests your money

Congress Wealth Management creates a customized portfolio for each client based on their goals, risk tolerance, time horizon, cash flow needs and other factors. The firm’s investment philosophy centers on the belief that returns come from a portfolio’s overall asset allocation. Rather than trying to pick individual stocks, bonds and other investments that might generate higher returns, Congress Wealth Management focuses more on finding the right balance of different assets for its clients instead.

The firm does this by dividing client portfolios into two parts, known as a Core and Satellite approach. The first part focuses on core strategies and invests in more traditional assets like stocks, bonds and mutual funds. The second part goes toward satellite strategies, which invest in more exotic and riskier but potentially higher-earning assets like commodities, private equity, real estate investment trusts (REITs) and emerging market securities. With this approach, Congress Wealth Management believes it can create portfolios for individuals that match the results of much larger institutional investors.

Since the firm often uses funds from outside investment managers for these strategies, it performs due diligence on each outside advisor to make sure they can meet a client’s goals. Congress Wealth Management then reviews the arrangement at least once a year to make sure the outside manager continues to be a good fit.

Fees Congress Wealth Management charges for its services

Congress Wealth Management primarily charges for its portfolio management services based on a fixed percentage of a client’s assets under management. When someone signs up, the firm will set their rate based on the size of their portfolio, the complexity of their account and the strategies and managers they want to use.

The client’s rate will also depend on whether they only hire Congress Wealth Management, in a single contract agreement, or if they work with an outside investment manager recommended by Congress Wealth Management under a dual contract agreement. Congress Wealth Management charges between 0.50% to 0.90% per year for dual contract agreements and between 0.65% to 1.25% for single contract agreements. The firm charges a lower fee for dual contracts because the outside investment manager will charge its own fee in addition to the fee charged by Congress Wealth Management.

Contract agreement Annual asset-based fee
Dual contact agreement (Congress Wealth Management plus an outside investment manager) Between 0.50% to 0.90%, plus the outside manager’s fees
Single contact agreement (Only Congress Wealth Management) Between 0.65% to 1.25%

For additional financial planning and other services that go beyond the scope of the firm’s wealth management program, Congress Wealth Management could charge an asset-based fee, a fixed fee and/or an hourly fee, depending on the situation. The firm will discuss the terms when a client signs up.

Finally, clients will cover the expenses for making the investments in their portfolio, though that money will not go to Congress Wealth Management.

Congress Wealth Management’s highlights

  • Customized portfolios for each client. Every client receives a unique portfolio tailored to their personal situation and goals. The advisors at Congress Wealth Management then supervise the investments over time and update the portfolio when a client’s needs change.
  • Goes beyond basic investments to increase returns. Besides standard stocks and bonds, Congress Wealth Management also integrates more sophisticated assets into its portfolios, such as private equity, commodities and REITs. This adds diversification and can potentially increase returns.
  • Highly-credentialed investment management team. The investment team at Congress Wealth Management holds a mix of high-end credentials, including CFA and CFP designations, as well as JD and master’s degrees.
  • Services for extremely-wealthy clients. For ultra-high net worth clients, who are investors with millions of dollars, Congress Wealth Management offers a family office division to handle more complex needs like estate planning and multi-generational wealth planning.

Congress Wealth Management’s downsides

  • Above-average asset management fees. Congress Wealth Management’s asset-based fee can range up to 1.25% for single contract agreements. In comparison, the median fee for portfolios over $1 million is 0.85%, according to Kitces, a blog for financial advisors. While Congress Wealth Management charges less for dual contract arrangements, clients are then paying an additional fee to the outside investment manager.
  • Fee schedule not publicly available. Since Congress Wealth Management’s asset-based fee varies on a case-by-case basis, clients won’t know exactly how much they may pay without first meeting with a representative.
  • Only available for wealthy investors. Someone must have at least $500,000 in liquid investable assets to sign up. Though this is below the threshold for a high net worth individual as defined by the SEC, it is still a significant investment.
  • Use of outside investment managers can increase risk. Even though Congress Wealth Management performs due diligence on its outside investment managers, this still means the firm is trusting a third-party to behave responsibly. Congress Wealth Management once faced a disciplinary disclosure because it trusted the wrong investment manager (see next section).

Congress Wealth Management disciplinary disclosures

If an SEC-registered firm faces some sort of serious disciplinary action, whether a criminal charge, a government sanction or a lawsuit, the firm must report what happened on its Form ADV, paperwork that all registered firms must file with the SEC. Congress Wealth Management had one such issue to report in its Form ADV.

The disciplinary disclosure was the result of an SEC fraud case brought against another investment manager, F-Squared Investments, Inc., in Dec. 2014. F-Squared admitted to making false claims about its AlphaSector Index strategy and its performance.

Congress Wealth Management invested some of its client assets in this strategy from May 2009 to Oct. 2013 and repeated F-Squared’s claims about investment performance in its marketing materials. In Dec. 2013, Congress Wealth Management began to question the accuracy of F-Squared’s claims and terminated the relationship.

Still, the SEC believed that Congress Wealth Management was negligent by publishing this inaccurate information in its materials. Congress Wealth Management did not admit to any wrongdoing but agreed to pay a $100,000 fine to settle the matter.

Congress Wealth Management onboarding process

Anyone interested in working with Congress Wealth Management can reach out using the contact form on the firm’s website, which requests your name, email address and what type of investor you are (individual, financial or institutional). Interested investors can also call the closest Congress Wealth Management office for an appointment; the firm has offices in Boston; Scottsdale, Ariz.; Westport, Conn.; and Orange City, Calif.

During the first consultation, Congress Wealth Management advisors will get to know the potential client’s goals, as well as their income and time horizon. From there, the firm will recommend a portfolio. If the client likes the recommendation, they’ll sign a contract with both Congress Wealth Management and with the outside investment advisors managing the funds (only if they sign up for a dual contract agreement).

Whether it’s a single or dual contract agreement, the Congress Wealth Management team will design and supervise the overall portfolio. From there, the firm will schedule quarterly check-ins to make sure the investments are still appropriate for the client’s needs and to make any necessary updates.

The bottom line: Is Congress Wealth Management right for you?

If you can meet the $500,000 investment minimum and want a customized, sophisticated portfolio, Congress Wealth Management could be a good fit. The firm’s highly-credentialed team goes beyond using the standard asset classes of stocks and bonds and instead uses more sophisticated products in an attempt to increase returns. Since Congress Wealth Management partners with outside investment managers, this also provides more options for designing portfolios.

But this approach does have its downsides. Fees can be higher than average at Congress Wealth Management, and you won’t know exactly how much you may end up paying until you meet with a representative.

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