This $1.7 Billion New York City RIA Is Buying Bitcoin And Dilapidated Houses For $5,000

The Evolution of Financial Advice: From Sales Commissions to Fiduciary Standards

The financial advisory landscape has undergone a significant transformation over the past four decades. Historically, financial brokers were driven by sales commissions, recommending products that offered the highest fees rather than those that best served the client’s interests. This environment often prioritized the broker’s earnings over the client’s financial wellbeing. However, a paradigm shift occurred with the rise of the fiduciary standard, which mandates that advisors act solely in their clients’ best interests. Today, most financial advisors are bound by this standard, typically earning a flat fee or a percentage of assets under management. This shift has fostered greater transparency and trust between advisors and their clients, ensuring that financial recommendations are aligned with the client’s goals and needs.

One of the pioneers of this fiduciary model is Lewis Altfest, who embraced the fee-only approach early on. In 1983, Altfest co-founded L.J. Altfest & Co., now known as Altfest Personal Wealth Management, after leaving his role as director of research at Lord Abbett & Co. At the time, many doubted the viability of a fee-only model, with critics arguing that it wouldn’t generate enough revenue. Altfest, now 84, recalls the skepticism he faced: “People said that you can’t make money in fee-only financial planning.” Yet, his firm not only survived but thrived, managing approximately $1.7 billion in assets today.

A Family Legacy: Building Altfest Personal Wealth Management

Altfest’s success is not just a solo achievement but a family affair. His wife, Karen Altfest, joined the firm in 1987, starting out with administrative tasks before becoming a certified financial planner and advisor in her own right. Today, she specializes in advising women, particularly widows, on financial wellbeing. Karen’s work extends beyond traditional planning, as she hosts events to educate women on financial literacy and independence. Her dedication has made her an invaluable asset to the firm and its clients.

Their eldest son, Andrew Altfest, 44, is now the president of the firm. Growing up, Andrew was constantly exposed to the world of finance, often listening to his parents discuss financial planning during car rides. This early immersion sparked his interest in the field, leading him to intern at the firm at just 14 years old. After completing college, he joined full time and has since become a key driver of the firm’s strategic direction. Today, the firm serves approximately 600 households, with a special focus on healthcare professionals such as dentists and physicians, who make up the largest segment of their clientele.

A Personal Touch: Client Relationships and Tailored Advice

The Altfests take pride in their client-centric approach, which sets them apart from larger brokerage firms. “We are not a big brokerage house where you go into a glass box and sit with somebody,” Karen Altfest explains. Instead, the firm fosters deep, personal relationships with clients. “Our clients want to hear about our grandchildren and want to tell us about their grandchildren,” she adds. This personal connection is at the heart of their philosophy, ensuring that clients feel valued and understood.

The firm’s investment strategy has traditionally focused on a mix of stocks and bonds, but in recent years, alternatives have gained prominence. For instance, the firm has been actively purchasing individual municipal bonds for clients and exploring alternative investments such as real estate and infrastructure. Andrew Altfest notes, “We’re still active in purchasing individual municipal bonds for clients. We have also been investing in alternatives in the last few years, in part because we didn’t think bonds were that attractive.”

Diversifying Portfolios: Alternative Investments and Thematic Strategies

Altfest Personal Wealth Management has been at the forefront of incorporating alternative investments into client portfolios. In response to growing demand, the firm recently added Bitcoin to its offerings, purchasing it for clients through the Fidelity Wise Origin Bitcoin Fund (FBTC). Additionally, the firm has been emphasizing infrastructure investments, particularly in utilities, materials, and railroad companies. Such investments are considered more defensive, offering stable income streams and protection against inflation.

One of the firm’s most innovative strategies is its focus on distressed real estate. Spearheaded by Andrew Altfest, the firm began exploring this niche by buying homes out of foreclosure for as low as $3,000 to $5,000. Today, the firm invests in distressed single-family homes, land parcels, and occasionally new construction, primarily in markets like Allentown, Pennsylvania. Most purchases are made for less than $100,000, and the firm has dedicated 10% of its 40-person team solely to real estate investing. This strategy has proven to be one of the strongest performers in the firm’s portfolio.

The firm launched its first real estate fund in 2021, followed by a second in 2023, with a third planned for this year. Andrew Altfest emphasizes, “Distressed single-family homes are our biggest focus, but we also buy land parcels and sometimes new construction.” This thematic approach reflects the firm’s ability to adapt to market trends and uncover undervalued opportunities for clients.

Looking Ahead: Market Outlook and Strategic Optimism

As the firm looks to the future, the Altfests are cautiously optimistic about market returns. Following two consecutive years of S&P 500 returns exceeding 20%, they predict more modest, single-digit returns for 2025. Lewis Altfest notes that while corporate earnings remain strong, economic risks such as President Trump’s tariffs could impact the market. He explains, “Tariffs will be implemented and are meant to fund the intended reduction in taxes. However, they will be materially lower than advertised and more selective by country.”

The firm also expects the Federal Reserve to maintain its current stance on interest rates, with possibly a small reduction if inflation remains under control. Altfest believes that while the market could see another year of rally, high valuations leave little room for error. He advises clients to prepare for short-term volatility, driven by uncertainty from policy decisions and economic shifts.

In conclusion, Altfest Personal Wealth Management stands as a testament to the power of integrity, innovation, and family legacy in the financial advisory industry. From its early days as a pioneer of the fiduciary standard to its current emphasis on alternative investments and client-centric relationships, the firm continues to evolve while remaining true to its core values. As it looks ahead, the Altfests are positioned to navigate the complexities of the market, offering tailored advice and strategic insights to help their clients achieve long-term financial success.