In InTrust You Should Trust

Jeff Diercks and InTrust Advisors fight the good fight for Truth, Justice and
Client ROI in a turbulent economy.

By Jay Winchester
Website: www.intrustadvisors.com

Although the huge window in his office offers a particularly appealing view of the shining minarets of the University of Tampa campus, the gently rolling swells of the Hillsborough River and the ebb and flow activity in downtown Tampa’s business district, it’s a view that Jeff Diercks, Managing Director of InTrust Advisors rarely gets to see. That’s because the larger part of his days in the office are taken up by monitoring a complex array of screens offering views of financial market software and models he uses to help client investments grow, no small trick in these recessionary times.

Intrust Advisors is a boutique investment management business focused on trend following and momentum based strategies for high net worth and institutional clients. “The goal of these strategies is to help our clients achieve their goals and objectives faster than traditional ‘buy and hold’ strategies,” says Diercks, an 11-year veteran in financial management. He is also a certified public accountant with over four years of audit and tax experience working for KPMG Peat Marwick in Indianapolis. After moving to Tampa, Diercks spent five years with a local firm, Tunstall Consulting, Inc. He earned his keep at Tunstall by raising venture, bank, private equity and public financing for growing middle market companies.

However, once the entrepreneurial bug bit, Jeff went his own way, although it wasn’t necessarily by design. “I got into the business by accident,” he recalls. “When I left corporate consulting in 1995, a co-worker introduced me to a wealthy family who happened to have a full staff managing their financial lives, what we call a family office.” The family was looking for a bright person to run the office and offered Diercks a unique package of benefits to entice him to move in that direction. Ultimately, they did not hire him as an employee, but as an independent contractor.

“What I found was that I loved working with their investments, especially the stocks and hedge fund investments,” he says. “However, I always had this burning desire to build a company.” It was a fire fed by his own family’s failure at building a business manufacturing ceiling fans. “This family essentially set me up in the business of managing the financial affairs of wealthy families,” he says. “I slowly added additional family clients as well as more traditional investment management clients. I also began doing hedge fund allocation work for high net worth and institutional clients.”

As happens with most entrepreneurial efforts, the early days were filled with struggles. “The business grew slowly, but consumed most of my energies as our revenues were not significant enough to hire the kind of specialized help to support and grow the business,” Diercks says. “With a small administrative staff, I was constantly pulled from family office chores to investment management to hedge fund visits to client calls and, of course, the ever present due diligence. It was too much; something had to give. My plan was this: if I could grow one of the businesses, I could sell or trim the other two to get down to a simpler business structure.”

At this juncture, it’s important to realize one key thing about Diercks: He is a man of faith. His Christian beliefs inform much of what he does and how he does it. This is particularly true of his business. There are those who say that God moves in mysterious ways. Diercks believes that God’s ways are only mysterious to us because we don’t have the long-range vision it takes to see where God is working and where He is heading.

Jeff was never able to overcome the struggles in his business in the way in which he planned. However, change did come. “God had a different way of dealing with my business,” he says. “Through a series of events that were way beyond my control, and over a period of 24 months, God essentially trimmed the business back to its smallest component, investment management. Much of this ‘God Sizing,’ as I call it, has only happened in the past two years. So here we are operating a unique business, but it’s our smallest remaining business unit. We are working hard to grow in the middle of the worst financial markets since the Great Depression. As a person of faith, I find it ironic how differently God works from the human approach to simplifying this business.” The firm’s investment returns were very good in 2008, giving them hope for growth as the country works its way through an economic recovery and a recent bear market rally.

Over the past few months, Diercks has been working to restructure InTrust’s business, looking for ways to differentiate it from financial advisory firms. In the course of this work, he discovered five elements he believes make InTrust Advisors different. “The elements that set us apart from our competitors are as follows: First, we actively manage client portfolios and apply constant supervision over such portfolios; second, we use trend following strategies in most client solutions where we are attempting to grab onto the meat or middle of market trends and ride them to completion; third, in rising markets we apply momentum overlay models to help us be in just the right asset class or investment at the right time; fourth, we apply a sophisticated risk management process to each portfolio including the use of stop losses, proper diversification and position sizing; and fifth, everything we do is in a separate account structure that offers complete liquidity and transparency of positions.”

As for the firm’s current services, InTrust offers three investment solutions: Market Adaptive Portfolio Solutions, the Active Hedge Overlay and the Personalized Portfolio Solution. A description of each follows:

• The Market Adaptive Portfolio Solutions (MAPS) is a series of model portfolios that meet most clients’ risk and return objectives. InTrust’s unique MAPSSM process allows the firm to tactically rotate and adapt to the constantly changing market environment. Ideally, InTrust seeks to profit from being in just the right asset or asset class at the right time.
  
  In traditional asset allocation, investors tend to have investment assets spread among a large number of asset styles in a very diverse portfolio. This ‘buy and hold’ approach seeks to reduce risk, smooth returns and achieve a market rate of return over a longer time horizon. In contrast, adaptive methods aim to mathematically identify and flexibly rotate to the most productive assets or asset classes as market conditions change. By striving to own a number of top performing stock groups in leading market segments, InTrust aims to enhance returns through a more rewarding form of diversification. There are currently six underlying MAPSSM asset classes that make up our model portfolios. These are U.S. sectors, U.S. style, international regions, countries, fixed income and core.

• The Active Hedge Overlay is a professionally managed, complementary position that attempts to protect another existing long-only portfolio in down markets and to enhance returns in an up market. The Active Hedge uses proprietary indicators to determine long or short signals on a high beta, ETF position to hedge or add performance to another portfolio, depending on the market’s direction. This solution provides a simple and cost effective way to hedge and enhance portfolio returns over complete cycles, contributing to long-term performance. It is not a pure sunk cost like other alternative solutions.

• The Personalized Portfolio Solution is a modified version of a ‘buy and hold’ strategy. InTrust builds a customized portfolio of exchange traded funds (ETF) for its clients and holds this portfolio until the firm’s proprietary market indicators signal that a market top has been reached. InTrust then shifts the portfolio on a position-by-position basis to cash, cash equivalents or traditional stores of value, such as gold and/or treasuries. When the proprietary market indictors signal a market bottom, the firm again puts its original customized asset allocation back to work.

This customized solution is a simple means of providing tax efficiency over complete Bull market moves. It puts a premium on capital preservation during destructive Bear market moves. InTrust’s historical data reveals that this simple process can add as much as two to three percent per annum to a client’s portfolio returns over a complete market cycle after taxes.
We know that the economy has ratcheted up stress levels all across the board. There is hardly a segment of the population that is not impacted in some way. Diercks deals with the stress of his work in several ways. “I work out regularly,” he says. “I am generally an active person.” While the workouts and activities help his body and mind, Jeff also focuses on building his faith and strengthening his family bonds. “I pray and read my Bible frequently,” Diercks says. “My family also helps me handle the day-to-day stress of being in this business through their support.”

Jeff Diercks has a burning passion for investment management and is driven to see InTrust’s clients receive a suitable return on their investments and their trust in him. When he does take a moment to glance out the window of his office, he sees the panoramic view of downtown hustle and bustle. But he also sees a bright future and real opportunity for financial growth. “We know we can outperform more traditional ‘buy and hold’ strategies,” he says. “Internally, we hold the goal of going one step further - generating positive returns in most market environments. I really am excited about our current investment processes, as well as our abilities to help our client achieve better returns than other more traditional alternatives. This motivates me!”

With Diercks, it really is all a matter of trust.