The Importance of Transition Management

This month marks the 4th anniversary of COVID impacting our lives. Fortunately, in many ways it seems like ancient history, as most of the societal restrictions have been lifted, we are free to gather with family and friends wherever we want, and many of the economic repercussions of COVID policies are beginning to normalize. I find myself reflecting on the resilience demonstrated by the many individuals and institutions I work with, and the importance that decision-making has had on outcomes over this time. “The quality of your life is a by-product of the quality of your decision-making” is a quote I repeat daily, as I think about my own life, those of my family and of course, Cornerstone. This month also marks my 60th birthday, another milestone that has caused me to reflect on the past and contemplate the future.

I have been remiss in writing A View from the Corner Office recently, justifying it by “keeping my nose to the grindstone,” and focusing on the most important tasks that need to be accomplished each day to feel fulfilled and to meet my commitments to others. That said, a lot has happened since I last wrote, and I want to share the highlights with you.

From March through May 2020, the S&P 500 dropped 34%. From May 2020 through December 2021, the S&P rose more than 100%, before dropping 26% from January to September 2022. Since then, it has risen more than 40%. Over the same period, interest rates went from 200-year lows to the highest we’ve have had in 20 years, and inflation rose to levels we have not seen since the 1980s before falling to around 3% as we sit today. As a client of Cornerstone, you know we remained disciplined to our risk-based investment process throughout this tumultuous period. When markets declined, we took advantage of tax-loss harvesting, where appropriate, to save our clients taxes at year end. We also bought while prices were down. As markets hit highs, we sold where applicable to lock in gains and keep our clients’ portfolios at their agreed upon risk profile. We added and removed inflation hedges and deployed tactical shifts, where appropriate, and most importantly, we showed up, on-line and in person, to help explain what was happening to the best of our ability. I am also extremely proud of the level of service and responsiveness we provided. We are a caring company that is always In Your Corner.

Simultaneously, we continued to build our company, hiring 8 net new people over the same period. This brings the total Cornerstone team to 36. We invest heavily in people and their capabilities. Over the last two years alone, our people have earned more than 20 professional designations, bringing the current number to more than 50. Clients buy capabilities, and ours are always improving. We also excel at innovation and have invested millions in our technology over the last few years. This makes us efficient and accessible to you when you need us.

Part of our investment in people is in their leadership skills. We are proud to announce that Jessica Long and Jennifer Bauder became Principals of Cornerstone in 2022. Jessica is our Director of Operations and leads the team that processes all the account openings, transfers, trades and much of the reporting for our clients. Jen, as our Director of Retirement Planning, is responsible for managing 150 retirement plans across 18 providers with more than $3 billion in total assets. Both Jessica and Jen are highly organized, extremely efficient, and very responsive to client needs.

In the beginning of 2023, we added Chris Lakatosh and Tyler Papaz to our Executive Committee. Last week, Chris celebrated his 20th anniversary with the company, the 8th person to achieve this milestone. He began his career in investment operations, learning the business from the ground up, became a consultant, then senior consultant, Principal and now member of the Executive Committee. Chris also leads the business development initiatives for the firm. Tyler has been with us for almost 10 years and is the leader of our Private Wealth business, which represents nearly 40% of the revenue of the firm. During the last 4 years he also completed a master’s in taxation from Villanova to enhance his skills. Both Chris and Tyler serve on several community boards and coach their children’s youth sports teams. As part of Executive Committee, they influence the strategic direction of the company and have increasing decision-making authority.

In September 2023, we celebrated our 7th year of being a 100% employee-owned organization. We remain laser focused on our mission helping our clients meet their financial goals by utilizing fiduciary best practices as the basis for financial decision-making, managing risk in a responsible way, aligning our interests with those of our clients, and driving results.

As much as the world is in constant flux, I know that making good decisions for the firm will have good results for our employee-owners and you. Our goal is to be the multi-generational advisory firm to meet your needs for decades to come. We are committed to remaining independent, serving the best interests of our clients and not outside shareholders or investors. For several decades, we have been and continue to be intentional about building the next generation of leaders that will serve you. I am proud of the team members cited in this note and those who were not mentioned by name. I am also thankful for you entrusting us with your assets. We will be providing more regular updates going forward.

Commentary regarding the returns for investment indices and categories do not reflect the performance of Cornerstone Advisors Asset Management, LLC Cornerstone Institutional Investors, LLC, or its clients. Historical performance results for investment indices and/or categories generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. Figures contained herein are obtained from sources deemed reliable, but we do not guarantee its accuracy or completeness. Past performance is no guarantee of future results. Investments fluctuate in value. Securities offered through M Holdings Securities, Inc., a Registered Broker/Dealer, Member FINRA/SIPC. Investment Advisory Services are offered through Cornerstone Advisors Asset Management, LLC. Cornerstone Advisors Asset Management, LLC and Cornerstone Institutional Investors, LLC are independently owned and operated 6502232.1