Twenty-Five Years of Preparation
Nothing really important is started without laying a good foundation, and handling investments is certainly important.

My foundation for investments began in 1974-75 in graduate school at The Wharton School when I was the President of the Wharton Investment Club, directing an investment competition for the MBA students each semester. Naturally, the studies for my MBA in Finance and Accounting were another important part of the foundation.

Professor Harry Markowitz, father of Modern Portfolio Theory, was teaching at Wharton, and those were really heady times. He was proving his theories about managing risk by diversifying investment portfolios -- this was absolutely cutting edge in the investment world, and we were right there in the middle of it all. His discoveries were so profound that he subsequently received a Nobel Prize for his work. So I learned portfolio diversification "at the hands of the master" and was fascinated from the start.

As my CPA career developed, I had many clients with basically unmanaged portfolios. They would complain to me that their broker had called with their latest trade and the client asked my opinion. Each time, there were two major barriers for me to give the client a meaningful answer:
-- Giving advice on a specific security would be a violation of security laws, since I was not licensed, and
-- I couldn't advise on one security out of context of their entire portfolio and investment objective.

So I found myself reviewing a lot of portfolios from a larger point of view and giving the clients advice on how to manage their brokers to invest with an overall objective rather than merely selective opportunities.

Frequently, clients would spread their moneys around to two or three brokers and not let one broker know about the others. This meant that there was no one managing the client's overall portfolio. Each broker was handling their portion, but with no coordination at all with the others. Many times, clients had liquidity in each portfolio, ending up with substantial underinvested funds.

Meanwhile, the investment world changed. Mutual funds have become commonplace. In order to achieve meaningful diversity, you needed about $100,000 in 1975 ($350,000 in today's dollars) in order to have positions in a variety of stocks without incurring very high "odd lot" commissions. TODAY, a portfolio can be well-diversified by holding 15-20 well-chosen mutual funds with as little as $5,000 in each fund.

So, the tools for diversifying a portfolio have now become available for more than the ultra-wealthy. I have been involved in the investment management world for over 25 years, but it was not until recently that the right opportunity arrived. In 2002, the time became "right" to begin giving my clients the professional, objective care and attention that they warranted.


Expanding into Investment Management
Until the late 1980's, CPAs were barred from accepting commissions, and therefore could not engage in securities work, because that was the sole compensation method at the time. Brokerages developed programs for CPAs to "sell product" and some CPAs went down that path. I never did, because I have always felt that commissions are a reward for making a sale, when the reward should be for my good judgment and investment management.

The Registered Investment Advisor designation was created in the Securities Act of 1940, but was used almost exclusively by the Wall Street investment banking firms until the 1990's when Charles Schwab and other discount brokers began recruiting investment advisors as their "sales force."

But still, many organizations had sales quotas and favored products that they "pushed" and that was unacceptable. It took me a few months in 2002 to research the securities laws and discover that I could create and register my own investment advisory firm and then "hang my license" with my firm. Thus, Leeward Advisors LLC was born.

In creating Leeward Advisors, I could eliminate any sales or marketing influences that would detract from the client's best interests. Leeward Advisors is a fee-only advisory firm that accepts no commissions. Everything that we do is guided by securities laws and the client's best interest, period.

Please go to the Michael W. Fisher CPA PC web site for more information about my CPA life and talents.