This year Silvercrest began its 20th year in business, to culminate in our 20th Anniversary celebration in May 2022.
Silvercrest 20th Year
Richard R. Hough IIIChairman and CEO
This year Silvercrest began its 20th year in business, to culminate in our 20th Anniversary celebration in May 2022. Founded on bedrock principles and a strong, proud culture, Silvercrest was at the forefront of the burgeoning independent Registered Investment Advisor business to serve clients as fiduciaries. It seems like an obvious choice in hindsight, but at the time it was largely an unproven model. Silvercrest’s launch came against the backdrop of storied private banking and investment counseling firms shuttering or sacrificing their independence to achieve scale, often at the expense of their clients’ interests. As with industry consolidation 20 years ago, unprecedented changes and waves of consolidation once again threaten business models dedicated to putting client interests first.
We have remained true to our founding principles. We never lost sight of our purpose: to provide excellent institutional-quality asset management and associated family office capabilities, delivered with superior client service and the highest ethical principles of a trusted fiduciary. Our partners remain dedicated to building an enduring franchise that will successfully serve clients for generations. Thanks to the loyal support of our clients, Silvercrest is stronger than ever with $31 billion in assets under management, an extraordinarily talented team of dedicated professionals, and a 98% client retention rate.
Founded in the wake of the Tech Bubble Crash and 9/11, and having successfully navigated the Global Financial Crisis shortly thereafter, Silvercrest is no stranger to adversity. And now that we have weathered a global pandemic, I have never been prouder of my Silvercrest partners and colleagues. We are grateful that our clients came to trust and rely on us more than ever, and thankful that we were well prepared to meet the unexpected challenge.
All of us at Silvercrest are focused on building upon the great legacy of our firm, true to the vision of our founding partners. We remain a proven and tested team with a long-term vision, intent on building a sustainable, innovative, forward-thinking, and enduring business for our clients’ benefit. By pursuing growth initiatives which are fundamentally compatible with our principles and our core wealth management business, we hope to continue to serve our clients with greater intellectual capital and resources.
We look forward to celebrating our milestone anniversary with you in 2022 and to working hard on your behalf for the next twenty years and beyond.
Economic & Market Overview
- Interest rates are an important influence on equity valuations
- Lower interest rates on bonds support higher valuations on equities
- Over the past ten years, interest rates have continued to decline making equities more appealing on a relative basis
Sentiment: U.S. Bond Yield/CPI YoY Perspective
Source: U.S. Department of Treasury, CPI: BLS
- Inflation is an essential influence on interest rates
- When inflation is elevated, investors demand higher interest rates
- When inflation is lower, investors will accept lower interest rates
- Low and declining inflation in the past 40 years has supported low interest rates
- Currently, inflation is in focus, primarily for the effect it may have on interest rates
- We expect inflation to remain modest and supportive of interest rates around 2% where they have been for much of the past ten years
Contributions to GDP
Source: Bureau of Economic Analysis & Federal Reserve Bank of St. Louis
- The COVID cycle led to a rapid decline and recovery in economic activity
- Much of the collapse and rebound was in personal consumption (navy segment)
- This cycle has been unusually fast, owing to the unusual nature in which it unfolded
- Going forward, we expect growth slightly above prior trends, with continued strength in personal consumption
- Total employment had been fairly stable for some time, with gains coming in the past five years, prior to COVID
- The COVID decline in employment has not been re-captured, despite the economy largely recovering
- This points to increases in productivity, and challenges in getting labor participation and employment back to prior highs
- We expect employment to more fully recovery throughout 2022
New York Fed
- The New York Fed tracks a variety of real time economic metrics providing a great gauge on economic activity
- While recent quarters have been exceptionally strong, this gauge will begin to return to prior trends
- We see 2022 growth of around 4%, better than long term trends, owing partly to continued recovery in the COVID cycle
TSA Travelers & Vaccinated Population
Travelers in Millions
Source: Transportation Security Administration & Macrobond
- Traveler counts have been improving consistently with the increase in vaccinated
- Pre-COVID travel counts were roughly 2.1 million daily, while recent counts have been approximately 2.0 million
- International travel has remained largely restricted, while domestic travel has strongly rebounded—in most cases to levels seen prior to COVID