Sterling Capital Management Review 2022 - MagnifyMoney
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Sterling Capital Management Review 2022

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Sterling Capital Management is a large investment advisory firm headquartered in Charlotte, N.C., with eight additional offices located across the U.S. Founded in 1970, the firm now has 175 employees on staff, and more than $70.1 billion in assets under management (AUM). Sterling Capital Management serves individual investors (including high net worth individuals) and other entities, such as charitable organizations and corporations. The firm primarily provides investment management services.

The bottom line: Sterling Capital Management is a portfolio management-focused firm with minimums starting at $100,000, and financial planning reserved for private clients.

  • Large advisory firm tied to an even larger financial holding company
  • No financial planning for clients below $10 million
  • Offers proprietary mutual funds and an ETF

All information included in this profile is accurate as of December 3, 2021. For more information, please consult Sterling Capital Management’s website.

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Overview of Sterling Capital Management

Sterling Capital Management was founded in 1970 and has since grown to 175 employees, over 70 of whom serve in investment advisory roles. The firm is an independently operated subsidiary of Truist Financial Corporations, which is a publicly traded financial services holding company. Sterling Capital Management is majority owned by Truist Financial Corporations. Partial ownership is split between four members of the executive team: Alexander McAlister, CEO, and the firm’s three senior managing directors, Robert Bridges, Scott Haenni and Mark Montgomery.

Sterling Capital Management’s pros

  • Competitive fees: Sterling Capital Management offers clients competitive pricing. The firm’s highest rate is 1.00%, and most of its fee tiers are far below that figure. For comparison, average industry fees typically range from 0.59% to 1.18%, according to a 2021 study by AdvisoryHQ.
  • Large firm: Sterling Capital Management is a subsidiary of a large financial holdings company, which means it has deep backing and resources.

Sterling Capital Management’s cons

  • Lack of planning services for non-private clients: If you’re not a Sterling Capital Management private client (which requires a $10 million initial investment), you won’t have access to wealth management or financial planning. Many firms have a baked-in financial planning option that accompanies investment management and if not, will at the very least offer financial planning services at an hourly rate. Sterling Capital Management does not offer either.
  • High minimum balance: You need at least $100,000 to work with Sterling Capital Management. Many financial advisor firms have minimums in the low thousands and also offer financial planning services for those who invest less than $10 million.
  • Performance-based fees: Advisors at Sterling Capital Management may charge performance-based fees, in which the advisor takes a share of a portfolio’s capital appreciation, as compared to certain benchmarks. This can incentivize advisors to take more risks in an effort to boost portfolio performance.

What types of clients does Sterling Capital Management serve?

Sterling Capital Management serves individuals, including those who are high net worth. For reference, the U.S. Securities and Exchange Commission (SEC) defines high net worth individuals as those with at least $750,000 under management or a net worth of at least $1.5 million. Additionally, the firm works with trusts and estates, as well as a wide range of institutional investors. While the vast majority of the firm’s AUM is derived from businesses, pension and profit-sharing plans, banks and government entities, the firm’s largest client group is individual investors, with an almost even split between those who are high net worth and those who are not.

Minimum initial investment requirements at Sterling Capital Management vary depending on the type of account and can range from $100,000 to $50 million. The firm doesn’t offer financial planning for regular clients, but if you have at least $10 million, you’re eligible to become a private client, which grants you access to personalized wealth management services.

Services offered by Sterling Capital Management

For individual investors with less than $10 million, Sterling Capital Management is exclusively a portfolio management firm. For those with $10 million or more, the firm offers wealth management services, which encompasses financial planning and retirement planning.

Within the portfolio management space, the firm offers a number of strategies, generally tied to different mutual fund objectives. The firm has its own proprietary mutual funds and an exchange-traded fund (ETF).

Below is a comprehensive list of services that Sterling Capital Management offers to individual investors:

  • Investment management
  • Wealth management services for private clients, including:
    • Estate planning
    • Wealth transfer
    • Tax planning
    • Retirement planning
    • Education planning
    • Private banking
    • Insurance and family risk management
    • Fiduciary services
    • Strategy development

How Sterling Capital Management invests your money

Sterling Capital Management’s investment philosophy is centered on defining and managing acceptable risk. The firm considers itself an objectives-based investment manager, meaning it aims to achieve returns that are attractive when taking into account the degree of risk involved.

For the most part, Sterling Capital Management invests clients’ money in proprietary mutual funds and ETFs. Individual clients can become a mutual fund shareholder directly from the firm’s website. Funds have different strategic focuses, which align with typical investor objectives and include equity and fixed income.

Clients also can choose Sterling Capital Management’s separately managed accounts program, which offers a host of equity and fixed income investments as well. Instead of owning a single mutual fund, separately managed accounts allow clients to own the underlying securities. Each strategy has its own manager.

Private clients (those with at least $10 million to invest) will work with Sterling Capital Management advisors to build a customized portfolio that meets their uniquely complex needs. Portfolio creation will depend on factors such as the client’s life and investment goals and risk tolerance, as well as their plans for retirement, wealth transfer and taxes. For these clients, the firm prioritizes long-term returns, asset allocation and tax efficiency, among other considerations.

Fees Sterling Capital Management charges for its services

As a client of Sterling Capital Management, you will pay a percentage of assets under management as part of the firm’s fees for its investment management services. The firm’s rates range from 0.15% to 1.00%, depending on the investment strategy used and the size of the account size.

In addition to an asset-based fee, you will be responsible for a variety of additional account fees such as brokerage commissions, transaction fees, custodial fees, fees charged by other managers and other fees and taxes on brokerage accounts and securities transactions. If you choose to use a wrap-fee program, however, most of the transaction costs and fees (from broker-dealers or banks) will be included in the overall fee that you pay.

Sterling Capital Management also allows performance-based fees. The rates of performance-based fees will depend on various factors, including a portfolio’s returns in comparison to an agreed upon performance benchmark. Keep in mind that these fees may create a conflict of interest as your advisor may have an incentive to make riskier investments since their compensation is based on your account’s performance.

Additionally, the firm may use a fixed fee arrangement when the work it completes for a client is not directly related to the client’s assets under the firm’s management.

Sterling Capital Management disciplinary disclosures

Sterling Capital Management has one reportable incident from 2017 involving an affiliated company. As a registered investment advisor, the firm is required by the SEC to disclose any legal or disciplinary events from the past 10 years that may be material to a client’s evaluation of the firm and its management.

The disclosure reported by Sterling Capital Management involves BB&T Corporation, a control affiliate of the firm. In 2017, BB&T Corporation agreed with the Federal Reserve and the North Carolina Office of the Commissioner of Banks (NCCOB) to a cease and desist order related to its compliance with anti-money laundering and bank secrecy act requirements. The NCCOB terminated the cease and desist in June 2018 after determining that BB&T Corporation satisfied the requirements.

For additional information, visit the firm’s Investment Adviser Public Disclosure (IAPD) page.

Sterling Capital Management onboarding process

If you are a private client, your experience with Sterling Capital Management will begin with a discussion of your needs and financial objectives. The information you provide will guide the investment decisions the firm makes for your portfolio, and include questions about risk tolerance, time horizon, tax planning, retirement, wealth transfer and more.

For investors with less than the private client $10 million minimum, mutual fund accounts can be set up through the firm’s online system. To do so, you’ll need to input your Social Security number, choose an account type and input your financial details.

You can expect to hear from the firm on a quarterly basis, when your advisor provides your formal reporting. This reporting includes a portfolio valuation and summaries of acquisitions and disposals, cash movements and performance. To note, wrap program clients’ account reviews and reports may differ.

How often you meet with your advisor is up to you. During these meetings you’ll discuss investment results and portfolio strategy. Objectives and risk tolerance are often reviewed as well.

Where Sterling Capital Management is located

Sterling Capital Management has offices in the following locations:

  • Burlingame, Calif.
  • Washington, D.C.
  • Jupiter, Fla.
  • Charlotte, N.C. (2)
  • Raleigh, N.C.
  • King of Prussia, Penn.
  • Richmond, Va.
  • Virginia Beach, Va.

Is Sterling Capital Management right for you?

Sterling Capital Management may offer the most to those investors with at least $10 million to invest. These clients will have access to a broad range of wealth management services, which includes financial planning, and also enjoy the firm’s lower than industry average fees.

For those with at least $100,000 to invest, the firm may be a solid choice for the investor solely looking for portfolio management with the understanding that assets will be invested in mutual funds and ETFs. Those seeking full service retirement and financial planning (with under $10 million to invest) would likely be better served by a more inclusive financial advisor. When choosing a financial advisor, it’s important to thoroughly consider at least a few options to find a financial advisor who is right for you.

The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.