Today we’d like to introduce you to Udo Herges.
Hi Udo, thanks for joining us today. We’d love for you to start by introducing yourself.
My San Diego-based investment advisory firm, Herges Capital Management LLC, was founded in 2013.
I left a well-paid investment banker position in Frankfurt, Germany, canceled my privileged private health insurance membership, and left all friends and family behind to take an entrepreneurial risk in a foreign country far away. One I had previously visited as a tourist but never lived in.
I called England my home for a couple of years while studying for my Master’s and PhD in Mathematics. An American investment bank subsequently hired me, mainly because I completed my PhD in just 20 months, and trained me several months at 7 World Trade Center in New York City. That building’s structure collapsed in the afternoon of 09/11 due to fire.
The driving force behind my risky life decision to start a new life abroad was the desire to do better for investors. I witnessed how investors suffered massive losses during the global financial crisis 2008-2009. Many are unaware of the various risks and the (hidden) fees they face. More transparency, alternative investments, better diversification, and greater fairness were the goals. I was convinced it could only be achieved with my own company, fighting established, big names. David versus Goliath.
Would you say it’s been a smooth road, and if not what are some of the biggest challenges you’ve faced along the way?
The start was very slow. There was no guarantee that the services and the new approaches I believed would be advantageous and right for investors would find demand. Trust needed to be built, the firm had to be advertised, fairs attended, and new clients had to be willing to try something different.
The most important – indeed, existential – ability of a CEO is to observe, learn, and adapt. In 2017, we extended your services and acquired a second license. That was crucial for survival. Herges Capital is now a Commodity Trading Advisor (CTA) and a Registered Investment Advisor (RIA) – a rare combination.
As you know, we’re big fans of HERGES CAPITAL MANAGEMENT LLC. For our readers who might not be as familiar what can you tell them about the brand?
The main reason people should work with us is what we are not: we are not a broker!
That distinction is far more relevant than most investors realize. As an independent investment advisor, we are 100% on the client’s side, adhering to the highest standard, the fiduciary standard. We invest as if it were our own money. Only 12% of all financial advisors in the U.S. are not brokers, so we are very rare birds. Some of my more well-read clients knew to avoid brokers but still had to spend weeks to find us.
We distinguish ourselves from other investment advisors through a far more diversified portfolio, including commodities (precious metals, industrial metals, energy, agriculture) and international real estate. The total investment costs are also generally lower than any competitor, as we not only avoid high-expense mutual funds but, where possible, avoid funds altogether. Instead, we invest in individual stocks and bonds. The resulting numerous positions allow for a highly effective tax-loss harvesting strategy. Investors typically avoid capital gains tax, year in and year out.
Highly unique: accounts below $100k are charged no management fees.
What are your plans for the future?
Herges Capital will grow organically. More clients will drive further hiring and expansion. The potential is unlimited and could extend beyond national boundaries into buzzing Asia.
Pricing:
- Accounts below $100k are not charged.
- Manager fees decrease as account size increases, eventually reaching 0.16% per quarter.
- Total investment costs are important, including fund expenses, taxes, and management fees.
Contact Info:
- Website: https://hergescapital.com/
- LinkedIn: https://www.linkedin.com/in/udo-herges
