Thursday, March 01, 2007

Chippewa Partners

Investing Across Cultures

The founder of the first Native American-owned money management firm has a mission to serve the underserved, many of whom are millionaires.

By Adam PioreMarch 1, 2007- To hear Dean Parisian tell it, bad investment advice has plagued Native Americans since the moment after one tribe sold Manhattan to the Dutch for a few pockets' full of trinkets. Imagine how much those trinkets would be worth today if they'd kept up with inflation. (One estimate, made by compounding $24 at 6% from 1626 to today: $44 billion.) It's a trend the loquacious registered investment advisor, a former Drexel Burnham Lambert trader, has been fighting to reverse for more than a decade now, since he opened Chippewa Partners, the nation's first Native American-owned investment shop, in 1995.


From the dual trading desks in his home office in suburban Atlanta, Parisian preaches a simple message to one of the most underserved populations in the nation: "The greatest long-term risk to money, besides losing it, is the loss of purchasing power," he says. And maintaining purchasing power requires understanding and participating in the financial markets.
It is not an easy message to get across to his target audience. Consider this: 15% of Native American communities are more than 100 miles from the nearest ATM or bank, and 86% lack a single financial institution within their borders. But it's a personal mission for Parisian.
Today, perhaps more than ever, sound financial advice is crucial in Indian Country. Indian gaming is now a $7.4 billion industry, according to the Native Indian Gaming Association, with the wealth spread across major population centers around the nation. In San Diego County, for example, Native American casinos maintain a payroll of $22 million.

Meanwhile, Indian Country is experiencing explosive economic growth in other areas. Nationally, from 1992 to 1997, the number of Native American-owned businesses grew 84%, to a total of 197,300 businesses, and their receipts increased 179%. In 2004, nearly two million acres of Indian lands were leased for hydrocarbon production, producing over $254 million in royalty revenues, according to the Department of the Interior.

Perhaps the most promising news is the emergence of a solid middle class. Comprised of the growing number of college-educated Native Americans, this demographic, along with a lot of newly minted millionaires, will lead their tribes forward economically. "The challenge for us is to make sure the next generation has some understanding of money and markets, and where to go to find out about them," says Michael Roberts, president of First Nations Development Institute, a 25-year-old nonprofit that works to help the Indian nation take care of its assets. That's where Dean Parisian comes in.


As a member of the White Earth Chippewa Band of northern Minnesota and the son of a Bureau of Indian Affairs bureaucrat--he calls himself a "BIA Brat"--Parisian grew up on Western reservations that were mired in poverty, alcoholism and desperation. He attributes his ability to escape his surroundings to his parents, who encouraged him to go to the University of Minnesota. He paid his way through with summer jobs trapping beaver, muskrats and coyote.
After college, Parisian landed a job at Northwestern Mutual Life Insurance, then moved to Kidder Peabody in 1982. He found a home with high-rolling Drexel Burham Lambert in 1984. "Things were rocking and the world was awash in cash," Parisian remembers.

Parisian thus found it all the more appalling when he learned how the BIA Office of Trust Funds and Management was handling Native American money. "I saw money going into short-term government bonds, where you don't get any growth," he says. "Imagine where we'd be now if we'd put $1 billion in the stock market in 1989 or 1990, instead of putting it in bond money?" It was then that Parisian began to think about how he might serve his fellow Native Americans.
In 1995, he opened Chippewa Partners with about 25 clients. To keep overhead low, Parisian set up shop in his large North Atlanta home, located on a quiet cul-de-sac. He's still there today, delighting in the fact that instead of commuting, he spends his morning reading three newspapers. He prefers to keep his total assets under management below $25 million--he prefers to avoid "the headache," he says. Though he's considered hiring staff, he still works alone.


Parisian's office is a mishmash of state-of-the-art trading technology and old-style decoration. Multiple computer screens blink with the latest market data. Above them, the hides of deer and white timber wolves hang from the walls, as do horns, animal heads and pictures of Parisian's father in full Native American regalia. It's a unique workspace. But most of Parisian's clients will never see it. The majority "are in Ketchikan, Alaska, Fort Lauderdale and all points in between," he says.

Indeed, the first thing Parisian did when he went private was hit the road. "You can't fax handshakes," he explains. He crisscrossed the nation, meeting tribal leaders on their own turf, determined to lead them into the 21st century.

To his dismay, Parisian often found himself facing down blank-faced, risk-averse and suspicious tribal elders. "There's a lot of education needed with Native American money," Parisian says. "You've got to get people to really understand why they need long-term exposure to the stock market. Tribal councils are looking for safety, and there's volatility in the stock market."
Lynette Two Bulls, an independent financial consultant in Montana who worked for Dean Witter and Merrill Lynch, says she faced similar obstacles. She too grew up in a "traditional environment," raised by her grandparents as an Oglala Sioux on the Pine Ridge Indian Reservation in South Dakota. "You have to teach the basics," she says. "What is a stock, a bond? What is the S&P 500? A lot of mainstream people read it in the paper, but it's foreign to many tribal leaders."


The key to specializing in any particular ethnic group--even your own, Parisian learned--is balance, staying power and discipline. Today, Parisian estimates, about 50% of his clients are Native American tribes and individuals. He's balanced that out with clients he has met through newspaper advertising, investment seminars and radio spots on local and national talk shows. Parisian now relies on referrals to bring in new Native American clients.

"It takes longer than I ever thought to break even financially and to get over those early hurdles," he says. "You need to figure out up front what types of accounts you want and be very stringent. If you have minimums, stick to them. Stick to the types of personalities you want as customers. For young guys starting out, figure out what kind of clients you want and don't take nonsense. I'll tell some people to go across the street to Merrill Lynch."

Today, Parisian is perhaps best known in the Native American community for work that doesn't pay. "He's an advocate for financial education and a proponent of making sure not only tribal councils understand money and markets, but that the general population does too," says First Nations' Roberts.

Parisian has endowed a $25,000 scholarship fund for Native American business majors at the University of Minnesota, his alma mater. He hopes someday to raise funds for an endowment, which he would like to see grow north of $1 million. Often, when working with tribes, he'll gift back a portion of his management fees--usually about 10%--if they'll agree to put it in an endowment fund of their own that will grow over time. He encourages the tribes to use that money to fund education. Parisian is also helping Roberts and First Nation put out a culturally sensitive Native American investment manual.

As far as investment style, Parisian favors the Core and Satellite approach. The core consists of the Rydex S&P 500, an equally weighted index fund. For the satellites, Parisian favors small-growth stocks, exchange-traded funds and convertible bonds.

As a former stock jockey, Parisian considers his fee structure one of his best practices. Clients with more than $750,000 managed by the firm, or a net worth of at least $1.5 million, qualify for a performance fee, set up as a sliding scale of 0 to 1% of assets plus 20% of profits. Parisian will also accept a retainer or bill on an hourly basis.

He says that he gets better every day at trading, but what's more important is that Indian Country grows in its knowledge too. "Education is the key to breaking the cycle of dependency," he says. "And I am more committed than ever to helping the people who need help."

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Native American Advisors CHIPPEWA PARTNERS

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CHIPPEWA PARTNERS, Native American Advisors, Inc. is a Registered Investment Advisor, founded by Dean Thomas Parisian in 1995. The firm is a manager to an exclusive clientele and is closed to new clients. As a Registered Investment Advisor, our expertise developed over 35 years balances experience, integrity and tremendous work ethic. Dean Parisian is a member at the White Earth Reservation of the Minnesota Chippewa Tribe, a former NYSE and FINRA arbitrator and trader who began his career with Kidder Peabody and later worked for Drexel Burnham Lambert in LaJolla, CA. His philanthropic interest is in Native American education and he's endowed a significant scholarship for Native Americans at the University of Minnesota. His greatest accomplishment includes raising two sons and 26 years of marriage. The Parisian family enjoys outdoor pursuits at Pamelot, their farm in Tennessee and at the Ghost Ranch, their ranch on the Yellowstone River in Montana. For media requests contact the firm via email: ChippewaPartners (at) gmail dot com, on Twitter: @DeanParisian. Global 404-202-8173