Case study

Sage Mountain transforms their alternative investment strategies with Navigator

Sage Mountain Advisors, an SEC-registered investment advisory firm advising on over $5 billion in assets, strives to be the “go-to solution for alternative investing.” Founded in 2018, the firm consults high-net-worth clients, ensuring that investment decisions align with client goals without any product affiliations. In early 2023, Sage Mountain transitioned from using spreadsheets to adopting Navigator to manage complex alternative portfolios and help scale its growing business more effectively. This technology move addressed their need for consistent and scalable portfolio management tools, particularly in cash flow forecasting and portfolio projections.

When we’re inputting a new fund, we can input that assumption one time, and it’s done — everyone is using the same assumption. From a consistency and scalability perspective, it’s been awesome. Navigator has 100% delivered on that.

Tony Cox, Cio

FIRM

Sage Mountain

LOCATION

Atlanta, GA

ESTABLISHED

2018

CURRENT ASSETS UNDER ADVISEMENT

$5 billion

HOUSEHOLDS SERVED

160

KEY CHALLENGES

Roadblocks to expansion

Inconsistent capital market assumptions
Sage Mountain heavily relied on manual, spreadsheet-based models, which varied across advisors. Each advisor’s approach to cash flow projections and portfolio forecasting was unique, leading to inconsistencies and inefficiencies across the firm. This variance made it challenging to maintain uniform firm-wide assumptions and further complicated portfolio management when assumptions changed. 

Difficulty scaling and managing growth

As Sage Mountain expanded, the limitations of spreadsheet models became more evident. For example, seemingly simple changes in assumptions often required manual updates to each individual spreadsheet. This manual process was not only time-consuming but also prone to errors. These challenges were only magnified as the firm tried to scale its operations to meet the needs of over 160 households and a rapidly growing asset base.



Challenges in alternative investment planning

Sage Mountain had a large percentage of their portfolios allocated to illiquid and long-term alternatives, which is particularly tricky when trying to manage their client expectations and plan for the long term. Projecting cash flows, managing fund commitments, and ensuring proper liquidity positioning were critical aspects of their portfolio management and planning process. Their manual spreadsheet models again couldn’t meet these needs, leaving room for potential inefficiencies and inaccuracies in long-term planning.

SOLUTIONS

Navigator empowers Sage Mountain’s growth

Navigator provided Sage Mountain with strategic solutions to these challenges, offering key features that aligned with their growth objectives.

Cash flow forecasting and pacing analysis
Navigator’s cash flow forecasting and pacing models proved critical for Sage Mountain, particularly in maintaining consistent capital market assumptions across all clients. The pacing models allowed them to help clients meet their target allocations, often uncovering key insights. One notable example involved a client with a seasoned alternatives portfolio, with about 50% allocated to illiquid investments. As the portfolio began to mature and some vintage years liquidated, Sage Mountain used Navigator to project what the portfolio would look like over time and when to advise clients to size in new commitments. With Navigator, Sage Mountain was also able to incorporate both the client’s personal spending estimates and one-off events like home purchases into the analysis, providing a comprehensive view of the client’s future liquidity needs.

Sage Mountain President & CIO Tony Cox emphasized, "When we’re inputting a new fund, we can input that assumption one time, and it’s done — everyone is using the same assumption. From a consistency and scalability perspective, it’s been awesome. Navigator has 100% delivered on that."

Customizable sample J curve based on historical data

Dynamic modeling for real-time adjustments
Navigator’s flexibility allowed Sage Mountain to advise on highly detailed, real-time adjustments to client portfolios. For example, one client had a large portfolio that required precise target allocation planning. Initially, Sage Mountain discovered that while the client was committing a significant amount to alternatives in dollar terms, these contributions were too low in terms of their overall portfolio allocation. Using Navigator, they were able to easily adjust the allocation to meet the client’s targets. They now run this report every quarter and can easily update assumptions based on client feedback or new commitments. As Tony Cox notes, “We can change one assumption and then instantly show them what that looks like. So Navigator is much more efficient on that front.”

See how different strategies play out over time

Improved client communication and transparency
Navigator’s capabilities enhanced Sage Mountain’s ability to communicate effectively with clients, particularly around the complexities of alternative investments. Clients were shown exactly how their portfolios were performing, how alternatives were expected to evolve and what cash flows they could expect over time. This transparency built greater trust and confidence in the firm’s investment strategies.

RESULTS

Navigator led to transformational improvements for Sage Mountain in key areas

Enhanced client communication and confidence
Sage Mountain has found that Navigator reports greatly improve client communication. For example, quarterly reports include clear visualizations of allocation percentages, helping clients understand how their alternative portfolios are performing and where their capital is invested. Senior Portfolio Manager John Darby highlighted how clients who previously relied on rough estimates now receive more precise, data-backed projections, making them more comfortable with long-term commitments to illiquid assets.

Incorporate Navigator’s projections into existing Addepar report templates

Increased operational efficiency
With a team of 25, Sage Mountain needed a solution that would ensure consistency across all advisors. Navigator significantly boosted the firm's operational efficiency by automating manual tasks and pulling live data from Addepar, providing a full financial picture for clients. The ease of refreshing reports ensures that all team members work with the same assumptions. Manually updating complex cash flow projections could take over an hour, but with Navigator, these updates now take just minutes, reducing routine workload by 91% and improving scalability.

Tony Cox remarked, “Having portfolio projections in a format that we can just refresh and show clients with some real numbers behind them has been really, really helpful.”

Supports closing new business
Navigator has significantly improved Sage Mountain’s ability to win new business. For instance, when competing for an RFP from a $150 million endowment, Navigator allowed the firm to present a detailed alternative investment strategy. They created granular projections by sub-asset class (e.g., private equity, venture capital, private debt), rather than treating alternatives as a whole. Similarly, Sage Mountain used Navigator to secure new business in the liquidity management space, where the platform’s ability to project various liquidity scenarios was pivotal in winning the client. Tony Cox expressed confidence, saying, “We can really help you plan around your liquidity situation,” and this was “a big part of the reason why we won.”

Better decision-making in alternative investments
Sage Mountain’s decision-making frameworks for alternative investments improved significantly with Navigator. Previously, clients often set aside excess cash, unsure how to time their alternative investment commitments. Navigator’s pacing models allowed Sage Mountain to project capital calls and distributions accurately, enabling clients to stay fully invested without unnecessarily holding cash. For example, Tony Cox mentioned that Navigator helped clients understand when and where future commitments could be funded through existing portfolio cash flows, ensuring optimal allocation without liquidity concerns. This proactive approach allowed them to maintain a balanced portfolio, even as alternatives fluctuated in value or timing.

Understand future commitments to maintain a balanced portfolio with cash flow projections