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Take Me to Your Leader

Updated: Jul 20, 2023

Back when I was a broker (we’re called wealth managers now) in the mid-1990’s, everybody was a sole practitioner. By that I mean that we all ran our own office, typically with an administrative assistant or two.

The firm provided us with proprietary research, free coffee and a phone. The research and the coffee were crap, but I basically got to run my own business. As long as I made money, I was pretty much left alone, which was good because I was never very good at “managing up.”

When I first started in the business, I spent a short time working for Merrill Lynch in Laguna Niguel. The branch manager acted like he was the CEO of the entire company, but he wore his double-breasted suits with the jacket unbuttoned, so I knew better. Every afternoon at 3:00, I would tear out of that office and drive straight up the 73 toll road to the Everen Securities office at 620 Newport Center Drive.

Everen was the old Kemper Securities; the employees bought themselves back from Kemper and renamed it Everen. So, it was an employee-owned broker-dealer with solid investment banking, and the manager there was a guy named Jeff Johnson-- one of the finest people I’ve ever met.

For 37 consecutive business days, I drove to 620 Newport Center, took the elevator to the 14th floor, flirted with the receptionist, and walked myself down the hall to Jeff’s office. And then, finally, on Friday, June 19th, 1998, Jeff Johnson left me a voicemail. “Alright, f***face, you’ve got a job. Be here on Monday morning at 6:30. Don’t call me. I’m leaving on a cruise and don’t want to hear from you. 6:30 on Monday, OK?” Click.

I saved that voicemail for two years.

Suffice it to say that I was fiercely loyal to Jeff, and I only started to develop my issues with “managing up” when they replaced him as branch manager with a former school teacher who thought we should all be selling annuities.

It happened when Everen got acquired by First Union, which went on to be acquired by Wachovia and ultimately Wells Fargo. I never really got into trouble with that manager because I left a week before the deal closed.

I went to Paine Webber, which was great until they got bought by UBS, a firm so large that it provided numerous opportunities to enrage upper management. Warburg Pincus got acquired by UBS at about the same time, and Warburg’s managing director and I walked out together on the same day after some conversation about “bureaucrats.”

Ultimately, I found myself back at Wells Fargo, which provided me with even more opportunities to burn out managers than UBS. Over the course of my time at Wells, they were busted for opening millions of fraudulent accounts and for forcing clients into unauthorized mortgage modifications. They had a massive breach of client data. They commanded their wealth managers to open unnecessary lines of credit. They settled a lawsuit that claimed their entire financial advisor training program was prejudiced against African-Americans. They recently settled a lawsuit for illegally signing up customers for insurance when they took out car loans during that period. They sold thousands of fraudulent life insurance policies to unknowing ATM kiosk users, more than 80% of whom did not speak English as their first language. Managing up with a crew allowing all that to happen would have been like Frank Nitti trying to manage Al Capone.

The beautiful thing about what they were doing was that they forced me to open my own investment advisory company-- there was just no possible way to stay there. I left Wells Fargo with an expletive-laced letter to my whole chain of management that blasted them for operating a criminal enterprise that was making the guys at HSBC look like a bunch of pikers.

That was the last time I managed up.


Since those first years at Merrill, the large wirehouse firms have come to favor advisory teams as opposed to solo practitioners because they create a client bond with the firm, rather than the advisor. Those firms have also shifted heavily to fee-based business (as noted in last week’s note) and to general financial planning services, which is probably not a coincidence.

The question is, How has that worked out for clients? (Please see the Wall Street classic “Where are the Customers’ Yachts” by Fred Schwed, Jr.)

There are more than 83,000 CFP certificants in the U.S. now, and with every major broker-dealer making such a big push into financial planning over the years, it’s worthwhile to examine the rigor of that exam. Here are a few sample questions:

1. A prudent investor will always follow the principle of diversification of investments because:

A. They seek to maximize risk

B. They seek to minimize losses

(Seriously? If you missed this, you will probably not be able to differentiate what my company does versus any other financial planner, so you may as well stop reading this column now.)

2. Which of the following is true of an unsystematic risk?

A. It affects all investments irrespective of diversification

B. It is unique to specific investments

C. None of the above

(We work with a bunch of scientists and engineers; most of them are able to explain what “unsystematic” means to me in a way that even I can understand.)

3. When the return on two different investment portfolios is negatively co-related, this indicates:

A. Both investments show a higher rate of return

B. Both investments show a lower rate of return

C. One investment shows a higher rate of return than the other.

(Ohmygod this test is so boring.)

You can find more sample CFP test questions here. Please have a look, and decide for yourself is this is a proper bar by which to evaluate the competence of financial advisors. I don’t mean to knock CFP’s; I’m simply suggesting that consumers should utilize additional layers of due diligence.


Most “advisory teams” are comprised of a senior advisor (i.e. The Boss) supported by a cadre of clerical staff. There is no advantage to continuity in the practice because, in most cases, the staff does not have the wherewithal to perform at the same level without The Boss. Their support may provide some leverage for the team to work with a larger number of clients, but it typically falls far short of providing the benefits derived from clients working directly with The Boss.

Alternatively, we find here at RG that quickly getting our clients to their advisor who they know and trust, who is knowledgeable about their financial situation and who is focused on getting them the help they need creates a very high degree of client satisfaction and builds a strong bond for the firm. Most of my clients have my personal cell phone number, and I frequently answer my own phone at the office.

Plus, as you can see from this column, I’m able to discuss politics, economics, pop culture, and any other general vulgarity that I think will help me to get my point across. I am not encumbered by a large investment bank’s need to deliver advice in broad strokes with little or no freedom to utilize other means of communication.

In this environment, one where the rise of “advisory teams” in the industry has coincided with the rise of fee-based business, where brokers spend less time managing portfolios and more time marketing to prospective new clients, and where passing a super-easy test is many advisors’ only qualification, we recommend:

  • Personally vetting your financial professionals

  • Embracing the portability of financial assets and the opportunity to move them if your advisor’s circumstances change.

  • Seeking the best advisor for you, not the closest or the biggest.

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