The Gerson Guarino & Meisel Group
(Citi Family Office)
New York, N.Y.
AUM: $2 billion
Jeffrey Gerson, founder of The Gerson Guarino & Meisel Group escorts me around the team’s midtown Manhattan office, describing the very specific roles each of his 10 team members plays in the group. Here is Christopher Guarino, who lets the naturally garrulous Gerson concentrate on prospecting and focuses on managing clients' portfolios. Here is Shawn Landau, a former attorney, who is the team's financial planner. Here is Laura Micelli, who does all the follow-up on 529 plans, and Michael Gammarati, who prepares many of the client proposals.
Everyone at Gerson Guarino has been with Citigroup for their entire financial careers, making the team unusually cohesive. The sense of shared destiny is useful in tough times, says the 45-year-old Gerson, who has been with Citigroup for 23 years. This business "can take its toll," he says.
Smith Barney's decision three years ago to eliminate what Gerson calls the "marriage penalty" has done a lot to promote the formation of advisor teams at the firm, he says. Under the company's current compensation scheme, a team is compensated at the payout rate of its highest producing advisor as long as every team member is in the top three quintiles of performance for his level. Thus, an advisor generating $2.5 million in fees, who would normally get a cash payout of $1.125 million (45 percent), doesn't have to worry about being dragged down by a sixth-year advisor generating a more modest $350,000 in fees.
"It's a win-win for everybody," says Gerson. Young advisors get a career path, senior advisors get support, and Smith Barney gets to move more of its 14,600 advisors into teams, a structure likely to encourage clients to keep their money at the firm for longer.
Aspiriant
San Francisco and Los Angeles
AUM: $5 billion
With $5 billion under management, Aspiriant (which adopted the new name in May, dropping its prior incarnation, Kochis Fitz/Quintile) is an example of both the enormous potential of RIA teams—and the challenges they face as they grow.
Aspiriant is built around a team approach that typically puts one very thorough generalist in the lead position with a client, and supports that advisor with one or two additional advisors. Each combination is carefully thought out, with the client in mind. Indeed, the combined firm's 32 principals may find themselves working with several different junior advisors, or more, over the course of a year.
"One of our motivations is to make it virtually impossible for any one person to have a book of business that is vulnerable to that person's longevity with the firm," says Aspiriant's 62-year-old chief executive, Tim Kochis.
Aspiriant was created through a merger late last year between Kochis Fitz and Quintile, whose aim was, in part, to increase the financial rewards of working at the combined company. Kochis and his counterpart at Quintile Wealth Management, Rob Francais, were looking for a way to create some liquidity for themselves and other top equity holders. Kochis and Francais believed they could create an internal market for the company's stock, and a ready source of capital for their firm's future growth, by letting a newer generation of advisors buy stock from the older one.
Francais will transition into the CEO role by the end of next year, while Kochis will begin to focus exclusively on client work and on his role as an industry ambassador. That may create some integration pain. But Kochis thinks Aspiriant will benefit from letting more young advisors get some skin in the game. "They're investing in an enterprise that has been growing at north of 20 percent annually," Kochis says. "Not too many things fit that description."
The MDE Group
Morristown, New Jersey
AUM: $1.6 billion
As a 30-year-old trusts and estates lawyer, Mitchell D. Eichen was doing something his education, a master's degree in tax law from New York University, had prepared him to do. But he felt frustrated by the limits of his interactions with clients. Their needs for financial advice exceeded what he was able to provide. So Eichen left a budding career at the Bank of New York and struck out on his own.
He has never looked back. Today, Eichen runs a thriving investment practice in Morristown, New Jersey, with 180 clients and $1.6 billion under management. “We have a very niche-y business," says Eichen. "Our clients are by and large senior corporate executives,” many of whom initially gravitated to Eichen because of his expertise in the area of executive compensation, including stock options.
MDE's domain of expertise has grown along with its business. All of the firm's senior staff members have professional training—they are either CPAs or CFPs or have M.B.A.s or law degrees. The company's top investment strategist, John Longo, is a Ph.D in finance and former hedge fund manager. He heads one of several teams of dedicated specialists.
These days tax projections are "part and parcel of every meeting we do with a client," Eichen says—but MDE also creates estate plans for its clients, finds them the best deals on mortgages and figures out what to liquidate when a client calls and says he needs $100,000 wired to his bank account, among other things. Every client works with a two- or three-person team of advisors—a senior wealth strategist and one or two junior advisors—as well as an operations specialist who is part of MDE's portfolio implementation team.
With MDE closing in on its 21st anniversary, Eichen has been rethinking his own role. Although he still maintains about a dozen client relationships and meets with many more clients informally, he is spending more of his time these days on high-level strategy, leaving MDE's day-to-day operations to Glenn Myers, who is now the firm's chief operating officer. Eichen, who has a J.D. from Georgetown University, admits it has been an adjustment to pull back in some areas. But he says, "If you are a person of intellectual curiosity, you evolve."