Debbie Jorgensen's book is pushing a half billion dollars, but the true measure of her success is this: She now gets to tell her company's bosses what to do.
Jorgensen, with nearly two decades of experience at Merrill Lynch, has recently been appointed head of the firm's advisory committee to management, a group of 14 top producers who help shape the firm's approach to client services, broker training and other aspects of the financial advisory business.
“You really don't want to be insular — you really want to be able to help senior management see things that they may not be able to see,” says Jorgensen. “When you spend time working with clients, you know repeatedly what they're looking for.”
Her experience is typical of the nation's top brokers. As a group, one might expect them to be reluctant to share the formula that has brought them so much success. Surprisingly, they are anything but. Many, like Jorgensen (profiled on page 42), have taken on larger roles within their firms — vetting new products, contributing to technology decisions, advancing educational efforts.
But this does not mean the poo-bahs of production have completely lost touch with the competitive personalities of their inner brokers. Indeed, when management floats a trial balloon, many heavy hitters are all too ready to shoot it down — particularly when they sense a policy change that might damage their client relationships.
“If you're not doing what they perceive as being as the best thing for clients, they drive you crazy,” says Sallie Krawcheck, chief executive officer of Smith Barney.
In fact, it's probably safe to call the top brokers listed in the pages that follow a conflicted bunch. (Registered Rep. assembled the list of top brokers with input from the Wall St. firms, consultants, wholesalers, branch managers and top producers. The list starts on page 49.) On the one hand, they are part of the general broker community, and they share the concerns and goals of hundreds of thousands of colleagues. On the other, though, their books have grown to a size that renders any comparisons to ordinary producers useless. In this sense, they are peerless. They are Michael Jordans of Wall Street.
Generally, the top brokers each manage more than $400 million in assets. By way of comparison, consider that the average rep at Merrill Lynch has $77 million in assets, according to the firm's financial documents — and that average is tops in the industry.
The advisors on this list typically have logged 15 years or more with their current firm — testament to their adhering to the old adage, “Don't mess with success.” In fact, just two of those included in 2002's group switched broker/dealers in the last year (not including those at Prudential Securities, which was acquired by Wachovia Securities earlier this year.) And one, Gene Vilfordi, has been with Merrill for 50 years.
Another common sight on the list: teams. In many cases these have sprung up around a “family office” structure, in which they strive to serve a tightly controlled group of ultra-high-net-worth clients.
But of all the things they have in common, the willingness to get involved in charting their firms' strategic direction is perhaps most interesting. The drive for such involvement is consistent with the image of the typical big producer in at least two ways. First, it plays along with the idea of a big producer having a huge ego. But the top brokers say there is a very practical side to their involvement as well: courting influence. “With senior management, if I really have to talk to them, all I have to do is pick up the phone, and I know I'll get a call back,” says one Morgan Stanley producer.
Still, sometimes the brokers' involvement in strategic projects seems more altruistic than anything else. For instance, when Smith Barney was assembling its private wealth management group, they tapped one of our top brokers, Niall Gannon of Clayton, Mo., for help in structuring it. Gannon has about $1 billion under management, despite servicing fewer than 10 client households. (See page 44 for a profile of Gannon.)
“As we were developing a series of things three-and-a-half years ago, Niall was useful in detailing the issues that the wealthy face,” says Christopher Poch, who heads the Smith Barney group.
In addition to the practical experience Gannon brings to the table, he acts as a kind of living symbol for other brokers. “He shows that you can be an advisor of the wealthy irrespective of where you live,” says Poch. “There's no limit to what a registered rep can do or what clients they can get if they apply themselves and understand the issues that face wealthy clients.”
Steve Spence of UBS Securities, another of our profiled (see page 40), also has found success in an off-the-mainline way. He lives in Portland, Ore., and many of his clients hail from that region, and while that city has its share of affluent citizens, it's a far cry from the HNW hotbeds of New York, Chicago or San Francisco. He's been with the firm — or various predecessors — for more than 30 years and has witnessed the myriad changes that have taken place in the economy that affect the wealthy, including massive changes to estate tax law and the way people save for retirement. He has to navigate the ups and downs of the capital markets for his clients.
“We're spending a lot of time in our relationships monitoring where [clients] are in terms of accumulation of wealth and what forecasts for them in terms of timing for retirement,” he says.
Looking Long Term
Another attribute the top brokers share is a focus on long-term financial planning. Of course, some clients will want to tinker more aggressively with their investments than others, but the top advisors say that short-term investment moves must be undertaken only within the context of a long-term strategy.
“The most major effort we're taking on as a firm is, taking all of the different working parts, that is, the need to look at a person's debt, and look at estate planning and how all this all fits in their investment portfolios,” says Jorgensen.
Still another common denominator among the hyper-successful types is their ability to anticipate trends. For instance, many on our list secured advanced certifications — CFPs, ChFCs, CIMAs, for instance — before doing so became the norm in the industry.
Jorgensen, for instance, decided to get her CFP in the mid-1980s, not long after starting at Merrill Lynch, because she wanted to set herself apart in some way and knew that at the age of 24, she needed a competitive advantage. Confirming the primacy of such certifications, Louis Chiavacci of Merrill Lynch notes that his team includes a CPA, two CIMA designates, two CFPs and an adjunct professor at the University of Miami. Further, many brokers on this year's list cited an increased commitment to professional edification as a current goal.
For some, though, education was a family affair. Christopher Errico of Morgan Stanley, a native New Jerseyite who now works in New York, got an early introduction to the securities business through his father, and he and his two siblings have been chugging along in the industry ever since. (His profile begins on page 46).
The practice of Smith Barney's Gannon is also rooted in family — but not his own. He has structured his practice on a soup-to-nuts financial service of fabulously rich families, and his focus has paid off. He is painfully selective about adding clients to his list, a strategy that would seem at odds with building a huge book, until you see the details of his.
At the opposite end of the selectiveness spectrum are Scott Hanson and Pat McClain, a duo of light-hearted reps based in Sacramento, Calif., and affiliated with Securities America. The easiest place to reach them? On the AM radio, where they partner up for a weekly financial advice radio show. They don't cold call, but they will gladly make a meeting to those who call them. But they contribute to their firm also — they recently started an advisor training class focused on retirement planning.
As the experience of these top advisors attests, there is no magic formula for super-sizing a brokerage book. But the good news is this: At one time or another, they were no different than many of you.
A Teacher and Student of Investing
IF STEVE SPENCE HAS LEARNED ONE THING in his 30-plus year career, it's that the business of financial advice is all about teaching. With clients shouldering more responsibility for managing their own savings and investments, there's probably never been a time of higher demand for a good education — even among the soon-to-retire set in which Spence specializes.
Spence, who works in UBS' Portland, Ore. office, says filling the role of teacher and mentor has been key to his ability to amass a prodigious book, which currently sits at $460 million dollars and counting.
“We have a role as a teacher and also a role, in a constructive sense, as an enabler — we're enabling people to make good decisions,” he says. “If we can't explain, in terms that people can understand, the engine that creates wealth and the risks attendant to it, then I think we're not fully serving our clientele.”
A former naval officer who gravitated to the brokerage industry in the early 1970s, Spence built his initial business relationships after moving to the Portland branch of Blythe Eastman Dillon, a predecessor to UBS. Through that firm's investment banking contacts, he met numerous corporate executives and quickly intuited an advisory niche: helping preserve the wealth of people who were creating it for the companies they ran.
This focus continues to this day, though his job has grown more complex as his book has expanded.
Also complicating his task is the growing popularity of 401(k) plans and the slow demise of pension plans. Since these forces represent a shift of investment responsibility from institutional money managers to individual investors, they translate into a lot more work for high-net-worth financial advisors.
The changing retirement landscape presents “the problem of people retiring with a larger amount of cash but without a frame of reference” for how to make that money last, he says.
On the positive side, however, people “have the ability to save as much as they can in these kinds of accounts with after-tax contributions — that's a very dynamic change.”
It's this piece of the financial puzzle that Spence specializes in: the transition from a time of salary and mortgages to a period of rollovers and distributions.
He relishes the challenges presented by clients approaching the end of their working years.
“We have a great opportunity and responsibility to help people work that puzzle,” he says. “That's where we're spending 70 to 75 percent of our time.”
— David A. Gaffen
San Francisco, California
WHEN DEBBIE JORGENSEN BEGAN HER CAREER at Merrill Lynch at the age of 24, she had few illusions about her readiness for the big time: “I realized I wasn't capable of bringing things that I have now to the table, which, mainly, was experience,” she says. But she knew she didn't want to be a regular, transaction-oriented broker.
She made a number of smart choices early on, including pursuing a CFP designation at a time when relatively few major firms were interested in financial planning. “At the time, Merrill provided mostly product training,” she says. In fact, the product-centric approach was so prevalent, some of her industry colleagues counseled against getting a CFP, calling it a waste of time.
But things have come full circle at the firm: Now every new advisor undergoes rigorous training that includes the coursework for the CFP designation. And she was recently named chair of Merrill Lynch's advisory council to management, a group of 14 financial advisors who help chart the course of the firm and its 13,000-strong sales force.
“As an advisor sitting in your office, you do what you do. But with this you take a look at everything from a global perspective — saying what needs to be different on statements, or what we can do as a firm to help clients achieve their goals.”
Jorgensen, 42, has been a part of the group for nearly a year now, which means she has been party to several of Merrill's recent strategic moves, including its decision to segment client services. However, she is the first woman to serve as chair of this exclusive group.
The council sometimes distracts from her day-to-day advisory business, although Jorgensen has built herself a little cushion in that area: She currently has $450 million in assets under management.
Jorgensen's deep financial-planning experience informs her approach to setting clients' investment strategies. Before committing any dollars, she works to understand “all the working parts” of the client's financial picture. “I believe that investing is a lot later in the game when you work with a client,” she says. “When we get down to the actual investing, we structure portfolios around income and expenditures that a client anticipates needing — we try to anticipate a three-to-five year time frame and we map this out on a rolling basis.”
Working in San Francisco for the last few years, Jorgensen has seen her share of economic instability. The upheaval caused by job losses, higher taxes and poorly performing investments have caused many a client to reevaluate his financial plan.
“As far as retiring early, there were many people who were one step out the door but didn't make it,” she says. “Those are the people who have retrenched.”
But, thankfully, not all clients have suffered. “We were big proponents of bonds and diversification, which wasn't the necessarily the most popular approach” in the stock market's go-go years, she says. “Hand-holding was less necessary for clients that worked with us — and I feel fortunate that's still the case today.”
The Discriminating Advisor
THE WORD SELECTIVE DOESN'T BEGIN to describe Niall Gannon's approach to the financial advisory business. The 35 year-old manages over $1 billion in assets at Smith Barney in Clayton, Mo., but his clients do not even number in the double digits. From the start, Gannon decided to focus exclusively on ultra-high-net-worth families, a decision he made after a pair of client meetings early in his career.
The first was with a doctor he had cold-called about a municipal bond. The prospect rejected the muni pitch, but said he could use some help sorting out his portfolio. “He said, ‘I've got all these no-load funds, and I'm killing myself here,’” Gannon says.
The experience taught him that people's financial lives are complex and what they require most is detailed attention from a professional. The second formative client meeting of his career was with a St. Louis-based CEO who was planning to distribute his substantial investment dollars among several brokers in a survival-of-the-fittest-style bid to find the best fit. Gannon, a graduate of The Citadel Military College in Charleston, S.C., took an aggressive, straight-line approach to the competition. “I said, essentially, that I didn't have an interest in opening an account for $1 million, and that I'd rather put my name in to be his chief of staff,” Gannon says. “He made me wait for 24 hours, but he came aboard.”
Since then, Gannon and his team of three have concentrated exclusively on the complex financial lives of a handful of wealthy families. His client list is heavy with high-ranking executives at St. Louis-based companies — many of whom are used to having “people around them who tell them what they want to hear.” Gannon understands that a large part of his job is taking the opposite tack. He is quick to point out to clients that this three-year bear market — which he likens to “Krakatoa's eruption” — doesn't necessarily guarantee a roaring bull to follow.
Still, he knows the best weapon against a down market is good research. Gannon and his head researcher, Matt Rogers, devote massive energy to analyzing individual equities and investments. Gannon estimates he spends about half his working hours on research-related tasks.
This rigor leaves little room for new business. Adding even one new client is a “massive undertaking,” Gannon says.
But, despite his small absolute number of clients, Gannon's success resonates loudly within the walls of Smith Barney. When the company was looking to improve its focus on ultra-high-net-worth clients, he was one of a dozen financial consultants the firm queried. Chris Poch, managing director of private wealth management at Smith Barney, says Gannon was helpful in defining the issues facing newly rich families and in developing family offices.
One of the most important of these issues: finding ways to protect money for people who have already earned their fortunes.
Even as his business continues to flourish, he remembers where it all began: “It was one of those CEOs who had faith in me,” Gannon says. “I was 26, and he said, ‘Everyone tells me I should have a table full of gray-haired men, but this seems right’… I guess you can always point to small transformations.”
WHEN CHRISTOPHER ERRICO LEFT PaineWebber for Morgan Stanley in 1999, he had $200 million assets under management. In the four years since — four of the toughest years the securities industry has ever seen — he has boosted that figure to a staggering $650 million.
In the last year alone, Errico and his team have signed up 50 new clients — all of them are of the CEO/high-net-worth variety. He estimates he has 400 clients total, most of them loyal: Ninety-eight percent of his book at PaineWebber followed him in his move to Morgan in 1999, he says.
The trick, he says, is diversity. “Sure, I can give you a lot of good stock recommendations, but 90 percent of the advice I give is showing how to allocate assets,” Errico says. “Three years ago, like anybody, I had a lot of tech stocks. But what mattered was being smart enough to have a mix, to take advantage of historically low interest rates.”
Errico might have been genetically programmed to be a rep. Where as most students spend their summers flipping burgers or lying on the beach, Errico, as a teenager in suburban New Jersey, had an internship — along with his brother — on the floor of the New York Stock Exchange. The gig had come courtesy of connections from his father, then the president of Alliance Capital's fund distribution arm.
Four years later, right after graduating from college, Errico was working at Lehman Brothers, and soon after that (and the move from PaineWebber), he and Steven were running an advisory team at Morgan Stanley. Their sister also worked with them. Errico loved working on Wall Street, but then there wasn't much choice.
“I wasn't gonna be a doctor,” he says, “not in this family.”
Errico, now 35 and a senior vice president at Morgan, has plenty to brag about at the dinner table.
A student of the markets, he's no egghead. He calls the financial advisory business an “art, not a science.”
He calls Steven (who now runs a hedge fund) his mentor, and credits him with this guiding piece of advice: “Don't worry about gross. Bring in the new assets, and the gross will come.”
His office in midtown Manhattan employs five brokers, and though he has achieved huge success in the last few years, he feels as though he's only now on the cusp of something truly great.
“People aren't getting beaten up anymore — they're ready to make some money now,” he says. “That just means we have to work harder. So much of it is out there now, and we have to be the ones who grab it.”
To this end, Errico joins his staff in the office at 7 a.m. every day for a daily strategy call.
“You're not going to really grow your business in three years,” he says. “It takes time to put that together. But I think we're more than on the right track.”
— Will Leitch
Scott Hanson Pat McClain
Hanson/McClain Retirement Planning
A CONVERSATION with Scott Hanson and Pat McClain can quickly take on the quality of a phone-in radio show — literally.
The pair, who head Sacramento-based Hanson/McClain Retirement Planning, host a weekly personal finance show on 1530 KFBK AM in Sacramento. This experience, combined with working as a financial advisory team for a decade, has yielded them with the sort of knowing, telepathic connection exhibited by all good comedy teams.
“They main way we lose clients is through death,” says Hanson.
“You shouldn't joke about that,” says McClain.
“He's a reporter, he can take it,” says Hanson.
No wonder Hanson and McClain are so jovial. Since joining forces in 1993 — they work exclusively in investment planning for individuals, with a specific focus on retirement — Hanson and McClain's combined assets under management have grown to $650 million. In the last year alone, they have landed 200 new clients and $140 million in assets.
Their firm, a unit of Omaha, Nebraska-based Securities America, employs 27 people, including eight registered reps, support staff and even a corporate communications officer, who oversees marketing; they have recently opened a third office, in suburban Sacramento. They say they retain 99.7 percent of their clients on a year-to-year basis, and they now serve 2,200, after starting their business with 30.
Part of their secret is making sure to meet clients regularly — at least twice a year, “like a dentist,” McClain says.
They also attribute a large part of their success to their strict focus: Retirement planning is the beginning, middle and end of their business. Their model is held in such high regard, that the pair recently launched the Hanson McClain Retirement Network for Securities America, which trains other advisors to build their businesses using a similar discipline.
“Sure, people hated us for owning real estate and bonds when the market was rolling,” says Hanson, who also writes a weekly financial planning column for The Sacramento Bee. “But our investment philosophy has not changed in 10 years. We have kept that long-term discipline throughout.”
Hanson says 80 percent of the firm's new business comes through referrals, and many of these are an outgrowth of the firm's charity work in Sacramento.
Of course, the radio show also has helped their image.
“We did it for branding, and it's turned into a big thing,” says McClain. “We don't use it for new clients — if someone asks for our number, we won't give it to them — but it's been great for our name.”
In fact, the show has become such a large part of the duo's professional lives that they now take Fridays “off” to prepare for it. Prepping for phone-in questions keeps them sharp and up-to-date, while also burnishing their most valued skill: their teamwork.
“I'm going to do this until I die,” Hanson says. Without missing a beat, McClain chimes in: “Yeah, I'm gonna do this until Scott dies too.”
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