The team members: Arthur Sherman: A broker since 1969 and a pioneer in financial planning, Arthur founded the partnership in 1981. He spends winters working from his home in Boynton Beach, Fla., communicating with the office and clients via five phone lines, a direct connection into the computer system and a fax machine. He has held a long list of corporate titles, such as national sales manager for financial planning, branch manager and regional manager with SSB and its predecessor firms.
Dan Sherman: A partner, team leader and organizer, this 37-year-old lawyer embraces management catch phrases like "systematizing our business" and "establishing modules"--a seriousness that sometimes elicits good-natured ribbing from colleagues. He refers to his father as "Arthur." Dan practiced law in Washington, D.C., until joining the partnership in late 1990.
Joyce Fischman: A partner, fixed-income specialist and former high school teacher, Joyce joined the partnership in 1983. She shares a cluttered, 25-by-15-foot window office with Dan.
Seymour (Sy) Cassorla: The "trader" within the partnership, Sy sometimes plays the role of court jester or tension-breaker. (He has been known to make prank phone calls impersonating a prospective client.) Sy joined the partnership about 16 years ago and has authored three murder-mystery novels. He also paints wildflowers, which adorn the walls of his office.
Cathi Efstathios: A sales assistant with the team for the past eight years, Cathi handles the trust and estate paperwork, and other assorted duties.
Nicole Gallodora: A sales assistant with the team since college graduation a year and a half ago, Nicole processes managed money paperwork, contracts, payments, tax-reporting documents and a little bit of everything else. She's currently studying for the Series 7 exam.
The Partnership Located on the 13th floor within Salomon Smith Barney's New York branch office at 666 Fifth Ave., the Sherman Group has about 1.25 billion dollars in assets under management and generated roughly 3.25 million dollars in gross production in 1999. About a third of the team's business is fee accounts.
Founder Arthur Sherman says the team is probably one of the oldest broker partnerships in existence. The partnership serves about 3,000 clients living everywhere from Florida to Santiago, Chile. Much of its business is rollovers, trusts, estate planning and the like. SSB treats the partnership as if it were one individual producer--issues one paycheck to the team and contributes only a fraction of the sales assistants' salaries. The team's income is split by mutual agreement--there are no formulas--but the partners factor in both seniority and individual production.
The Assignment On Monday, March 20, Registered Representative Senior Editor Michael Hayes spent the day with the Sherman Group. The goal was to peek into the everyday routine of a team of successful producers, watch how they interact and walk away with some understanding of the dynamics of this increasingly popular work arrangement. Here's his journal ...
7:35 a.m.--I arrive at Dan Sherman's office on schedule and let myself in. (There's nobody at the receptionist's desk, and lucky for me, the main door is unlocked.) The branch is laid out in the shape of a horseshoe, which I discover after wandering around for a few minutes.
I find Dan in his office, about three-quarters of the way around the horseshoe, past the order cage, along the windows. He's preparing for an 8 a.m. team meeting, researching money managers on his workstation as CNNfn plays on the TV in his office and an SSB analyst reads her stock recommendations over the squawk box.
Dan has decided to move some assets away from two large-cap value money managers (Oppenheimer and Smith Barney Asset Management) in favor of all-cap value managers. The idea is to give clients some exposure to the "new economy stocks" they've been clamoring for.
There is no coffee brewing anywhere, no donuts on the table. A sign taped to the wall behind Dan's desk reads "No smoking." It's going to be a long morning.
8:02 a.m.--Dan gathers the troops for a meeting in Arthur's office. After some casual chatter about upcoming client meetings, Dan's first order of business is welcoming Arthur back from Florida, where Arthur has been working since December. Arthur is greeted with polite applause.
Dan then shows his partners a new consolidated statement for retirement plans he's considering, passes around some copies of a magazine article on running a successful consulting business and asks about progress on a client appreciation dinner planned for May. Sy complains about the broken intercom system. All very routine stuff.
The conversation heats up when Dan suggests changing money managers. "I think we've come to the decision that it's going to be a long time before large-cap value is actually a favorable style again for any extended period of time," he says, passing around copies of a profile on Davis Skaggs Investment Management, the portfolio manager he's recommending. SAs Nicole and Cathi sit quietly, perched and ready to take notes.
"Wait a minute," Sy objects. "We originally put clients in there for three to five years, and now after a year it doesn't look good, so we're moving out?"
After about 30 seconds or so of overlapping conversations and people interrupting each other, Arthur interjects. The team snaps to attention. "Let's not get carried away too much by all this technology growth that's taking place over such a short period of time with no earnings," he says. "I think we've really got to stick with the fundamentals that have been our success--companies with strong balance sheets, good dividends, good management ... " Joyce completes his thought. "And time," she adds.
That's it. The team elders have spoken. Although some debate follows, it's clear that Dan's partners aren't thrilled with his proposal to switch money managers. "Remember that our whole theory was preservation of capital first," Arthur says. "And the second rule is to remember what the first one was."
8:30 a.m.--Arthur walks away from the table. "I have to place an order before I forget about it," he says. Joyce reminds him that it's only 8:30. Even so, Arthur's departure signals the end of the meeting. Everyone for the telephones.
9:05 a.m.--The telephones start heating up. "Give it another day or two," Joyce tells a client.
Dan tosses a copy of an e-mail on her desk. The message is from the son of a client who has been in the hospital, updating Dan and Joyce about his father's condition and letting them know that he has referred a friend (the CEO of a large company) to the partnership.
Joyce takes another call, this one from Florida. "Let me take a look at your account," she says casually. "Everything's fine, nothing to do right now."
Outside Dan and Joyce's office, Cathi leafs through a pile of paperwork from last week. She's double-checking new account forms, fund transfers, trade corrections, research requests, notes about problems with tax reporting and estate valuations; reviewing the "pending" projects in the pile and making her picks in the office basketball pool. "Arizona choked," she says.
Occasionally, she picks up a ringing telephone and shouts over to Dan or Joyce to pick up. Although all of the team members have been supplied with cheap Radio Shack intercoms, they never use them. They shout back and forth, through open doors and glass office windows. Now I understand Sy's complaint about the malfunctioning intercom system. It's getting loud in here.
9:25 a.m.--Joyce leaves a message. "Hi, this is Joyce. Give me a call. I've got some bonds that look attractive." She tears open a padded envelope while on the telephone. A client who writes children's songs has mailed her an audiotape called, "I'm a dinosaur living in a world of men." She smiles.
9:30 a.m.--Sy asks a client to hold while he takes an order. (Throughout the day, clients always hold if the broker is writing up an order.)
Nicole takes a call from another SSB broker who "inherited" one of Sy's troublesome accounts. "I benched this client," Sy explains. The former client is his niece.
Joyce walks in and flips a piece of paper on Sy's desk. It is a photocopy of a handwritten list of fixed-income products she's recommending, including some Nassau County General Obligation Bonds.
While Joyce makes the rounds handing out her tip sheet, Sy picks up her telephone line. "Tom, can Joyce call you back?" he asks the client. Apparently, the client won't wait. "OK, NBR is at 37 and 5/8ths, off 3/8ths," Sy tells the impatient investor after checking the computer. "Global is at 22 and 5/16ths, off 9/16ths. Sell both? OK, sell 1,000 NBR and 1,000 Global."
Sy scrambles to write the ticket and dashes over to the "tube" in front of Joyce and Dan's office. He stuffs the order into a cylinder and it's sucked up and over to the order desk. Because his workstation is so slow, Sy says it's quicker to send the order through the tube than it is to enter it himself.
10 a.m.--Dan chats up some clients, asks about their weekends. "It's time to wake up," he tells a client.
On the television facing him, CNNfn anchor Sasha Salama is talking about "old economy versus new economy stocks." He calls a client about a secondary offering of biotech stock. The firm has 200 shares, he says.
I notice Dan is wearing cufflinks. The word "Right" is printed on one cufflink and the word "Left" is printed on the other. He's mixed them up. They're on the wrong sleeves.
Joyce eats dry Cheerios from a Tupperware bowl.
11:15 a.m.--Arthur dips into Dan's office to say that he just received a call from a client who is entertaining a friend from Brazil. This friend is a surgeon with about 500,000 dollars at the Bank of New York, and he is considering putting it all into AIM Charter Fund, apparently at the suggestion of the bank, Arthur explains. Their conversation is interrupted by a phone call.
"OK, 300 shares of TXN at 172 or better," Dan says. "You have plenty of cash in your account, 90,000 dollars."
Moments later, Arthur resumes his conversation. This client and the Brazilian surgeon are coming in at 12:30. "See what you can find out about AIM Charter Fund."
Dan immediately calls SSB's mutual fund desk at headquarters downtown, and then calls AIM directly. He rattles off a long list of questions about such things as turnover ratios, trading points and break points.
Arthur says the Brazilian surgeon has a U.S. tax ID number. "We can dampen his tax liability by putting him in managed money," Dan says.
11:30 a.m.--The office quiets down. Dan takes a call from a client who wants to increase his biotech stock holdings. Dan bristles. "As much as I love you, I don't want you calling me 20 times a day worrying about this," he tells the client. He hangs up the phone chuckling and relates what the client just said: "Thanks for calming me down, Dan."
11:42 a.m.--The four partners meet in Dan's office to discuss some personnel matters. "The toughest problem we have is actually getting together throughout the day," Dan says.
Items on the agenda include the type of broker they're looking for when they add another producer to the partnership (one who knows something about managed money), possibly adding a bonus to Nicole's salary (maybe one-half of one percent of the team's production), and Dan and Cathi's personality clash (she's a veteran SA and unmoved by Dan's energetic drive for perfectionism). Dan is unhappy about her attitude; but the other partners like her efficient competency. The discussion ends right there.
12:15 p.m.--The client arrives with the Brazilian surgeon and the surgeon's sister. Dan and Arthur duck into Arthur's office to talk business with the new prospect.
Forty-five minutes later, Dan pokes his head through the office doorway and asks Cathi for three new account forms, some client agreements, an ACATS form and paperwork for Access--SSB's Web site for clients. Mission accomplished. Without any fanfare or celebration, the deal is done.
1:55 p.m.--Joyce flips through the blue list of municipal bonds, researching California munis that might be attractive to a certain client. Meanwhile, Dan takes a call from a 70-year-old client in Santiago, Chile, who wants his account statement faxed to him that evening, after his employees have left the building.
This client has a friend who invested heavily in technology stocks and feels as though he's missing the boat. "If it were up to him, he would have taken everything he had and put it in technology mutual funds," Dan says. He talks the client down.
The phone rings again and Joyce picks up. A client wants to know the current price of AOL. She flips the caller over to Nicole. "They know not to ask us for quotes," she says.
2:15 p.m.--Dan pulls a frozen entree from his office refrigerator and microwaves it for lunch--the first sign of any real food in the entire office since Joyce broke out the Cheerios.
3:30 p.m.--A team of representatives from Van Kampen arrives to pitch Dan and Joyce on some bond funds. (Dan has two clients in these funds.) They laugh at Dan's bad joke.
Sy drops another order. While standing at the tube, he glares through Joyce's office window, right through the backs of the Van Kampen reps, and tries to distract her by making faces.
Whether she sees him or not, Joyce doesn't flinch. She's used to his antics. Sy laughs. It's getting late in the afternoon, and the mood is noticeably more relaxed than this morning.
4 p.m.--Dan politely calls an end to the Van Kampen meeting. Joyce takes a call from a client who wants to know if he can afford laminates (apparently, laminates are an expensive type of dentures). She laughs. "This client has 17 million dollars--in one account," she says. She heads home to New Jersey, her two kids and carpool duty.
4:30 p.m.--Sy, Dan and Arthur meet with Branch Manager Robert Matthews to discuss new office space, hiring another sales assistant, adding another partner and those damned intercoms. (Thankfully, I'm not invited to tag along since the meeting dragged on until 7 p.m., Dan says.)
Conclusions There's nothing magical about the way this team interacts. Each member has a niche (both in personality and professional talent) that complements the whole. While Dan drives the team's direction, he is quick to recognize a group consensus or the broader perspective of a more seasoned partner.
Surprisingly, there is little evidence of ego flexing. The result is a tapestry of producers that melds into one entity, one well-rounded practice.
Other teams fail because "everyone's watching what everyone else is doing," Arthur says. Not here. As contradictory as it may seem, there is one thing that galvanizes this team--they leave each other alone.
