A former wirehouse advisor, now an independent, is also a Navy SEAL and an active reservist. Trouble is, he keeps getting called up for lengthy stints. He's concerned that's hurt his ability to grow his business — and will continue doing so if he's asked to serve again.
For advice, we turned to our panel of experts: Philip Palaveev, president of Fusion Advisor Network, an Elmsford, N.Y.-based network of advisors; Hellen Davis, president of Indaba Training Specialists, a management consulting and training firm in Treasure Island, Fla.; and Chip Roame, managing principal of Tiburon Strategic Advisors, a Tiburon, Calif.-based market research and strategy consulting firm for financial institutions and investment managers.
The Situation:
Patrick Berry became a Navy SEAL in 1989, serving in a variety of places until he left to get his B.A. After 11 years at Merrill Lynch, and then Smith Barney, he left to go independent, affiliating with Concert Wealth Management. Along the way, he focused much of his practice on 401(k)s. But, as an active reservist, he also spent two 18-month stints on duty — the last time, just two months after starting his firm. Although he was stationed near his practice in San Diego, the time away has definitely taken its toll on growth. And, he wonders, what will he do if he's called up again?
Berry attended two years of college before joining the Navy in 1987. Two years later, he joined the SEALs, and, over the next six years, was stationed in the Philippines, Guam and in Coronado, Calif., as a land warfare instructor. In 1995, he left to go to college at San Jose State University. When he graduated in 1997, he got a job in Merrill Lynch's training program; he'd had an internship there while he was in school. After three years, he moved to Smith Barney, where he stayed for eight years and started to build a practice focused partly on 401(k)s and partly on individual clients while helping companies with their retirement plans. In April 2009, he left to start his own practice, deciding to go with Concert Wealth Management.
During that time, Berry stayed an active reservist. That meant fulfilling a two-days-a-month, two-weeks-a-year volunteer commitment — not too onerous. The trouble came when he was formally called back to active duty twice for 18 months apiece. First was in October 2002 and the second in June 2009. Both times, he was able to get assigned to jobs in San Diego, working on recruiting and other tasks, meaning he was able to keep running his practice before and after hours.
But that second stint came at a really bad time — just two months after Berry launched his own practice. He hired an associate from Smith Barney as a sales associate, paying him commissions, and continued to run his practice long-distance. For example, Berry would go to the office at 5 a.m., work until 7 a.m., then go to the SEALs office, take a long lunch when possible, during which he'd attend to work. “I've had many 401(k) investment meetings in my camouflage uniform,” he says. One time, the CFO of a client wanted to hold an investment committee meeting and refused to change it, even though he knew Berry was on active reserve duty. Berry asked a colleague at the base to pinch hit for him; he flew back to San Diego from a conference he was attending in Las Vegas, attended the meeting, then flew back to the base.
According to Berry, he's lost only a few clients thus far. But all that time away hasn't helped the business. “It didn't impact my existing practice a great deal, but there was no way to grow it,” he says. He has $75 million in total assets and, he says, his business would be a lot bigger had he not had to go away.
A few months ago, he started a new effort. When he left to launch his own firm, his plan was to cultivate other Concert advisors and handle their 401(k) work for them. But, not long ago, his b/d asked him to work from its office and act as an advisor to reps about 401(k)s; he'd receive part of the commission or fee. He is now mostly working from the b/d's offices.
But, Berry knows he's still on rocky ground. The SEALs recently sent him to Korea for two weeks. He would work a 7 a.m. to 7 p.m. shift, then would wake up at 2:30 a.m. and attend to business until 6:30. His clients ask him if and when he's going to have to go away again. “I can tell from the look on their faces, they're struggling with it,” he says. And he's pondering just how can he go on like this and grow his business.
The Advice:
Philip Palaveev
I admire the guy for his commitment. And I understand how he's torn about what to do.
It's just going to be very difficult to develop his own business while spending all that time on duty. This is especially tough because his independent practice is relatively new. The fact is, leaving a young business for an extended period of time is difficult. And it looks like his clients are scratching their heads saying, well, is he around or not?
If his commitment is a year or two, then he might be able to create an interim plan. If it's longer, then he really needs to rethink whether he can be a full-time business owner. Creating a firm is like raising a child. It requires your attention day and night. Long stints away just won't work.
Perhaps he could find a wealth management firm where he can work and won't have the kind of responsibilities he has now, a place that will allow him to be absent for a significant period of time. If he's working with a team, it will provide backup. Typically, advisors who spend a significant amount of time away from their practice have a strong team behind them, able to handle all client service requests and needs while they're gone. His firm now has $75 million in assets — he's not financially able to have that kind of team.
Someone with his level of experience can be a good addition to a firm. If he finds the right practice that respects his commitment to the Navy, it may be easier for him to continue to serve his clients.
As for 401(k) plans, they can be more labor intensive than working individual clients, depending on the nature of the plans and the services he provides. That isn't necessarily a guaranteed area for him. My suggestion is that, if he remains as is, that is, keeps running his own business, he has to look for a certain type of client — someone who is not going to need his constant presence in the office, who doesn't need him to get back the same day. That means clients who are strategic in nature with a long-term plan and fewer emergencies. But it's not going to be easy finding such clients on short notice. It will take time. Still, if he devotes two or three years to this, he may be successful in finding such clients.
Hellen Davis
I was in the service for six years and I can tell you — you can't serve two masters, not two that are so demanding. That's the bottom line. When I got called up for three months every year and I had a financial planning practice, I made sure I was in a place with other people who could shore me up. We're in a business where people depend on us. You never know when a catastrophe is going to happen.
He's been lucky. He's been able to get local assignments. But will that happen next time?
My point is, he can't be solo. One possibility is to get in a place with other military guys who are in the same boat. When one person is deployed, the other picks up the slack. Of course, if they're deployed at the same time, they're in trouble.
Or there's another alternative. He could join another firm, one where there are other people who can help him out. But there's still the same problem. If he's deployed for a year, what does he do with his clients? I think anyone who fills in for him can only perform maintenance. If someone calls, his backup will do the best to fix it. But not much more can happen. There won't be a way to extend the relationship or find new clients.
Or he could go somewhere and be secondary to another guy, where he's not looking after clients on a day-to-day basis. Ultimately, he shouldn't be doing any of those duties. Clients will be aware of the role he plays; they'll know that he's not the one who's the service guy.
If you're in the reserves, fact is, it's best to be in corporate America, where if a few people are called up, it doesn't make a difference. The way I see it, if he keeps his practice as it is, he may have to consider leaving the military.
Chip Roame
First of all, I'm very proud of him. But being a solo practitioner and his SEAL commitments don't go together. It's a great thing to do if you're an employee and someone fills in for you when you're away. It's a great thing to do if you have three partners. But it's tough if you're on your own.
A two-week-a-year commitment is no big deal. It's when you're called for a deployment that you start to have problems. You can't tell your clients, “Don't think about retiring this year because I'll be away.” You have to serve the client when that client has a need, not when your schedule allows it. And we have a volatile market. It's not the time to be away.
What can he do? He can go back to a place where he's an employee and someone will be able to cover for him. But that's a pretty radical move. I don't know if he'd want to do that. He can think about bringing on someone more senior. Or, most creatively, he can find a local financial advisor and make an arrangement whereby he pays that person to cover for him. In fact, some advisors do succession planning this way.
But the 401(k) work he just started to do might be the answer. The 401(k) business is radically changing. His b/d is aware that major regulatory change is happening. And they've come up with a good idea: Let's make him the point guy whose job it is to help the other advisors. He's got a great opportunity. That could be a nice way to reposition himself and continue with his military commitment. He helps other advisors kick off their 401(k) business. Then, if he's away, it won't be devastating to the clients. They'll still have a financial advisor. And there will be a level of trust built up between the advisors he coaches and himself.
