Highly rated financial advisers talk about what got them to the top of the heap
Gregory Vaughan has the demeanor of your favorite college professor — accessible, attentive and humble. Not the alpha dog mentality you might expect of the nation's top financial adviser, according to Barron's magazine latest ranking of top financial advisers.
“Maybe it's better to be lucky than smart. I work in Silicon Valley, one of the great wealth creation centers of the world,” said Mr. Vaughan during the “Top Advisers Panel” at the annual Investment Management Consultants Association conference in Las Vegas this morning.
Luck has little to do with it. Mr. Vaughan has spent his 30 year career with Morgan Stanley Smith Barney building an extraordinary book of 120 clients. The investable assets minimum for his prospective clients—though it is not hard and fast, is $5 million, and he currently manages $9.6 billion in assets.
How did Mr. Vaughan build his book of business? Listening.
“When you become a good listener, good things happen. And if you do a good job for clients, the referrals come,” he said. Working with three partners in his Menlo Park office, the referrals have been coming and existing clients are staying. “We have a very high level of service. We structure our days around communicating with clients.”
Given that so many investors dump their advisers because of inadequate communication, Mr. Vaughan makes a point of keeping in touch with his clients speaking with them at least once a quarter and meeting them face to face at least twice per year. “Our best clients are our competitors' best prospects,” he pointed out. “Be the person they call about anything important financially, and call them when bad things happen. If you don't, you'll be out of business quickly.”
He may be a receptive listener, but he's not afraid of speaking up for his clients' best interest. “One of the things of greatest value you can do for a client is to stop them from doing something silly.” He said that early in his career, he was often intimidated about challenging a client when he disagreed with them. “Now I challenge them. Over time, I've found that people want to be challenged and they want different points of view.”
For advisers to high net worth clients, the personal touch is extraordinarily important. If clients feel they're not getting adequate attention they won't stay with you. “Trust is the most important thing with clients,” said Steve Lockshin, an adviser with Convergent Wealth Advisors, ranked No. 13 on the Barron's list. “I used to think that clients didn't pay us to socialize and interact with them, but I've changed my thinking on that.”
Like Mr. Vaughan, he sees a big part of his job as telling clients not what they want to hear, but what they need to hear. And very often, it may not be about investment planning at all. “You can often do a lot more for someone with $10 million in assets advising them on tax or estate planning rather than just investment planning,” said Mr. Lockshin.
The advisers on the panel suggested a key factor in their success was running their practice like a business. Mr. Lockshin said that three years into his business, he decided to hire a CFO/COO to run much of the administrative functions of the business and saw immediate results. “It allowed me to focus on what I do best [investment management].”
Alexander Williams, a UBS Financial Services adviser based in New, said that advisers have to be careful not to spread themselves to thin in building their business. “You can't try to be all things to all people. Ask yourself the question: am I spending my time taking the business where I want it to be?” he said. One pitfall for high net worth advisers is signing up demanding investors that require too much attention. “Taking on time-intensive clients can be a big mistake,” said Mr. Williams. “It's not worth it.”
Firing clients is never easy. While the evolution of his business has taken him farther up the scale of wealthy investors, Mr. Vaughan said that letting a client go feels wrong to him. “I have a very hard time firing clients. I've had small clients become big clients. I think you have to be really smart about who you bring on because when you take on a client, you've made a commitment to them.”
