In talking about the advisory profession, and even the more rarefied wealth management dodge, industry pundits and other gadflys often make the point that it’s not rocket science. But if it were, that wouldn’t be much of a challenge for Walter Gerasimowicz, chairman and CEO of New York-based Meditron Asset Management, because he actually is, or was, the proverbial rocket scientist. In addition to holding an M.B.A. from the Wharton School, Dr. Gerasimowicz holds a Ph.D. in physical chemistry from Villanova University and before becoming the number two scientist at the U.S. Department of Agriculture, worked at the Naval Research Laboratories (NRL) in Washington, D.C., where he specialized in multiple-quantum nuclear magnetic resonance and solid-state thermodynamic research.
Eternally curious, he had a successful and thriving career as a government scientist and no background whatsoever in economics when he decided to apply to Wharton. Although he probably shouldn’t have been, he was surprised to be accepted and decided to enroll in the program while continuing his day job. After graduating from the Wharton program he continued with his duties at USDA until he was recruited by J.P. Morgan Securities, where according to his official biography, “he pioneered state-of-the-art portfolio and risk management techniques including downside risk measures and methodologies. He also specialized in global and international fixed-income strategies as it related to benchmark design, replication, and out performance for major institutions including central banks, state pension funds, and large endowment funds.”
From there he went to Lehman Brothers where he was chief investment strategist and director of advisory services in the firm’s private client services division. After eight years at Lehman he decided it was time to strike out on his own. He left Lehman Brothers on good terms and, in fact, says that he’s been invited back, more than once, adding, “but I prefer to have my own independence.”
At Lehman Brothers, Gerasimowicz says he had a wide array of investment options to offer his clients, but felt that if he had the entire investment universe to choose from he could do a better job. When he set up Meditron Asset Management in 2003 he took no clients with him. Today the firm boasts some 80 client relationships and is rapidly closing in on the $1 billion threshold in AUM.
“What we have attempted to develop is truly a global multi-family office,” he says. “And within that framework we have individuals, families, endowments in the U.S., in Europe, the Far East, and so on.”
Although many wealth management firms call themselves global because they have foreign nationals as clients, Gerasimowicz actually has offices in Zurich and Taipei so that a real person answers the phone in local time for clients in those areas.
The Primary Advisor
Preservation of the client’s assets is what Gerasimowicz sees as his number one operating principle, but it’s only one of the items on Meditron’s wealth management menu. The firm also provides financial planning, helps set up and manage charitable foundations and trusts, gets involved in estate planning, and pays attention to potential tax burdens. For legal and tax matters beyond the knowledge base of Gerasimowicz and his associates, the firm has outside experts to whom the clients can be referred. If the client desires, Meditron can also provide a wide range of concierge services ranging from bookkeeping and bill paying, to making long-term care arrangements and setting up reverse mortgages, to booking airline tickets and hotel reservations.
Although Gerasimowicz takes great pride in the fact that his firm has managed to generate positive returns every year so far, he doesn’t think that’s really the most important service the firm offers current and potential clients. “They’re trusting you with one of the most important things they have beyond their families and their health–their wealth and their corpus of assets,” he says. “That is a leap of faith. You can be very, very competent in those technical areas, but the trust factor is every bit as important as, let’s call it the knowledge, skills, and abilities–KSAs–that you bring to the table. I say to many of the folks that come in, ‘It’s not a matter of whether or not you need a financial expert to manage these affairs for you, it’s only a question of who you choose.’ Predominantly you are choosing because you have a level of comfort and trust.”
As is the case for many wealth managers, the bulk of Gerasimowicz’s new clients come from referrals made by existing ones, although some also find him from his many appearances on CNBC and Bloomberg Television or quotes in publications such as BusinessWeek. “But much of it, the bulk and majority of it, come from referrals. If your clients are pleased and are doing well they’ll talk about it with relatives or business partners, and that becomes a source of self-sustaining referrals.”
Each of Meditron’s clients has assets in the seven- or eight-figure range, and dealing with clients who have that kind of money isn’t the same as dealing with the merely affluent. Gerasimowicz stresses that every portfolio is customized to match each client’s unique situation. “We are not taking what I call the typical institutional approach where they place a cover sheet with your name on a one-inch presentation and tell you to choose the conservative, the moderate, or the aggressive pre-canned portfolio. We do not take the Monty Hall approach of door number one, two, or three,” he says with a smile. “Our clients deserve better. We are very, very cognizant of the risks our clients are both able, and willing, to take. Certain clients are able to take on certain levels of risk in our opinion, but at times they are psychologically unwilling and we try to work within that risk framework. We’re also very cognizant of the fact that if you manage the risk, the returns will follow. If you chase returns, risk will bite you. It really, really will.”