Barron’s “The Top 1,000 Advisers” recognizes the best financial advisors in the business. As always, Research joins in congratulating all the winners and this year takes a closer look at three special firms that made the cut. What makes them stand out?
For starters, each is ranked tops in their respective states: The 545 Group in California, The Rodriguez/Hardie Group in Louisiana and The Barry Garber Group in Maryland. For the rest of the story, please read on.
And for a complete list of the Barron’s Top Teams by State 2009, click here.
Your Chief Investment Officer
The 545 Group, Morgan Stanley Private Wealth Management
Morgan Stanley Smith Barney, Menlo Park, Calif.
The 545 Group deals daily with some of the heaviest hitters in Silicon Valley, solving problems a lot of advisors wish they had.
Consider: The average account size of a 545 Group client is roughly $25 million.
But the group’s principals don’t aim to wow their clients with complex solutions — just the opposite.
“You learn a lesson every week and we have a lot of scar tissue to show for it.
“We’ve had complex problems with clients, but the more simple you can keep the solution and the more simple you can present, the better. Your client doesn’t have to know how smart you are or how smart are the people who work with you,” notes Robert Dixon, executive director of the Menlo Park, Calif.-based team. “If you can put your solution on one or two sheets of paper, that’s better than 20 or 30, and it eliminates a lot of problems going forward.”
It’s good advice from someone who has a lot of skin in the game. Dixon, 62, and Gregory Vaughan, 53, first formed their partnership at Morgan Stanley 28 years ago. The “545″ refers to their cost center number at the time. One of their longstanding hallmarks is consistency in the client experience — but their practice has been anything but static.
As their clients’ chief investment officer — and that’s how they actively position themselves — Dixon, Vaughan and their two younger partners deliver a global, tax-efficient investment process and, importantly, the multi-step process concludes with their own accountability.
As Vaughan frames it, “Many of our clients run organizations and are very used to delegating. We view ourselves as an employee of the client. I would suspect our clients run their businesses the same way: You hold people accountable for results.”
The great majority of the 100 or so families The 545 Group serves are corporate executives or founders and private equity professionals. Many have spent their careers running a company driven by a business plan — so the idea of a CIO isn’t foreign to them. Best yet, says vice president Jason Bogardus, 38, “Our CIO role forces clients to think about their personal investment portfolio as a business plan. Our goal is to try to add a lot of value to as many people as possible by focusing on what it is we do best: managing investments.”
Certainly, something is working. With more than $10 billion in assets under management as of end July, the practice didn’t lose a single client in 2008, a very difficult year. And, notably, most of its referrals continue to come from the firm’s fiercest marketers: satisfied clients.
“We’re not out shaking the bush quite as hard,” says Dixon. “We’re more intent on the day-to-day business of managing client assets.”
The 12-person team includes partner Mark Douglass, a chief administrative officer, and several traders, analysts and service associates. Everyone sits in the same office on renowned Sand Hill Road, a reflection of the group’s horizontal design.
“We understand what’s going on day to day, we overhear conversations and a lot of synergies come from that,” according to Vaughan. “Being in your own office is not creative and doesn’t create the kind of dynamic atmosphere we want.”
Not long ago, Vaughan arrived at the office, early for him, at 5:30 a.m. He had expected to be the one to turn on the lights.
“I walked in here and there were four people in the office. I thought I’d be the first one there,” he says. “These are folks who work as long as they need to get the job done. We’ve set an expectation level to get things right the first time. It’s what clients expect. As a group, it’d be tough to find another that works as hard as we do.”
All in the Family
The Rodriguez/Hardie Group
Merrill Lynch Global Wealth Management, New Orleans, La.
It wasn’t the market meltdown that started last fall or any that preceded it that has most tested The Rodriguez/Hardie Group. It was a hurricane called Katrina.
Not only were the then eight members of the team scattered in eight different cities during the aftermath of the 2005 hurricane, but the New Orleans-based group’s clients were displaced with no immediate access to their accounts.
“The most violent time we’ve seen wasn’t 1973, ’83 or ’91 or last October, it was Katrina. People were in an absolute and total panic because there wasn’t anyone in New Orleans who wasn’t displaced. We had clients who didn’t know how to pay for their next meal,” notes Rod Rodriguez, an advisor for nearly 40 years. “We had to do an immense amount of consulting with clients back then. It was an enormous challenge.”
Yet even in difficult times, The Rodriguez/Hardie Group’s assets under management have grown — as they did through the Katrina ordeal. And, again, as they did last year as new clients brought in net new assets.
With more than $2 billion in assets under management, Rodriguez, 60, and his partner, Scott Hardie, 43, tend to 400 client relationships with one overarching objective: to deliver an above-average rate of return on a risk-adjusted basis.
The group, which ranks routinely among Merrill Lynch’s top producers, has a family tree with deep roots.
Rodriguez and Hardie’s father, Eben Hardie, became partners in the early 1990′s representing pretty much the same type of clients that the group does today: high-net-worth individuals and corporate entities. Scott Hardie joined Merrill in 1996 after working for more than a decade in Washington, D.C., in corporate banking. The younger Hardie, tutored by his father and Rodriguez, joined the team in 1998. Eben Hardie subsequently retired after 50 years with Merrill Lynch. Not coincidentally, Rodriguez’s son, Richard, a client associate, became a part of the group this past January.
But here’s the “only in New Orleans” part: Scott Hardie’s great uncle, Darwin Fenner, was a principal with Fenner & Beane, the New Orleans commodities firm that Merrill Lynch bought in 1941 to give it a foothold in the South along with a new name: Merrill Lynch, Pierce, Fenner & Beane. “As you can see from the Fenner-Hardie side, it’s a tremendous lineage in Louisiana,” says Rodriguez. Not that he’s a “commoner.” The Rodriguez family owns McIlhenny Co., which makes the iconic Tabasco sauce. The privately held firm has been in the McIlhenny family — Rodriguez’ wife is a McIlhenny — since 1868.
For the past decade, The Rodriguez/Hardie Group has become more of a multi-dimensional practice, in large part because of the talents Scott Hardie brings to the mix. The group now has a lending component, for example, and Hardie has courted many of the city’s philanthropists and next-generation opportunities, converting them to clients.
“We added a dynamic we didn’t have before,” observes Rodriguez, whose own business has grown as a result of his clients inheriting their parents’ wealth. He’s also done a fair amount of corporate consulting. “We’re not in a static business. We always want to add relationships where we can bring value to the client — and not just numbers.”
With Hardie and Richard Rodriguez, 25, being groomed to lead the group one day, the elder Rodriguez says he sleeps easier — and so should clients.
“When you build a business in the brokerage industry, if you die and you don’t have plans, clients you’ve known your whole life are left in the clutches. I love my clients,” he adds. “I want to make sure they’re taken care of.”
A Sophisticated Approach
The Barry Garber Group, Private Wealth Management Division
Deutsche Bank Alex. Brown, Baltimore, Md.
Not long ago, advisor Barry Garber made a presentation to 15 physicians. Afterward, three asked if he’d take over their portfolios, each worth between $2 million and $4 million. Garber’s response?
“We just passed. It’s unusual in this industry to pass on that kind of business, but you really need to focus on what you do well,” says Garber, who heads The Barry Garber Group for the Private Wealth Management Division of Deutsche Bank Alex. Brown. “As soon as you start diluting that focus, you end up with a sub-par result.”
The story is classic Garber. Since joining Alex. Brown in 1991, after working for a couple of retail giants, the 53-year-old Garber has run a crisp practice focused on providing best-of-class service to institutional clients and ultra-high-net-worth individuals. His current minimum: $5 million.
With $1.4 billion in assets under management, the Baltimore-based group — Garber and four associates — keeps its service quotient high and its number of client relationships low. At the moment, the team has roughly 125 client relationships. One early lesson? “There’s a limit to how many relationships you can service properly.”
Not surprisingly, Garber — one of just 257 advisors in the private wealth management division — is also intently focused on performance results. From the beginning, he’s been fascinated by the concept of low correlating asset classes. The question that drives him: How do you put together multiple investment classes that have a very low correlation to one another? Alternative investments — including private equity, hedge funds and structured notes — are all part of the mix. Notably, with his high minimum, all of his clients are qualified purchasers.
“There’s a certain level of sophistication to this approach and while it was unique for the industry 18 years ago — no one was doing this — I stayed the course,” says Garber, who has an MBA in finance and portfolio management from the New York University Graduate School of Business. “Our approach of looking at these non-correlating asset classes and our approach of having assets under management that are fee-based — well, it means it’s not driven by activity, which is one of the flaws of the industry. When you put it all together, it’s putting the client’s interest in the same place where our interest is. In any business, unless you’re able to do that, you make bad decisions.”
Garber brings a unique background to his practice. After graduate school, attracted by the opportunity to learn all aspects of running a business, he entered a management training program at General Foods Corp. After that, he was a product manager with P&L responsibilities for Bristol Myers Corp. Later, he was recruited as a senior executive for U.S. Health, which owned and operated 65 fitness centers.
“I understand how to evaluate and manage a business, and I’ve leveraged that,” says Garber. “I deal with a lot of owners of businesses and senior executives. Having sat in their chair, I’ve been able to develop a special bond.”
Garber has never made a cold call, and today, he says, the calls are coming his way.
“This is the best type of environment for my business. When the market is flying, it’s very difficult to differentiate good from bad advice because everyone makes money. Over the last year and a half, while it’s been painful reading the headlines, we’ve held up significantly better than our peers,” adds Garber. “The fact is we’ve set up our business to hit singles and doubles and to try to protect on the downside. It’s actually for me one of the most exciting times since I’ve been in the industry.”
Baltimore Sun,” can be reached at [email protected]