'Intellectual Trust'

Robert S. Scherer
Managing Director-Investments; The Scherer Group at Graystone Consulting; Morgan Stanley Smith Barney; Washington, D.C.
Fun Fact: Scherer joined E.F. Hutton in 1983. His office phone number has remained the same since.

As a young man with a Wharton MBA, Bob Scherer helped Tenneco Oil reorganize its financial services division. To his amazement, the firm, which had a major presence in life insurance and financial services, outsourced the management of its substantially sized portfolio.

“Here we’re a bunch of MBAs sitting around and they’re still using an outside consultant to help manage their pension plan and portfolio. Here’s a major institution using a typical old-line traditional brokerage arrangement and not really getting fiduciary advice,” says Scherer. “And I’m thinking: What an interesting opportunity. It seemed absolutely a field on the verge of exploding.”

Scherer wanted in.

He got what he wished for. Today, Scherer heads The Scherer Group at Graystone Consulting, one of 32 elite advisory groups at Morgan Stanley Smith Barney that provide high-level investment consulting advice to institutions and the upper-tier private wealth market. With $3.8 billion in assets under management, it isn’t the largest practice in the Graystone group but Jim Tracy, Director of the Consulting Group at Morgan Stanley Smith Barney, calls it “second to none.”

As Tracy puts it: “These guys are exceptional at researching managers and opportunities, exceptional at managing money and exceptional at asset allocation and investment excellence. What Bob and his team members have is something you can’t duplicate.”

Scherer, 58, still has the first institutional client he took on after joining E.F. Hutton in the 1980s. What’s more, he has had virtually no client defections, which is saying a lot in a field where institutional committees routinely change managers. Not surprisingly, the loyalty meter is huge with Scherer and for him it can be measured in two words: intellectual trust.

“To me, that’s different than moral or ethical trust that most people talk about. It’s very easy for someone to say that they trust you and that’s why they give you their money, that they can sleep at night knowing Bob or anybody else is a trustworthy guy. That’s just the first step,” notes Scherer, who says an entirely different level of trust exists when someone becomes a client for life.

“At that point, they believe not in you as a person, but in you intellectually. There’s nothing out there you can’t help them attack, explain or understand,” he adds. “They trust that they will always be in the know, informed and they understand that their portfolio, specifically, and the concepts involved in running it will be explained. This level of trust is paramount to maintaining a loyal, sticky business and this is where we have succeeded above and beyond most of our peers.”