Welcome to Research magazine’s Advisor Hall of Fame, now in its 20th year. This eagerly anticipated annual feature has become a benchmark of excellence in our industry and an example to all of the rewards that result from effort and integrity.
Candidates who pass our rigorous screens have served a minimum of 15 years in the industry, have acquired substantial assets under management, demonstrate superior client service and have earned recognition from their peers and the broader community for the honor they reflect on their profession.
Finding the nation’s finest financial advisors is made possible by the wisdom and discernment of our panel of four distinguished judges (named on the last page of this article). Their discriminating judgment has enriched our Hall of Fame with five extraordinary new members. With no further ado, here are their stories.
John (Jeff) Erdmann III
Managing Director Merrill Lynch’s Private Banking and Investment Group
Career Began: 1985
Home Base: Greenwich, Conn.
Civic Affiliations: Maritime Aquarium at Norwalk, National Federation for Teaching Entrepreneurship
Almost everything about Jeff Erdmann’s business is supersize. With $4 billion in assets under management, he routinely ranks among Merrill Lynch Global Wealth Management’s top three advisors. Let’s face it: That’s rare air.
The statistic Erdmann himself cares most about? His clients’ comfort quotient. Just recently, he sat down with a relatively new client, the president of a major public company, and did a cash flow analysis for him.
“I’ve got so much money,” the man said afterward. “But I never knew until now that I had enough.”
The 18-member Erdmann Group, headquartered in Greenwich, Conn., manages money for 150 ultra-high-net-worth families. To call Erdmann’s clients captains of industry is not a reach. Most are current or past chief executive officers, presidents or founders of public and private companies — with family account sizes ranging from $7 million to $750 million.
As Erdmann, 48, frames it: “No one comes to us and says, ‘Make me rich.’ They’ve already done that. It’s our job to manage their wealth. The fact is we’re all worried about the same things, no matter how many zeroes are in our net worth.”
Erdmann, known for his empathy and out-of-the-box thinking, has built a business that is uniquely his. It’s industry practice, for example, for successful advisors to cull their least profitable clients. Not Erdmann. Twelve years ago, when he was trying to manage assets for 500 families, he created a second business within his own boutique to support the 300 or so clients with account sizes ranging from $500,000 to $7 million. Each family is assigned two investment partners and two administrative partners, along with an annual or as-needed check-in with Erdmann.
“All of those families are incredibly important to me. One of them is my sixth grade teacher. I’d never give them away. I want to make sure they’re totally taken care of,” says Erdmann. “We don’t tell someone you’re too small for us or we’re too important for you.”
Moreover, he adds: “To shift my clients over to some junior guy —that’s complete malpractice, it’s disrespectful and it shows I don’t care. First and foremost, you need to do what’s right and take care of the people who got you where you are.”
Not surprisingly, Erdmann still has his first client, who sold his business in 1999 for $100 million. When the entrepreneur opened his account with Erdmann, it had $2,200 in it.
Erdmann grew up in New Canaan, Conn. His father, a real estate broker, was a member of the New York Stock Exchange. When she retired, his mother was global editor-in-chief of Reader’s Digest Select Editions. Erdmann knew early on he wanted to be an advisor — cold calling for Paine Webber and then Merrill Lynch when he was still in college. He joined Merrill’s training program in 1985. It has been his corporate home since.
A graduate of Ohio Wesleyan, where he majored in business and finance, Erdmann recognized the importance of developing a business model from the outset. “I’ve said from Day One I want to have a business model that revolves around things I can control. 1. We are our clients’ financial planner and cash flow manager. 2. Their private banker. 3. Their investment advisors. 4. We’re their family friend,” he says. “If we can do all four of those things, and these are all things we can control, we will be successful.”
Twice monthly, Merrill Lynch advisors from around the country fly to Erdmann’s offices to, as he puts it, “look under the hood.” What they discover: a planning-based practice with a deep service component and laser-like focus on risk-adjusted performance and client lifestyle concerns. Notably, every person on the team is an equity partner. There’s still a great culture at Merrill Lynch,” Erdmann says. “I want to see it live on.”
Clearly, Erdmann is part of what has made the brand special.
“Jeff has the ability to do two things: to engender trust because of his composure and honesty and to communicate in any environment,” notes Peter Rohr, a Merrill Lynch advisor in Philadelphia who once interned for Erdmann. “He also has the ability to listen, something most people in our business struggle with. This is an industry that’s changing all the time and people rise and fall. Jeff has been the best since he started and he’s the best still today, a leader within our firm.”
Today, Erdmann says he is having more fun than when he first started — working harder than ever but, thanks to technology, smarter.
“I got into this because I love working with people. I still do,” he adds. “Business has changed a lot, very much for the better. Consumers and advisors are more sophisticated and there’s more transparency than there ever was. Frankly, there’s a much greater need today for advisors than before because of the complexities of the market. If you have a planning-based business, you’re in great demand.”
Stephen W. Johnson
Branch Manager Raymond James Financial Services
Career Began: 1979
Home Base: Draper, Utah
Civic Affiliations: Children’s Miracle Network, Rose Park Elementary, Utah Arts Festival
By any measure, Stephen Johnson is an industry success story. Production, assets under management, growth trajectory — all of that. But what makes Johnson truly stand out is an abundance that cannot be measured: his empathy, his compassion and his goodwill.
As Bill Counsman, Johnson’s regional director, puts it: “When you talk with Steve, regardless of the subject, you come away feeling good.”
Johnson, 57, heads a family practice in a Salt Lake City suburb that includes his brother Neal and son Lee. With 30 years of professional networking behind him, Johnson is the rainmaker. It’s no small thing that while many advisors saw production slide in the down market, Johnson’s firm experienced a growth spurt.
“Most advisors, if they are successful, will tell you in the down years is when they pick up more business. I hope to think it’s integrity that’s bringing them in the door. I’ve never made a decision based on what’s best for me; it’s always been what’s right for the client first,” says Johnson. “My referral sources know that.”
Johnson’s business has two distinct parts. With $225 million in assets under management, the retail side involves wealth management for business owners, executives, doctors and attorneys. “We don’t have a lot of clients we think will have trouble in retirement. The trouble is they don’t know what their number is: how much they need to be OK,” says Johnson, who also serves as investment management consultant to several Utah-based companies, including Children’s Miracle Network. “What we’re good at is helping people find that number.”
The second piece, retirement plan consulting, has grown into a $140 million business that Johnson is developing, as he frames it, by “mining” his own book.
“We’ve approached existing clients, asking them if they have a retirement plan. If so, are they happy with who’s managing it? Ninety percent of this business has come from existing clients. It’s a tremendous feeder,” says Johnson. At the moment, Johnson is managing retirement plans for four Salt Lake City law firms. Many of the attorneys were already individual clients. “I’m still trying to build it. I grew up with a stockbroker mentality of the business. I don’t mind prospecting. I like people.”
Johnson, a one-time dairy farmer, grew up in modest means in West Virginia. The student body president of his high school, he was drafted by the Baltimore Orioles but decided instead to attend Brigham Young University on a baseball scholarship. After getting his degree in business management and marketing, he briefly sold computer software and then ran his father-in-law’s dairy operation in Colorado for three years. One morning at 2 a.m. while working in the bitter cold, he decided that dairy farming wasn’t why he had gotten a business degree.
In 1979, Johnson got an insurance license and joined E.F. Hutton, later jumping to Dean Witter as an associate vice president. In 1990, he opened an office in Draper, Utah for Raymond James Financial Services (then Investment Management & Research.) When he couldn’t afford a full-time secretary, wife Connie kept him afloat by filing and record-keeping. Most recently, his wife designed new offices for the Johnson group, located in the corporate headquarters of a construction company. (Not coincidentally, Johnson now manages the builder’s retirement plan.)
Johnson starts each morning with his 34-year-old daughter Farah, severely handicapped since she was a baby. She is like a newborn and Johnson calls her “a great blessing.” He gives Farah her morning meds and gets her dressed. “We talk, we laugh, we play,” Johnson says. “It’s our time together.”
A member of the Raymond James Chairman’s Council, Johnson is known for giving clients calm, pragmatic advice. But, as Counsman notes, clients are drawn to him not just for the quality of his work but the quality of his character. “I would recommend Steve without qualification to anyone — and particularly to those I care the most about,” says H. Ross Workman, a retired attorney who is a longtime client.
Not surprisingly, Johnson’s impact on his community is far-reaching.
He manages money pro bono for the Utah Arts Council. And, for the last six years, he has raised funds each Christmas for families in one of the poorest sections of Salt Lake City, the neighborhood anchored by Rose Park Elementary. The money, donated anonymously, is used to buy toys, clothing and food for 12 families.
Last year, students returned to school in their new clothes and thanked the principal for the gifts. When the principal explained the money was given anonymously by “someone who loves Rose Park students,” one child asked: “Someone who doesn’t even know me wants to give me these?”
Someone named Steve Johnson.
“We have great clients and a great community,” he says. “We’re having so much fun.”
Managing Director Kauffman Wealth Services
Raymond James Financial Services
Career Began: 1982
Home Base: Pasadena and Santa Barbara, Calif.
Civic Affiliations: Santa Barbara Community College Foundation, Social Venture Partners, Hearts Therapeutic Equestrian Center, Anti-Defamation League
Mitchell Kauffman is a big thinker for whom details matter. He sets the highest of standards, above all for himself. And his client-first service model rivals the best.
Kauffman, 57, talks often of integrity, objectivity and transparency. Like his role model, the legendary Peter Drucker, Kauffman looks at the core of a client. “Is this someone I can connect with? Can I see the world through their eyes? Are we compatible? I dig pretty deep,” he says. “My practice is extraordinarily personalized.”
With $115 million in assets under management, Kauffman advises 75 households as the managing director of Southern California-based Kauffman Wealth Services, which is associated with Raymond James Financial Services. Clients include high-level executives, business owners, physicians and attorneys as well as several foundations and non-profits.
“My practice is really eclectic, to the chagrin of every coach I’ve ever talked to. They all talk about how you need to specialize,” says Kauffman, a certified financial planner. “In my practice we talk about being more people-focused than vocation-focused. A qualified client is really the person — it’s not what they do.”
Kauffman is known for practicing a comprehensive planning process that balances growth and/or income with institutional-level wealth preservation techniques. He also works closely with clients on what they want their lives to look like.
As client Ron Dresher, managing partner of a large promotional marketing agency in Los Angeles, puts it: “He not only gives good financial advice but he takes a good look at you personally — your risk tolerance, lifestyle, work desires — and then he puts a whole package together so you have a life plan that not only includes financial independence but your personal goals. And he plays with full integrity.”
Kauffman’s approach to his practice and to his own life was shaped as a child. His father abandoned him and his mother when he was three, an experience that has made him especially sensitive to the plight of struggling single women. Many of his clients are women.
Kauffman floundered in high school, barely graduating. He was pumping gas and bagging groceries when a friend’s family who believed in his potential convinced him to enroll at a junior college. He went on to get two master’s degrees. (Kauffman’s vanity plate reads: 10 HUS, for “tenacious.”) At Claremont University where Kauffman got his MBA, he studied under Drucker. It was Drucker who instilled in Kauffman a keen sense of business ethics.
After working in brand management for a consumer packaging company, Kauffman became a financial advisor first for Equitec Financial Group and later for American Pacific Securities. He founded his current firm in 1988.
From the start, Kauffman has operated according to several core business values. Objectivity and transparency, for example. Clients can choose to work with his firm on an hourly or percentage-of-assets fee basis, taking any conflict of interest right off the table. He also provides what he calls a “service sanctuary.” As Kauffman frames it: “It’s a place where clients can feel we’ve got the ball and we’re not dropping it. And these are standards I impose on my staff. If a client’s calling us with a question, we are already behind. We should have been pro-active.”