The Top Wealth Managers 2012 Profiles: No. 6—Gresham Partners LLC

The firm is different from other establishments such as wirehouses, private banks and trust companies because of its alignment of interests, says Neild. “Most people in large firms in the business are in it because they’re selling a product, not because they’re fiduciaries providing advice,” he explains. “That’s a clear dividing line between fiduciaries and brokers. In today’s day and age, I think that is becoming more important to people because they are starting to understand the difference.” He adds, “The press is educating prospective clients for us. It’s great!”

He cites other important factors, including the difficulty that small independent firms have with resources. Most “are constrained” in that respect, he says, “and don’t have an investment platform that allows them to do what we can do over our history—controlling risk and generating real returns after taxes in very challenging markets. It’s difficult to do.”

The other is the focus of the firm—which goes back to aligning the firm’s interests with those of the clients. Gresham, he reiterates, is focused on serving clients, whereas “many others are focused on acquiring clients and on the sales process. If you look at private banks and [other such firms], their incentives are not to serve clients well but to bring in new assets. Their incentives are aligned differently than serving clients well.”

However, he says, “We view it differently, in that if we serve them very well, the best source of new clients is referrals from existing clients.” He adds, “Focus on existing clients, and they become a very powerful referral source. It should lead to healthy business and client acquisition over time.” It has certainly worked for Gresham, whose growth has been completely organic.

Key to the Future and Chief Concern: Attract ‘True Fiduciaries’

While one concern for the firm, of course, is the capital market situation—volatile and risky—another is attracting the right kind of people. While the former situation can make it difficult to focus on “the very important task” of capital preservation, the latter is vital to long-term concerns as well.

Principal-owned Gresham is better able to maintain its independence, says Neild, because “If you have an outside owner, whether private equity or a big bank or some other, interests can become misaligned. Short-term results, or a financial result unrelated to anything to do with clients,” becomes the main focus. Employee ownership and a truly independent structure “are really important to being a true fiduciary to clients.”

When it comes to attracting new people, he says the same principle applies, adding that the lack of conflicts of interest has acted as a magnet for people committed to being true fiduciaries rather than being sales driven. The latter, he says, “are usually wired the wrong way” to succeed at Gresham.

The firm also looks for people who can focus on multiple generations of clients, since clients seek “a generational concept. What is wealth doing to their children? How best can they be helped in the future?”

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