One hundred firms make up AdvisorOne’s 2012 Top Wealth Managers, as measured by assets under management per client, with data as of 12/31/11.
Here we present a profile of the crème de la crème of the Top Wealth Managers—those 10 firms that topped the list in in our 2012 survey.
View the list of all 280 firms in our 2012 Top Wealth Managers survey.
Founding principal Ben Beavers, says President and CIO Ted Neild, knew the importance of true independence at the time Gresham Partners was put together as a spinout of a corporate financial planning firm. That independence still drives Gresham today.
Beavers and other founding principals are still principals today, as well, with the firm’s priorities unchanged and a long perspective in place. Neild says the way the firm is organized on the investment side preserves a focus on capital preservation and risk control.
That stood the firm in good stead during the 2008 upheaval. Neild says that Gresham’s quest to eliminate all conflicts of interest with clients at its founding has led to a firm that is independently owned, does not sell products and does not make money any other way than by providing advice to clients.
“In this day and age,” he explains, “with Madoff” and with firms selling poorly performing investment vehicles to clients, “people are focused on aligning their interests and making sure their advisors are true fiduciaries.”
While the founding principles are still intact, says Neild, the firm is “always adjusting … to adapt and keep up” so the focus is always on the right types of things for the client, both organizationally and with regard to investments.
The investment platform is always changing, Neild says, adding that the last couple of years “required more adjustments than at any point in time.” While the firm is still anchored to its compass, he explains that preserving and growing capital in real terms is important, and most platforms are geared toward benchmark-oriented relative terms. “We are protecting and growing [the clients’ capital],” he says, “the [former] in difficult markets, and the latter in normal markets. “We have made a difference for clients primarily because we have been able to preserve principal in difficult periods.”
The firm has escaped largely unscathed from the scandals that have plagued the financial industry, Neild says; it has been careful in its examination of potential investment vehicles and firms. While “some things come out of left field” such as the failure of Lehman Brothers or Bear Stearns, others displayed “warning signs” of risks. “We looked at Madoff several times,” he says, “but couldn’t get comfortable with the things that we saw.”
‘Alignment of Interests’
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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