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December 08, 2014 at 07:21 AM
In his rousing seminars, primo coach Tony Robbins spurs willing attendees to tread across a bed of burning-hot coals as a lesson in overcoming fear. Now he’s raking RIAs over the coals for taking “pot shots” at him.
Some advisors and others have mercilessly dissed Robbins’ new book, “Money: Master the Game: 7 Simple Steps to Financial Freedom,” as filled with inaccurate or biased information and said a portfolio model he hypes to the hilt is actually nothing special — or that he misunderstood the information he was given by the experts he spoke with. These detractors say he isn’t qualified to give financial advice. For the book, he interviewed John Bogle, Ray Dalio, Carl Icahn and Charles Schwab, among other notables.
In his tome as well as in press interviews, Robbins has given the unmistakable impression that he’s gearing up to step into the financial services industry.
Not true. Well, he was going to do that. But now his plans have changed, likely because of conflicts.
Indeed, Robbins had been in conversations to become a partner in Stronghold Financial, a new division of Stronghold Wealth Management, an RIA founded by his personal investment advisor of seven years, Ajay Gupta, that caters to the ultra-wealthy.
Stronghold Financial was created jointly by Gupta and Robbins’ compatriot Elliot Weissbluth, CEO of HighTower Advisors, which also specializes in an ultra-high-net-worth clientele. In contrast to its parent, SF is meant for people with modest assets.
Why did Robbins do an about-face? A look at SF’s Securities & Exchange Form ADV Disclosure Brochure dated Oct. 10, 2014, reveals: “Future Member of the Firm:…it is anticipated that Tony Robbins will also become a member of the Firm. A conflict of interest exists to the extent that Tony Robbins recommends the services of the Firm, or Stronghold Financial, and will be entitled to receive distributions or other compensation relative to his future ownership interest in the Firm.”
That section, however, was dropped completely, a month later, from an updated version of the brochure (Nov. 17, 2014). That ADV states that SF has three employees, zero clients and zero assets under management. Its minimum portfolio size is $25,000, and it charges an “asset-based fee” of 75 basis points (0.75%).
Also missing from the ADV is the name Josh Jenkins-Robbins, Tony’s son. According to FINRA’s BrokerCheck, he is registered with Stronghold Financial in San Diego. And his LinkedIn Profile links to three company websites: Stronghold Financial and two enterprises in which Tony Robbins enjoys joint ventures. In his book, the elder writes that Josh “has been in financial services his entire life.”
Robbins’ hefty volume is subtitled “7 Simple Steps to Financial Freedom.” But with plugs galore for the financially oriented companies he owns or has pieces of — or intended to partner with; i.e., Stronghold — it might as well be dubbed “656 Pages or So to Promote Stronghold.”
Sticking it to the financial services industry in general, he slams “the system” in which “the house reaps profits whether the clients win or not.”
He loudly trumpets fiduciaries, while fiercely denigrating brokers/financial advisors, dismissing the latter as “paid to sell” and under a conflict-of-interest cloud.
“Going back to your broker to help you save on fees is like going to your pharmacist to help you get off meds,” he says.
Robbins makes abundantly clear the types of investments — and providers — that he loves or loathes. “Beware of mutual funds,” he writes, citing high costs and taxes. “Nearly all mutual fund companies have a stacked deck. They are the ultimate casino.” Instead, he tells readers, replace those mutual funds with index funds. He has it in for most variable annuities, too (“Nearly every expert I interviewed for this book agreed that annuities should be avoided”) because “most people lose money in variable annuities.” He makes exceptions, however, for Vanguard and TIAA-CREF VAs, singling them out as low cost and investing in low-cost index funds.
The charismatic Robbins, 54, who has counseled Bill Clinton and coached trader Paul Tudor Jones for the last 21 years, owns a dozen companies with combined revenue of more than $5 billion annually.
He now considers himself spokesman for the individual investor. His aim, he says, is to change the industry’s focus from wealthy investors to just ordinary folks.
The “superhuman” Robbins (that’s what Oprah Winfrey calls him) wants to help everyman — that is, investors who are abused by “the system” — especially the broker part of the system. He first wants to “steer” consumers to fiduciaries, then focus on RIAs with a Mastery Program to help them “get to the next level,” including coaching on how to brand themselves.
It seems that the premier coach feels ready to wield the same sort of influence with investors and RIAs that he has with his seminar-goers.
Hopefully, in this arena that’s new to him, he won’t spur disciples to march on hot coals.
Last Friday, Robbins spoke with ThinkAdvisor from his Palm Springs, California, home. His official residence is in Palm Beach, Florida, which famously has no state income tax. Apart from that, the California native seems to have a thing for palm trees.
ThinkAdvisor: Are you entering the financial services industry?
Tony Robbins: I’m not looking to enter the industry. I have no desire. Some advisors think I’m coming to take over their industry. They’ve taken pot shots. I have zero desire to take their business. It’s not even slightly where I am. I’m a coach. I’m not changing industries. I’m not here to tell people what to do [about investing their money].
Why do you say that RIAs are fearful that you’ll take their business?
I would never, never tell anyone what to do in terms of getting in or out of the market. I have twice in my life, but it was based on what the people I interviewed for this book said. At the time, they were extremely concerned that the market was overvalued. So I said, “Here are some factors that may have an impact on the market according to people that I interviewed.” If I did make a wrong call, which I did not, then [detractors] telling me that [they] wouldn’t listen to somebody because they made a bad call better not listen to Warren Buffett.
But you wrote a book about investing that intends to tell readers “how to master” the “game” of money.
Nothing in this book is my opinion other than the emotional side. Everything that is talked about financially comes from sources who are 50 of the smartest people in the world that I interviewed. I’m going to keep my day job.
Yet in the book, you write that you’re in conversations to partner with Stronghold Financial, an RIA created by your personal advisor, Ajay Gupta, and Elliot Weissbluth, CEO of HighTower Advisors.
I don’t own any interest in Stronghold Wealth Management or Stronghold Financial, nor will I ever. I’m not considering it for the future. Zero. Well, that’s a change.
In the beginning, I was talking with them; but in the end, I decided I didn’t want to try to make money with individual investors. I want to educate and support them. I have no personal interest in selling something to them in any way, shape or form.
What was your original plan, then?
I would have been a third partner in the business. [Instead], they’re going to donate the profits they would have given me to the [Feeding America] program on an annual basis. I’m not seeing any of that money whatsoever. I’m not receiving anything financial from it, and I will not.
When did you decide not to become a partner in Stronghold Financial?
At the beginning of this fall [2014]. But the book was already in process; so we couldn’t go in and change it, or we would have missed our deadline. Also, I wanted to make sure I published it in time to stimulate The 100 Million Meals Challenge [charity program] which is during the holidays.
So, do you now have plans to open your own advisory?
That’s the biggest bulls— on the planet! “Oh my God,” [RIAs are fretting] “he’s coming to try to take my business!” No!
Are you interested in becoming deeply involved in any other part of the industry?
If I do something in the future, it will be on the institutional side. And I’m considering that because I think it’s a great thing for people to have more options.
What would you do on the institutional side?
Some individuals have approached me. One is Bob Caruso [founder-chairman, Impact Republic]. He was the COO of HighBridge [Capital Management] ,which they sold to JPMorgan. He’s approached me on potentially partnering with him, where he could bring in some alternative types of investments and make sure fees are stripped out of them — often they have a 15% markup, which I think is inappropriate — whether it be an REIT or private credit or senior housing. I’m in the early stages of looking at this as we speak.
You write that the financial services business is manipulative and non-transparent. At this point in your career, why would you want to get involved in an industry that you hold in such low esteem?
I want to show individual investors how to use the system, not to be used by the system. What you don’t know about this industry hurts you. Ignorance is pain. It’s not an evil system, and I don’t see it changing. It’s not that the system is horrible. It’s doing what it’s made to do. It’s just corporations whose job it is to maximize profits first. It’s not to maximize the profits of the individual investor. It’s to maximize the profits of shareholders.
You say you want to help RIAs. How?
