About 18 months ago, life coach and business strategist guru Tony Robbins argued that he assuredly was not gearing up to enter the retail financial services industry. Ten weeks ago, he became part of it, a move that the seminal seminar showman and entrepreneur details in an interview with ThinkAdvisor.
Named this past April Chief of Investor Psychology for Creative Planning, the nation’s No. 1 wealth management firm, according to CNBC, Robbins, 56, has already begun training the firm’s team of some 140 financial planners, and has designed and funded interactive online prospecting tools to attract an expanded clientele: investors with modest liquid assets as low as $50,000.
Creative, with AUM of $18 billon-plus, previously targeted high net worth and ultra-high-net worth clients exclusively. Now the firm has assigned a discrete team offering a “streamlined” version of its service model too.
Just what qualifies Robbins as an investor-psychology chieftain? After all, he’s neither an advisor nor a psychologist. Here’s a clue: “Tony’s genius is his ability to deconstruct what drives certain behaviors,” trader Paul Tudor Jones, whom Robbins has coached for more than two decades, told Fortune in 2014.
But what prompted Creative and Robbins to partner up? The firm’s president-CIO Peter Mallouk, Barron’s rated as America’s No. 1 independent advisor, was aiming to be the industry’s leading advocate for change by promoting the fiduciary standard for all advisors. (Perhaps ironically, when Mallouk started out at New England Securities 15 years ago, he was dually registered.)
Meanwhile, with publication of his 2014 book, “Money: Master The Game,” Robbins had also become a vocal proponent of the fiduciary standard.
Mallouk, 46, wanted to raise his firm’s profile. And with Robbins aboard, he saw a way to accomplish that. He and the famed coach announced their alignment on April 5. At around the same time, Creative acquired the RIA, Gupta Wealth Management. Top financial advisor Ajay Gupta, Robbins’ personal FA for years, is now Creative’s Chief Investment Strategist.
Robbins, chair of a holding company with 18 diverse businesses and a philanthropist who shares his wealth to feed, shelter and educate the impoverished, is out to make waves as a consumer advocate by alerting folks about issues such as broker conflicts of interest, transparency and the benefits of RIAs over advisors who are dually registered, a standing he unwaveringly does not support.
Robbins, who has counseled leaders and idols, like Bill Clinton, Oprah Winfrey and Serena Williams, collects many millions per year coaching CEOs worldwide; in addition, he garners a cut of their firms’ gains. As an independent contractor to Creative, he is compensated as a member of the Board of Directors and, separately, for generating new business. He says he is donating all that to the charity, Feeding America.
Two-and-a-half years ago, Robbins’ book, a how-to about achieving “financial freedom,” shot to the top of The New York Times business bestseller list even as it set many a detractor astir, if not atwitter. They saw Robbins as a financial services interloper and sneeringly speculated that he would soon launch his own financial advisory. Further, they razzed that his 656-page tome was laced with inaccurate or biased information about investing.
Robbins retorted, in an interview with ThinkAdvisor in December 2014, that such folks were “taking pot shots” at him and that the notion of his opening a financial practice was “the biggest bulls— on the planet!”
Now he’s published a paperback updated version of “Money: Master the Game” (Simon & Schuster) – 664 pages long. He continues to tout hedge fund founder Ray Dalio’s All Seasons Portfolio, a strategy that some advisors dissed when he promoted it in the first edition.
“Attacking Ray Dalio – for God’s sake! People might have been sincere, but they were sincerely wrong,” Robbins grouses in the new interview.
Consumers flock to Robbins’ rousing self-help seminars, paying the likes of $3,000 to $5,000 a pop for his annual six-day event. Now comes a documentary film that goes behind the scenes of one such spectacular “Date with Destiny.” The revealing look, called “Tony Robbins: I Am Not Your Guru,” will premiere July 15 on Netflix.
ThinkAdvisor recently held separate phone interviews with Robbins, speaking from his Palm Beach, Florida, residence, and Mallouk, in Leawood, Kansas, where Creative is headquartered. The two discussed Robbins’ new financial services role, the DOL’s fiduciary standard rule, annuities, Ken Fisher, and how brokers treat clients, among other topics. Here are highlights:
ThinkAdvisor: You’ve said that “brokers are selling for the house and that the house always wins” because brokers are looking out for themselves first and the client second. Why do you hold brokers in such low esteem?
Tony Robbins: I have nothing against brokers. Most of them sincerely care. But they do what they’re trained to do: they’re working for the house. The wirehouses are big corporations; and it’s their shareholders they want to take care of first, not the customer.
How does that impact clients, then?
TR: They have no clue what they’re being pushed into. They’re taught to give up control to somebody who doesn’t necessarily have their best interest in mind. Products and advice should be separate. That’s why I’m promoting the fiduciary standard.
Your new title, Chief of Investor Psychology, implies that you’re an expert in investments and/or that you’re a trained psychologist. What qualifies you for this role?
TR: I’m not trying to be a financial advisor. I’m an educator. But when it comes to psychology, I don’t think anybody who knows anything about my work for the last 39 years in 100 countries and with 50 million people would argue that I don’t have the chops to give anyone advice. I’m trying to add value in a way that the average financial advisor can’t because they don’t have my experience.
Do you keep an office at Creative Planning in Leawood, Kansas?
TR: No, no. I have 18 companies! We do $5 billion a year in sales. This is one of many ventures that I’m involved in.
What sort of education are you providing to Creative’s financial planners?
TR: How to figure out what people’s deepest psychological needs are so they’re not just getting a financial plan but that their individual emotional needs are being met.
Less than two years ago, you told me you had no plans to enter the financial services industry. But here you are!
TR: Yes, I am. Peter reached out to me and said, “I know you’re a big supporter of the fiduciary standard, but there are some gray areas I’m sure you’re not aware of.” We met, and he told me about them.
TR: Some advisors are duly registered: one moment they’re wearing a hat saying, “I’m a fiduciary”; but in the middle of the conversation, they can flip hats and they’re a broker. I was dumbfounded that the law has that loophole. Then Peter shared what’s going on with proprietary products. The combination of those two pieces pushed me over the edge.
What do you mean?
TR: After talking in more depth, I said, “If you’d be interested in partnering with me, I’d love to bring people to your world. But I want you to [serve] individuals that don’t have a million dollars. Would you be willing to create a division to provide a free [service], where anyone could get a second opinion on their portfolio?” I got him to agree, and I said, “I’m all in.”
Peter Mallouk: I’d been trying to get the word out about the fiduciary standard, but I didn’t have a very big megaphone. Now I can accomplish more in one day with Tony than I did speaking for the previous 12 years. It’s disgraceful that [brokers] aren’t required to act in the client’s best interest. That’s probably the biggest attraction that Tony and I had to each other.
Tony, what’s the main reason that your deal with Elliot Weissbluth (HighTower founder-CEO) fell apart? You and he promoted the original edition of your book together.
TR: We never had a deal. We were just great friends and still are. He really helped educate me about the fiduciary space. But I never committed to having a partnership with his firm specifically.