Jordan Belfort, aka “The Wolf of Wall Street,” is a fast talker. So even in a short 30-minute phone interview, this reporter covered plenty of ground.
Including: Where the disgraced ex-broker stands in paying back his former clients whom he defrauded of $2 million, for which he was convicted of securities fraud and money laundering in 2003, ordered to repay $110.4 million and sentenced to four years in prison (in a plea deal, he served 22 months); why he has just published a how-to book based on the same sales system he used to swindle those investors; his dangerous drug addiction, as depicted in the movie — and more.
In an interview with ThinkAdvisor, Belfort, sober for 20 years now, calls the semi-revamped system he touts in “Way of the Wolf: Straight Line Selling: Master the Art of Persuasion, Influence, and Success” (North Star Way) “elegant and ethical” and even “more powerful” than the version he and other brokers at Belfort-owned Stratton Oakmont Inc. employed to defraud high-net-worth investors of millions.
Straight Line is also the system on which Belfort, 55, bases the pricey seminars he has conducted globally since his 2006 prison release and that he markets online.
From offices in Lake Success, Long Island, New York, Belfort and his team pumped and dumped penny stocks in a massive scam. In 1996, the National Association of Securities Dealers (NASD) closed down the firm. Belfort was indicted three years later.
Thereupon, the Securities and Exchange Commission “barred [him] from acting as a broker or investment adviser or otherwise associating with firms that sell securities or provide investment advice to the public,” according to BrokerCheck of the Financial Industry Regulatory Authority, NASD’s successor.
But neither Belfort’s website nor his new book specifies the crimes he and other Stratton brokers perpetrated from 1989-1994. Indeed, his online biography boasts that he “built one of the most dynamic and successful sales operations in Wall Street history”…”earned over $50 million a year” and employed more than 1,000 brokers.
The SEC began investigating Stratton in 1990. When NASD Regulation shut down the firm, Mary L. Schapiro, then president of NASD, said in a statement: “With this expulsion, NASD … has rid the securities industry of one of its worst actors.”
Belfort — who before launching Stratton was with L.F. Rothschild, D.H. Blair and other brokerages for two years, according to BrokerCheck — reportedly has paid $4 million to $5 million to a victims’ fund but 11 years after his prison release, still owes millions of dollars to the clients he swindled.
His current lucrative income stream includes royalties from two bestselling memoirs and the blockbuster 2013 “Wolf of Wall Street” film, starring Leonardo DiCaprio as Belfort during the Stratton years, a louche lout steeped in a lifestyle of depravity and debauchery dominated by greed, drugs and hookers.
Today, in addition to royalty and seminar income, Belfort is a consultant and trainer to a number of companies, such as Deutsche Bank, General Electric and Investec, his website states.
ThinkAdvisor recently interviewed Bronx, New York-born, Queens, New York-reared Belfort, who lives with his fiancee and business partner Anne Koppe in a tony oceanfront pad in Hermosa Beach, California, south of Los Angeles. Speaking from a New York City hotel shortly before a nearby book signing, he discussed what financial advisors can learn from his how-to book. As for the former broker, he asserts on his site that he’s learned valuable lessons from “the mistakes he made and the prices he paid” and “has re-emerged as a…potent force behind extraordinary business success.” Here are excerpts from our interview:
THINKADVISOR: What’s the most valuable takeaway for financial advisors who read your book?
JORDAN BELFORT: That persuasion is such a linchpin skill if you want to grow your business. Advisors and money managers don’t realize how crucial that skill is to succeed. You might have the best track record in the world and the best skill for making money; but if you can’t share it in a way that makes people want to give you a shot, then you’re going to end up — well, without that skill, Warren Buffett would have been the best unknown money manager in Omaha versus the Warren Buffett we all know and respect.
You recommend using BoomBoom Energy’s pocket inhaler to help attain a state of self-confidence before any sales encounter. Shouldn’t sales professionals be energetic and enthusiastic naturally and not need to take a whiff of menthol and citrus to get there?
I’m very fortunate that it’s very easy for me to pop into that positive state. Some people struggle with feeling [emotionally] “certain” sometimes. They need helpful ways to ensure that they’re in the right space. So for people who, sort of, wear their emotions on their sleeve, [BoomBoom] is very helpful.
Did you take a few blasts right before you called me?
No [laughs]. But that stuff is awesome, by the way.
Have you been following the industry issue about the Labor Department’s fiduciary standard rule?
No. What is it?
A controversial rule that says when a financial advisor is advising clients about their retirement accounts, they must act in the client’s best interest by adhering to a fiduciary standard. The rule was set to go into full effect on Jan. 1, 2018; but now the DOL has proposed delaying it to July 1, 2019.
Haven’t brokers always had a fiduciary responsibility?
They’ve had to abide only by a suitability standard, unless they have discretion over an account.
I think any person that’s managing someone’s money should have the client’s best interest at heart. It’s kind of intuitive, isn’t it?
When the film “Wolf of Wall Street” came out, you stated on “60 Minutes” that your “goal is one day to pay back all the money. I hope so. No guarantees.” What’s the situation now?
That’s my hope, and I’m working at it. It’s going well. We’ll see what happens. Hopefully, the book will be another big push towards doing that.
So is making money what motivated you to write another?
Nah. The book isn’t a really ultra-lucrative way to make money. It’s not writing books that gets you rich. There are better ways than that. But it can pave the way to other things down the road.
Consulting, taking stakes in companies that you consult with and hoping they go public one day. Stuff like that.
Is the sales system you write about in the book the one you used at Stratton Oakmont?
It is. But now it’s developed, and elegant and ethical. Before I took the system around the world [for doing seminars], I spent a lot of time going through it to make sure that any strategies that lent themselves to being abused or that sent the wrong signals to salespeople were replaced with different strategies that are ethical and, frankly, more powerful because ethics and success are not mutually exclusive.
In the book, you alluded to your past by saying you had “a massive failure” and “lost [your] freedom.” But you didn’t state what happened. Why didn’t you spell it out?
This is meant to be a business book. I wrote two memoirs where I went through that in painstaking detail. There’s a movie out there. If someone wants to find out about that aspect of my life, they can. But this book is to teach people a skill set they can use to live a more empowered life.
Seems that you’re giving away your whole system in the book. Won’t that reduce your online sales and those for your seminars?
I don’t think knowledge needs to be held in. When I first started to speak, I said, “Oh my God, someone put [my seminar] on YouTube! That’s not fair!” But I realized that the more information you have out there, if people like it, the more they’ll learn — and they’ll buy the system.
You write that the secret to charisma in sales presentations is the tonal quality of voice, body language and “not saying stupid s—.” What exactly do you mean by that last part?
If people have appropriate body language and sound good but their words are idiotic, how can they go very far? You need to say intelligent things and deliver the message with positive body language and tonality.
You write that one of the 10 influencing tonalities expresses “I feel your pain.” Please explain.
Let’s say you ask someone what their biggest worry is right now, and they tell you. Your response needs to be that you understand and are empathic and sympathetic: I feel your pain. You’re emphasizing that you understand their plight. You really should feel someone else’s pain because they want to know that you understand. This is a very powerful tool and should be used honestly.
Surprising that you have a low “action threshold,” the point a prospect must cross before the want to buy, as you write.
[Laughs] Yes, I’m like, a sucker — very easy to sell. I love to buy. People have basic beliefs when making major decisions about trusting people and so on. I can size up people pretty quickly, and my first impression is a right impression. That’s a belief I have. Another one is that if [my decision] is wrong, it’s not going to end up that terribly — I can mitigate my losses.
So you see things positively.
Yes. I always see the glass as half-full when it comes to making decisions. That’s having a low action threshold. I tend to say “yes” a lot more quickly than someone like my father, who believes that if he makes a bad decision, it’s a disaster and that you shouldn’t trust anybody. People with those beliefs are hard to sell
But you, personally, can “sell pork to a rabbi,” you say.
One of the most powerful aspects of the Straight Line System is that there are certain language patterns that [can be used] to reduce someone’s action threshold, not forever but temporarily. The idea is that you want to get someone to a very, very high level of “certainty” [the product fills their needs, eliminates pain, is a good value] and then temporarily lower the action threshold in the moment.
Please explain the “power whisper” that you write about.
It’s when you put some energy behind a whisper so the prospect will perceive what you’re saying is extra-important. It creates urgency and scarcity.
Do you think financial advisors should always use a sales script?
Absolutely. But that doesn’t mean they read from it. You know what you’re going to say before you say it — and that protects you legally also, making sure you ask things that are required. Without a script, sometimes you say things that are off the reservation, and you can set yourself up with problems. Mapping out what you’re going to say and memorizing it gives you a massive advantage: You know you’re going to say things that are on the money and that you’re not going to get in trouble.
Any other reason to use a script?
Once you know what you’re going to say, it frees your mind to start analyzing your prospect’s responses. You pay more attention to other things by not having to worry about what your next words are going to be.
What are the essentials of a financial advisor’s quality script?
You need to focus on telling a story that makes sense both logically and emotionally. Those are big pluses in structuring your presentation.
You recommend deflecting a prospect’s initial objection rather than answering it specifically. Why is that a good strategy?
All those common objections like, “Let me think about it” and “Let me call you back,” are basically smoke screens for uncertainty. So rather than trying to answer an initial objection head-on, deflect it and build more certainty. You’ll often find that the objection is no longer there — it melts away. The first time I get hit with an objection when I ask for an order, I’ll deflect it and then loop back around and build more certainty. But I’ll answer a second objection, maybe a different one, and then ask again for the order.
Let’s talk about the “Wolf of Wall Street” movie. Brad Pitt and Mark Wahlberg were both under consideration to play you. Why did you choose Leonardo DiCaprio? Was it because he came attached with Martin Scorsese to direct?
I thought Leo was much better for the role. I always loved his acting. But, obviously, with Marty attached, that created even more of an impetus to go with Leo. Did you like the way he portrayed you?
Yeah! Obviously, there are always things — like, I wish they did this differently and that differently. But all in all, it was an amazing movie.
What did you think of how your drug addiction was depicted?
I was even worse [than that in real life]. I’m sober for 20 years now, but back in the day, my addiction was very bad. It was out of control. It was day in and day out, year after year. I can’t even believe I’m alive. It was really dangerous stuff.
Amazing that you could function in your work.
It is, but the kind of drugs I was doing would give [me] very intense ups and downs. So you’d have these windows of lucidity. I might be completely stoned out of my mind at 6:30 a.m., but by 8:30, you’d never know I was stoned. I wasn’t a big drinker. I was taking pills — so I had big ups and big downs.
And you got deeper and deeper into drugs as time went on?
The reason why rehabs are full of people is that you don’t realize it’s happening as it’s happening, slowly and insidiously. I’d do it once a week on a Friday night, and the next thing you know, it’s two nights a week. And before you know it, you’re doing it every night and during the day. It creeps up on you so you don’t really feel it. Like, if you put a mouse [or frog] in boiling water, it will jump out. But if you put a mouse in water that’s at room temperature and slowly increase the heat [it will slowly die].
You were developing a TV show at one point. Is that still a project of yours?
I’m not working on it right now. There were issues on the rights. The people that financed “The Wolf of Wall Street” film [Red Granite] got in trouble — nothing related to me. It was a Malaysian [corruption scandal]. And the TV rights got locked up for a while. So we’ll see about that.
I read that “The Wolf of Wall Street,” released theatrically in December 2013, was the most illegally downloaded film of 2014.
Yes, true. I think part of the reason is that 1) it has a very young audience and 2) in many parts of the world, the movie was heavily cut because of its “R” rating. So you went to see the movie, and it was only 40 minutes long!
I also read that the word “f—“ was used about 500 times in the film.
Maybe that’s why so many people downloaded it. They wanted to hear that dialogue.
Exactly. In certain countries, it was all edited out.
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