No Lone Rangers Here: RIA Looks for Team Players to Serve UHNW Clients

The certified exit planning advisor, who worked for 30 years at such large firms as UBS, Bank of America Private Bank and Lehman Bros., argues that “a dichotomy in the industry” splits advisors when it comes to recommending investments.

In the interview, Gouraige describes the planning needs of entrepreneurs who sell their business but give little forethought to how they’ll invest and manage their money in a post-sale lifestyle.

Here are highlights of our conversation:

THINKADVISOR: What’s driving your firm’s growth?

GHISLAIN GOURAIGE: Attracting and recruiting financial advisors to come onto our platform.

One of the hats that I wear is talking to advisors and establishing the vision of where they could take their practice if they come to our firm.

THINKADVISOR: What qualities do you require?

GOURAIGE: We’re looking for advisors who are going to put the client first, who are concerned with finding the best solution and don’t have a cookie-cutter approach.

We want people to work together to find solutions. If you want to be the Lone Ranger, fine. There are places for you to go. But if you want to be part of a team, that’s who we’re looking for.

THINKADVISOR: What experience do you look for?

GOURAIGE: We recruit advisors who have had success working with ultra-high-net-worth clients or [who] have significant assets under their belt.

THINKADVISOR: What’s a trend among advisors that you’ve been observing?

GOURAIGE: There’s a dichotomy in the industry. A lot of advisors are leaving big firms because they’re frustrated with being perceived as working for a big manufacturing plant that puts out investment products, and you’re supposed to act as a distribution arm to your clients versus doing the best thing for them.

There’s the perception — and sometimes it’s true — that advisors who work at the private banks, like Goldman Sachs or JPMorgan, are really working for Goldman or JPMorgan first and the client second.

The thinking is that these firms recommend investment products that they put out because that will capture the revenues and keep the assets with the firm.

THINKADVISOR: What’s on the other side of the split?

GOURAIGE: Fiduciaries are working for the client first regardless of where the assets sit or where the products come from.

As an independent, our firm is looking at the products and services [Wall] Street can provide.

We go to JPMorgan, Goldman, Bank of America [and others] to find the best solution for our clients. The assets could stay with those firms, but we want to be the advisor of choice about what type of investments work best.

THINKADVISOR: What do the clients that you specialize in serving — entrepreneurs, family offices, entertainers and athletes — need most from their advisor?

GOURAIGE: They need planning in general. For example, before an entrepreneur who runs a brick-and-mortar business sells it, most of their net worth is tied up in the business. They don’t [necessarily] have a large lifestyle.

But if they get a big number from the sale, they find that they have a lot more issues to deal with than they’d thought.

First, there’s estate planning and taxes. There are things they should have done, like trying to minimize those taxes, if not avoid them. They should have transferred assets out of their estate before the sale.

THINKADVISOR: What other type of planning do these entrepreneurs need?

GOURAIGE: Planning their life after they’ve sold the business. What will you be doing, and how do you plan for it?

We can direct clients toward philanthropy and the amount to contribute. Or, do they want to get the kids involved and set up a family foundation?

THINKADVISOR: What about basic planning, such as how much money they’ll need to live on to maintain their lifestyle?

GOURAIGE: Right. Here’s an example. One of our clients who didn’t have a big lifestyle sold their business and told us they would keep their same lifestyle. But they wanted to buy a place in Aspen, another place in Italy, some horses and a plane.

When you add those up, it doubled their expenses. So they wouldn’t be leading that same modest lifestyle.

THINKADVISOR: How do you handle that with your clients?

GOURAIGE: We ask: “What are your expenses going to be, and where will the money come from?”

You’re no longer getting a salary from the business, so it has to come from your portfolio.

Therefore, you have to organize your investments to support your new lifestyle.

You’d think people would have figured that out, but the reality is they don’t. What’s missing is a quarterback — the one trusted advisor to put all the pieces together, think about the plan and then execute it.

THINKADVISOR: What investing approach do you use?

GOURAIGE: We [apply] different [buckets]: What do you need to invest in today? Will your cash flow support your lifestyle? And what do you need for tomorrow and beyond?

“Today” is more conservative; so it’s going to have a lot more in fixed income — assets that aren’t going to be as tied to the stock market.

The tomorrow-and-beyond bucket, which is for the kids, say, or for philanthropy, can be oriented more toward equities.

THINKADVISOR: What are the main capabilities that NewEdge offers?

GOURAIGE: We’re able to handle retirement planning, ultra-high-net-worth clients and high-net-worth clients under one umbrella.

We have a retirement planning business, a broker-dealer and a group of advisors that work with ultra-high-net-worth clients with $10 million in investable assets or higher.

They’re family offices, athletes, entertainers, entrepreneurs.

We have another group of advisors that works with clients who have $1 million to $10 million in liquid assets to invest.

THINKADVISOR: How do your ultra-high-net-worth clients deal with market volatility?

GOURAIGE: The large family offices certainly understand volatility and can use it to their advantage. So the more sophisticated clients know that when markets are selling off, that’s when things are on sale.

THINKADVISOR: What’s your outlook for the stock market for the rest of this year?

GOURAIGE: If you look at the S&P without the big tech names, it’s not as overpriced as people might think. Also, there have been a lot of upward earnings revisions over the past couple of quarters.

That’s a sign there’s a lot more health, growth and efficiency in corporate America than people would have thought.

We’re not telling our clients that everything is rosy. But we’re not Cassandras crying that the market is going to sell off.

THINKADVISOR: What was your experience as an advisor with UBS for 16 years?

GOURAIGE: I had a lot of frustration. It was difficult to do business because of the compliance environment. It was difficult to get a yes answer.

… A lot of your time was spent fighting internal battles as opposed to solving issues for clients. That’s inherent bureaucracy at a lot of firms.