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| Advisory Jungle |
Emerging from the Thicket
Suzanne McGee
01/01/2006
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Pharmaceutical industry executive and entrepreneur.
Need: An advisor with the expertise to integrate and manage a complex
portfolio and concentrated stock holdings.
Strategy: Seek recommendations
from professionals in the financial services industry and from other investors
with similarly complex wealth advisory needs.
A microbiologist and biochemist, Allan Avery launched a Connecticut medical
communications business that was acquired by a bigger conglomerate in 1997. His
reward: more than $10 million in stock in the acquiring company. “My accountant
told me I needed help to deal with all this money in one single stock—I learned
the phrase ‘concentrated stock’ around that time,” says Avery, laughing. Until
then, he had dealt with a range of financial service providers—one at a large
regional bank, another at a brokerage firm. But he realized that while those
advisors were helpful in managing a small portfolio of stocks or constructing a
bond ladder, they did not seem to have the expertise that would be required to
effectively manage Avery’s stock windfall. Another problem: “I had spread my
financial affairs around so much among different advisors that none of my
strategies were integrated,” confesses Avery. “I guess that’s easy to do when
you have means, but you don’t yet have real wealth.”
He started asking
friends and professional contacts to recommend a financial advisor who could
pull all these disparate strands together and make recommendations on what he
should do with his large block of stock in a single company. The latter task was
of overwhelming importance—he knew that he could not just sell it outright; it
needed to be hedged in a way that took into account tax rules and securities
laws. Few of the brokers he was working with had the expertise to do this. Then
his accountant introduced him to Tom Phillips and Bill Donnell at Merrill Lynch,
two advisors who work with a team of brokers and bankers to serve wealthy
clients. Donnell oversees the selection process of managers, tapping into a
broader Merrill Lynch database while using his own knowledge of his clients’
goals and analytical skills to make the final selections. He also handles lines
of credit and provides solutions to deferred compensation, stock options and
pension issues. Phillips specializes in debt investing and handles investment
banking needs, as required, for the group’s clients. A third member, Marc
Berkowitz, directs mutual fund research. “I interviewed them for several hours;
I asked for references,” Avery says. “I wanted to know that their team was
astute at hiring the right managers, that their track record was good and that
they would really work with me to match my asset allocation strategy to what I
thought my future needs would be.”
Avery says he hates the phrase
“one-stop-shopping,” but admits that the breadth of services available, along
with the company’s demonstrable expertise in the area of concentrated stock
positions, were the factors that convinced him to hire the Merrill team. “I can
call one client service person, tell him what I want, and 48 hours later, it has
been done, and I have a range of solutions presented to me,” he says. Only
later, he says, does he realize that eight or more people were involved in
developing those solutions in a timely manner.
Today, Avery says he has
stuck with the Northeast-based team even though his work has taken him to Texas.
“They understand not just my business, but my life and my lifestyle,” he says.
“I’m realizing how important that is, as well as the ability to manage the
money.”
Suzanne McGee is a freelance journalist who writes about financial
issues.
Illustrations by Jonathan Barkat.
 Back to Main Article: Navigating the Advisory Jungle
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