Klaus & Jami Heidegger

The Heideggers admit that while switching brokers is a hassle that cost them and their personal attorney nearly five months of work, the change has been for the better so far. “Now we know that you have to ask all the questions to make sure you know your advisor and that you can trust him to do what it is that you want,” Klaus says.

Steve Miller
Former chairman and CEO of Shell Oil Co.

Need: A wealth advisor to manage an increasingly complex portfolio from a geographic distance.

Strategy: Seek out an upstart firm where his account would be considered very large and important. Rather than relying on credentials or an impressive client list, Miller looked for eager professionals who could devote a significant part of their time to his affairs.

It has been more than a decade since Steve Miller moved his growing investment account to Houston, Texas-based financial planners Deborah Stavis and Mary Margolis, now co-owners of Stavis, Margolis Advisory Services. Periodically, he will get pitches from advisory teams working at the private banking divisions of Wall Street’s biggest firms. “I’ll look seriously at what they offer, and I would consider switching again if I saw a reason to, but I don’t,” Miller says. “It’s not the name of the firm, but who is working on your account that matters, and if they aren’t good, it doesn’t matter how good the firm is.”

In 1992, when Miller shifted his investment accounts from two large national brokerage firms to Stavis, Margolis, it was on the eve of his family’s departure for what became a seven-year series of progressively senior management appointments overseas. “It was clear that I needed someone who was going to really care about how my portfolio was going to be managed, who could stand in for us while we were overseas,” he says. That was even more important in the days before email and the Internet, because Miller’s job involved spending as much as two-thirds of the year on the road. “I simply would never have had the time to handle personal financial matters.”

Looking back, Miller chuckles when he recalls that he went on gut feelings when he hired Stavis and Margolis. “They had no track record, or very little track record, at that point—it’s a hell of a way to choose your financial advisor. But because they were starting out, they were able to give clients the kind of individual attention I realized I couldn’t get from the brokerages,” he says. “If I had relied heavily on formal credentials, I might never have hired them.” His gamble paid off: Within a few years, Miller had become a managing director of the Royal Dutch Shell Group, and he called on Stavis and Margolis to address a range of complex financial issues that resulted from his promotion. “Income was flowing in from multiple countries, and the benefit plans were different. Suddenly both my asset and my tax situation became even more complicated than that of an ordinary expat,” Miller says. On one occasion, he recalls, his two advisors sat down in a room with 16 different Shell tax advisors from various jurisdictions to thrash out a complex tax issue.

 

“It’s not the name of the firm, but who is working on your account that matters. And if they aren’t good, it doesn’t matter how good the firm is.”–Steve Miller

In his search for new financial planners, Miller looked specifically for experts who had the skills necessary to manage his portfolio and his range of financial issues as those grew. Stavis and Margolis proved their mettle by developing a plan that included a variety of assets and retirement benefits. But they won the job by being able to show Miller that they could devote enough attention to his needs to serve as his de facto personal CFOs. Three years ago, Miller retired from Shell, and now serves on the board of Reliant Energy, as well as several nonprofit boards. He also chairs the board of trustees at the University of Illinois. Now that his portfolio is far larger and he is being actively wooed as a potential elite client by other private banks, Miller says there is no reason for him to switch again. “Their performance is superior and so is the sense that I have that they have my interests at heart.” Indeed, he has entrusted the firm with the management of assets in a foundation he and his wife have established.

Phil Strongin
Retired commodities firm executive.

Need: A highly skilled wealth advisor who could work on a more personal level with his entire family.

Strategy: Numerous in-depth interviews to determine compatibility with his stated goals. Using references from friends and associates, Strongin held repeated discussions with short-list candidates about needs and objectives. Through interviews, he was able to find a team of financial experts who could work on a much more personal level and act as family advisors.

“I didn’t realize that it was possible to have someone be a family advisor and not just an investment advisor.” –Phil Strongin

When Phil Strongin retired from his senior executive post early in 2005, he realized that his current financial advisor, a broker in the asset management division of a retail bank, was not going to be up to the task of managing all the money that would soon arrive in his account. “A number of my investments were cashing out, and I had to make some fast decisions about how to invest that capital,” he says.

His former advisor had not been doing anything wrong. Rather, Strongin’s needs were growing and changing, and he wanted an advisor with whom he could have a closer working relationship. “I needed to feel that I was an individual and not just an account number or statistic,” he recalls. “That was the most important thing when I started looking for a new advisor.”

Strongin began his search by asking for suggestions from his friends. He then pared their recommendations to a short list of four or five firms, which he examined and interviewed. “Without question, the strongest positive recommendation that I got was about the Moneta folks,” Strongin says. “Then I interviewed them over the phone, sat down with them and received a presentation about how they would deal with my account, and looked for reassurance that they were going to invest wisely.”

Strongin says that on paper there probably was not much difference between the qualifications of his old and new advisors. Both, for instance, have the certified financial planner credential. But at Moneta Group, Strongin would have access not just to an individual advisor, but to the team of specialists working with that advisor, both inside and outside the firm. (Moneta claims to have 130 employees who collectively hold about 100 professional designations.) An in-house attorney counsels clients at no extra cost to the client, and other experts offer advice on taxes, estate planning, insurance and real estate. Former Moneta principals have established a handful of affiliated firms, including tax preparation and retirement planning. “I can call and get advice on pretty much any strange question I have,” Strongin says. This has included advice on how his daughter should handle switching her health insurance when she changed jobs.

Personality issues were also vitally important to Strongin, who says he did not want to mediate between his attorney or his accountant and his financial advisors. “It turns out they work with a wide network of other professionals on their clients’ behalf, who spoke highly of Moneta,” he says. Even better, they came to his house (“My prior advisor had never done that.”) and spent an entire afternoon and evening reviewing their suggested changes to his portfolio. They introduced him to a number of new stock funds that had impressive long-term track records, such as the Third Avenue Value Fund and the Earnest Partners small cap value fund. “They just had a more sophisticated and comprehensive grasp of the world, and that was something I valued,” Strongin says.

Most of all, Strongin says that he is discovering that it is possible to have a team of advisors that serves his entire family and all their needs. In the past, Moneta has helped parents teach children to manage their money and assisted clients in caring for aging parents, going as far as finding in-home help. “I didn’t realize that it was possible to have someone be a family advisor and not just an investment advisor,” he says.

Allan Avery
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.

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