Top 100 Financial Advisors 2011
Financial advisors are hardly lacking for talking points these days. There are wars, earthquakes, tsunamis and a nuclear catastrophe. The dollar is plunging and commodities are soaring. Cities and states are running out of cash, and the federal government isn't far behind. That's to say nothing of the explosion of new financial products, from exchange-traded funds to a grab-bag of alternative assets, and the rise of trading that happens in milliseconds rather than minutes. The extraordinary combination of events isn't just setting the agenda for advisor-client meetings; it's putting advisors' skills to the test and shaking up the industry. Advisors with the know-how and tools are clearly making the most of it, as you can see on our annual listing of America's top 100 financial advisors. (To see the complete ranking click here.)
Twenty-five advisors not on last year's roster have earned spots on the new one, and some repeaters have scored huge gains. Sanjan Dhody of Deutsche Bank Alex. Brown, for instance, shot from No. 24 last year into the top 10. Robert Inbody of Morgan Stanley, No. 100 last year, has vaulted to No. 55. When the going gets cataclysmic, there's no telling how far a good advisor might go.
Our ranking is based on each advisor's assets under management, revenue generated for his or her firm, and the quality of the practice. We don't explicitly consider investment performance, in part because advisors pursue such a wide range of investment objectives. Preserving the family fortune is often more important for a customer than scoring big gains. But advisors with an impressive amount of assets under management are probably meeting the objectives -- or else clients would be leaving and new ones wouldn't be joining.
This listing differs markedly from the Top 1,000 report we published in February. That list showed the leading advisors in each state; this one identifies the leaders without regard to location. Most work at big brokerage houses, though smaller firms are also represented.
The No. 1 advisor is Gregory Vaughn of Morgan Stanley Private Wealth Management. Working from Menlo Park, Calif., he and his team oversee accounts totaling some $9.7 billion. These aren't just any accounts, either; the average size is $75 million. Vaughn has been finding some opportunities well off the beaten trail; he thinks the Norwegian market offers some great resources plays. Closer to home, he's buying certain types of California municipal bonds, undaunted by the state's fiscal woes.
The top advisors are focused intently on making sense of the big picture -- not only of world events but clients' entire financial positions, from cash needs to philanthropy. But some also take pride in their profession's historical backbone, stock-picking. Deutsche Bank's Bruce Treitman loves to scour for companies with strong balance sheets and histories of dividend hikes.
Like Vaughn, most advisors on our list are looking for smart, safe ways to play the tumult in municipal bonds, long a cornerstone of wealthy investors' portfolios. And, with fears of inflation mounting, the advisors are keeping a close eye on the spectacular run-up in commodities prices (see story "Time for Commodities?").
Mark Curtis, veteran advisor with Morgan Stanley, is in many ways the embodiment of the advisors who made this year's list -- a conservative practitioner with a sophisticated knowledge of how markets work and the vast panoply of investment possibilities to offer.
Curtis joined E.F. Hutton in Palo Alto in 1982. While the name of the firm on his business card has changed repeatedly to reflect Wall Street's successive mergers, he has never thought of leaving his post or even planning for his own retirement. "My father's best year in this business was the year before he died," Curtis points out. "I wanted to do this for all of my life, to follow in his footsteps and be as important to my clients as he was to his. And I want to keep doing it for the rest of my life."
He also takes a long-term view in investing. "It's a mistake to think investment themes change quickly," says Curtis. That's sound advice in a world that seems to be spinning faster with each passing day.
Bruce Treitman was always intrigued by money, but after a stint as an accountant for Coopers & Lybrand right out of college, he realized that burrowing into corporate ledgers wasn't how he wanted to spend the rest of his professional life. "My roommate at the time was a broker, and he seemed to have much more fun, so I ended up going to work at Merrill Lynch," he recalls. "Every day seemed to offer something new and exciting.
Unlike many of his peers, the 52-year-old Treitman maintains a link to those days by managing money himself, rather than turning it over to managers he selects. "Most brokers don't do that any more, but while we might use separate accounts or ETFs, the crown jewel of our group is the money we manage ourselves," he says.
Treitman seeks out companies with impressively strong balance sheets and histories of dividend growth, and then sells call options against them to enhance returns. He has also set up municipal-bond ladders, enabling him to combine the higher returns available from longer-duration securities with the certainty of having money coming due every year. He isn't rattled by the dire predictions of muni-bond bears because he seeks out the safest choices. Example: certain types of school-district bonds, especially in wealthy areas with few home foreclosures. He's so intent on ensuring these holdings stay safe that he pores over the current regulatory filings from each of the 400-plus different bonds in his clients' portfolios.
"I want to help people not blow it," Treitman says. Just as he says he will only buy a municipal bond "if I can't figure out any scenario where it will go bad." He also reminds people of the need for low volatility in other types of investments, even in runaway bull markets.
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