Page 9 - Forbes Magazine-September 30, 2018

AMERICA’S TOP 250
WEALTH ADVISORS
MINIMUM
ACCOUNT One objective of goals-based investing is to minimize mistakes such as panic
SIZE FOR
TEAM NEW selling. Thaler, a professor at the University of Chicago’s Booth School of Busi-
ASSETS 1 BUSINESS 2 ness, argues that matching clients to a portfolio through a traditional risk-toler-
19 Marvin McIntyre $3.4B $2M ance questionnaire just doesn’t accomplish that. “People do not know their risk
MORGAN STANLEY PVT WEALTH WASHINGTON, D.C.
tolerance. They cannot predict how they will react to something like the finan-
20 Rob Clarfeld 6.5B 5M
CLARFELD FINANCIAL ADVISORS TARRYTOWN, NY cial crisis,’’ he told Forbes. But Thaler adds this caution: “Goals-based investing
21 Richard Saperstein 8.4B 5M is easier to say than to implement.”
HIGHTOWER ADVISORS NEW YORK
Indeed, financial advisors might not be so keen to adopt goals-based invest-
22 Steve Hefter 2.3B 3M
WELLS FARGO ADVISORS HIGHLAND PARK, IL ing were it not for increased pressure to justify fees averaging 1% of assets a
23 Martin Halbfinger 1.6B 5M year. Traditionally, they’ve pointed to their portfolio construction and stock-
UBS FINANCIAL SERVICES NEW YORK picking skills. But index funds have overshadowed stock picking, and individu-
24 David Hou 3.5B 5M als can now get professionally constructed portfolios matching their desired
FIRST REPUBLIC INVST MGMT LOS ANGELES
risk level (or, alternatively, their goals) from robo-advisors for just 0.25% of
25 Thomas Moran 4B 2M
WELLS FARGO ADVISORS NAPLES, FL assets a year. To earn their keep now,
26 Kevin Peters 1.4B 4M advisors must offer a more personal-
“If the market ized, high-touch approach.
MORGAN STANLEY PURCHASE, NY
27 Richard Jones 14B 10M
MERRILL LYNCH PBIG LOS ANGELES cooperates, you “If you can tell people, ‘I’m work-
28 Reza Zafari 14B 10M ing to reach your goals,’ it’s more
get wishes. If it
MERRILL LYNCH PBIG LOS ANGELES understandable than if you say, ‘Your
29 Brian Frank 1.8B 2M
MORGAN STANLEY PVT WEALTH ATLANTA doesn’t, we pull portfolio has an expected return
30 Rebecca Rothstein 3B 2.5M of 10% and a standard deviation of
MERRILL LYNCH PBIG BEVERLY HILLS, CA back to needs.” 20%,’ ’’ says Sanjiv Das, a finance pro-
31 Michael Poppo 1.3B 5M fessor at Santa Clara University. He
UBS FINANCIAL SERVICES NEW YORK
argues that goals-based money man-
32 Martin Eby 3.1B 5M
WMS PARTNERS TOWSON, MD agement is compatible with traditional risk-based asset allocation—if risk is
33 Jon Goldstein 3B 20M redefined as the chance of not meeting a goal. In this construct, the appropriate
FIRST REPUBLIC INVST MGMT PALO ALTO, CA
level of risk varies by goal, since a typical investor will accept only a very small
34 Jason Katz 2.3B 0
UBS FINANCIAL SERVICES NEW YORK chance of falling short of funding basic retirement needs but opt for a higher
35 Paul Pagnato 1.8B 10M level of risk and return when reaching for a dream.
PAGNATO KARP RESTON, VA Jeff Harring, a planner in St. Petersburg, Florida, uses Raymond James soft-
36 Susan Kaplan 1.9B 1.5M ware to create separate portfolios for clients’ needs, wants and wishes. “If the
KAPLAN FINANCIAL SERVICES NEWTON, MA
market cooperates, you get wishes. If it doesn’t, we pull back to needs,’’ he says.
37 Peter Princi 4B 2.5M
MORGAN STANLEY GRAYSTONE BOSTON Not all veteran advisors buy into the goals-based paradigm. “Our job is to
38 Paul Tramontano 2B 25M make you as much money as we can in a given period rather than planning for
FIRST REPUBLIC INVST MGMT NEW YORK
specific events,’’ says Stephan Cassaday, who manages $2.8 billion at his firm in
39 Raj Bhatia 1.5B 10M
MERRILL LYNCH PBIG CHICAGO McLean, Virginia. He offers clients a choice of six portfolios, each with its own
40 Drew Freides 3.5B 10M risk, and helps them decide on the right fit. A problem with focusing on goals,
UBS FINANCIAL SERVICES LOS ANGELES
Cassaday says, is that they change. “I’ve never met someone who knows exactly
41 Ed Moldaver 2.7B 5M
STIFEL NEW YORK what house they want in 30 years.”
42 John Waldron 1.8B 1M In fact, behavioral economists agree that folks don’t know what they’ll want
WALDRON PRIVATE WEALTH BRIDGEVILLE, PA in 30 years. “Most young people cannot even imagine being old, much less
43 Ron Basu 3.9B 2M thinking about what financial needs they would have. So it makes sense to form
MORGAN STANLEY PVT WEALTH NEW YORK
goals in stages,’’ Thaler says.
44 Terry Cook 1.1B 10M
UBS FINANCIAL SERVICES BELLEVUE, WA It’s not just age. Life happens. Dana Hanson, who manages $870 million at
45 Gregg Fisher 2.5B 0 RZH Advisors in Stamford, Connecticut, with a goals-based approach, reports
GERSTEIN FISHER NEW YORK
that one client, upon finishing chemotherapy, announced that she wanted to
46 Brent Brodeski 5.8B 500K
SAVANT CAPITAL ROCKFORD, IL buy a vacation house in the Caribbean.
47 Peter Rohr 4.5B 10M Yet the fact that goals change is part of the reason advisors are embracing the
MERRILL LYNCH PBIG PHILADELPHIA approach. If a client needs to report when her dreams or circumstances change,
48 Andy Berg 5.6B 1M well, that builds a relationship you can’t get from a robo-advisor.
HOMRICH BERG ATLANTA
Other factors, too, are encouraging a shift. The proliferation of special tax-
1 ADVISORS ARE JUDGED ON INDIVIDUAL CONTRIBUTION, BUT TOTAL TEAM
ASSETS ARE SHOWN; WHILE IN SOME CASES SIGNIFICANT, NONCUSTODIED favored accounts—529s for college; IRAs and 401(k)s for retirement; donor-
ASSETS ARE NOT INCLUDED DUE TO VERIFICATION DIFFICULTIES.
2 MINIMUM ACCOUNT SIZES ARE GENERAL, SINCE THEY CAN VARY DEPEND-
ING ON A RANGE OF CIRCUMSTANCES. DATA AS OF 6/30/18. advised funds for charitable giving—promotes segregation of investments based
102 | FORBES SEPTEMBER 30, 2018