Advisors in the military reserves can face a tricky balancing act in working for their firm and serving their country, if they want to continue their livelihoods while deployed.
“Sales isn’t the best job for a reservist, it’s terrible,” says Andy Knight, a Wells Fargo advisor based in Edmond, Okla., and a former Army reservist. “I was always stressed about going in for training. It would always set me back, and I’d have to find a way to make it up.”
What's most at stake? The production-based salaries of financial advisors. Production poses a dilemma for those called into active duty when they must leave their jobs for extended periods of time, says Robert Gerstemeier, president and founder of Gerstemeier Financial Group, an RIA firm based in Chicago and Cincinnati.
“When you are called up, there is going to be an impact in the typical broker world, because the person in charge of the office and the person in charge of the region, their compensation are based on brokers producing underneath them,” Gerstemeier says. “When you are impacting other people’s compensation, it becomes a difficult situation.”
FINRA AWARDS ADVISORS
In one example, Christopher Zigmund Barra and Luis Miguel Sampredo, brokers who had been with Goldman Sachs since 1998, claimed they were fired by the firm because of Barra’s active deployment. A FINRA arbitration panel ruled last week that the two should receive $7.6 million in compensation, including $2 million in punitive damages and $100,000 for violating a federal law protecting a veteran’s employment while deployed.
Barra and Sampredo are now with UBS. Their Dallas-based attorney in the matter, Rogge Dunn, did not return calls for comment.
Andrew Williams, vice president of media relations at Goldman Sachs, says the firm disagreed with the arbitration panel’s decision. “We do not believe that the law or the record remotely supports the finding on liability or the amount of damages awarded, and we are considering our options, including an appeal.”
Williams adds the case was not a reflection of Goldman’s practices towards employees who are called into service. Among the support programs that the firm provides is an eight-week internship for veterans who are considering a career in wealth management.
Goldman Sachs is also a founding member of Veterans On Wall Street, a private industry group that helps place veterans into roles in the financial world.
“This case involves a dispute about termination of at-will employment and forfeited equity for a breach of a contract,” he says. “Only a very small fraction of the award was associated with the veterans-related component of the case. We are proud of our programs for attracting and retaining veterans and we vigorously dispute the plaintiffs’ legal counsel calling our treatment of veterans into question.”
PROTECTING ADVISOR VETS
Veterans are protected under the Uniformed Services Employment and Re-Employment Rights Act, a federal law that requires firms to allow employees to leave for active duty and return to the company – if not in the same position, one that is equivalent.
There are different approaches among wealth management firms towards recruiting and supporting veterans.
Edward Jones is among the most prominent in veteran recruitment, with 1,250 military veterans joining as financial advisors since May of 2012. That’s reflective of the culture at a firm whose founder Edward D. Jones served in the Navy in World War I, says Chris Penrod, director for financial advisor talent acquisition from the armed forces.
Penrod says that Edward Jones has a number of support initiatives for reservists who are called into active duty. Chief among them, providing caretakers to step into their business while they are away, and supplying gap pay to cover the time while an advisor is activated. The pay is averaged, based on past performance, he says, and covers the difference of what a reservist makes from the military. The gap pay actually continues, he adds, while an advisor works to build back up their business when they return.
“From my discussions with others, you hear horror stories from reservists who come back from duty,” Penrod says. “The job on paper is a lateral job, but it’s really not. At Edward Jones there is a commitment to put you back in the same job.”
HAVING A BACKUP
Gerstemeier says when he was called up for a tour of duty in Afghanistan – an absence that lasted 15 months – he was ready to accept that he might lose clients.
“When I got called up, it was out of the blue,” he says. “My stress level went high for a short time, but I decided it is what it is. I talked to all my clients and explained the situation. You never know how someone going to react, but for the most part, everyone stayed.”
Gerstemeier was fortunate enough to be able to rely on his wife, who was a former CFO and recently licensed as a broker, to take over much of the advisory business while he was deployed. Even while he was involved in infrastructure projects and ensuring financial controls on aid disbursements in Afghanistan, Gerstemeier managed to stay in touch with clients via e-mail and web conferences.
He adds that the wealth advisory industry is a good fit for someone with a military background, as much of that experience focuses on learning planning, team effort and service. “I’d rather have 95% of person like that, rather than other people who don’t have that drive to succeed and do good things,” he says.
Knight says when he was an active reservist and working as an advisor, the industry was not as supportive of the responsibilities and commitments that active reservists keep. “They didn’t give you a lot of slack back then, you were still expected to meet your quotas,” he says. “It was difficult. But somehow I figured how to do it.”