What does it take to make it to the top 40 under 40?
On Wall Street's annual ranking of the 40 most successful employee channel financial advisors under the age of 40 opens a window on the philosophies, best practices and work ethics of the wealth management industry's up-and-coming stars in the employee advisory channel.
The measure of their success is objective: We rank these FAs in order of their annual T-12 production as of Sept. 30. But the stories of how they succeeded, what drove them and where they're headed next are personal tales.
While their investment strategies, business models and personalities might be strikingly diverse, what's even more striking are the characteristics they share. As a group:
Their investment styles tend to fall into one of two categories: stock pickers versus arbitrageurs. But members of both groups insist that they are risk averse and virtually all characterize their approach to investing as conservative.
They view wealth management as an increasingly commoditized business and seek to set themselves apart by striving to offer their clients value above and beyond simple diversification and asset allocation.
This is a flock of early birds with an extreme work ethic. Ask them to describe a typical day and it often is like this: Rise early, hit the gym, get to the office by 6 a.m. to plan for the day. Spend the morning talking to clients and the afternoon prospecting for new ones.
This is a group without a comfort zone. Instead, they are constantly seeking out the next challenge.
1. Stephen Barrett
- Age: 38
- J.P. Morgan Securities, New York
- Production: $8.6 million
- AUM: $443 million
Call it a case of No. 2 trying harder.
Last year, Stephen Barrett of J.P. Morgan Securities finished second in On Wall Street's annual ranking of the top 40 employee-channel financial advisors under age 40. This year, he comes out on top with a 2014 T12 of $8.6 million, up 51% from $5.7 million in 2013.
Yet Barrett's jump in production, impressive as it is, tells only part of the story. What's truly jaw dropping is just how much the advisor's AUM has risen year over year: In 2013, it was a respectable $127 million; during 2014, it more than tripled to $443 million.
What underlies this stellar growth? "I began pushing on the institutional front," Barrett says, "and I've grown out a lot of long/short equity macro hedge funds."
The 38-year-old advisor continues: "From my perspective, there was an opportunity in the marketplace to do that, and over the years I've developed a network and have been able to expand it. That's probably how I'm different now from anyone else on this list. I generate a lot of institutionally driven revenue."
Barrett grew up in Westfield, N.J. He attended Fairfield University in Connecticut and then earned his MBA at Fordham, while working full-time and starting a family. After school, he broke in as an advisor at Bear Stearns, where he joined a team that was part of a hedge fund market group. When JPMorgan Chase bought Bear Stearns during the 2008 financial crisis, Barrett took over the team.
Barrett's team charges clients on a per-transaction basis, and with the commission rate falling across the industry, Barrett believes that the only way he can continue to grow his business is by attracting new clients, especially on the hedge fund side.
So everyone on the five-person team is assigned a sector such as financial services or high tech in which he or she specializes. This, Barrett says, gives the team an important competitive advantage, because the sector focus means "we are much more capable of speaking on certain themes at a higher level than most salespeople."
Wealth management, he says, "is something of a commoditized business, so it's important to differentiate yourself from everyone else. We try to do that by bringing people opportunities to make money while keeping the risk in check. Believe it or not, the way the industry's changed, there's less and less of that going on at our competitors."
2. Levi Nagel
- Age: 35
- Morgan Stanley Private Wealth Management, Los Angeles
- Production: $8.4 million
- AUM: $800 million
Levi Nagel's clients may feel blessed.
An ordained but nonpracticing rabbi, Nagel has been earning stellar returns for his ultra-high-net-worth clientele.
The 35-year-old managing director at Morgan Stanley Private Wealth Management and holder of the No. 2 spot in On Wall Street's 40-under-40 rankings was born in Brooklyn, N.Y.; moved to LA when he was 21; and in between attended rabbinical school in Miami Beach.
As a young child, Nagel traded for his father's account, and later, as a student, a career counselor confirmed what his family already knew that he was well suited for a career in money management.
Nagel's formal training began in 2003 at UBS, and he began building his practice by networking within the Jewish community. "It was tough to get the ball rolling," he acknowledges, but some standout successes with early clients quickly fueled his practice by word of mouth.
Nagel says one of his biggest clients, a real estate investor, began by putting $3 million in a cash management account with Nagel. As the nest egg grew, the client realized he was making more money with the young advisor than he could in real estate and drew more money out of his business to invest with Nagel. Today, the account is worth some $300 million.
The Morgan Stanley advisor describes himself as extremely risk averse and not as diversified as some other advisors. He spends most of his time "looking for mispriced, undervalued securities," he says. "I've gotten a little lazy in terms of prospecting."
One reason Nagel has limited time to bring on new clients is that he and his team of seven work strictly on a transaction basis, and he has to call his clients to discuss and receive authorization for each trade.
What sorts of trades does this risk-averse arbitrageur make on behalf of his clients? The one he made when the city of Detroit filed for bankruptcy in 2013 is telling. When Detroit defaulted, muni-bond funds began receiving redemption notices and needed to raise cash. So Nagel bought a little over $100 million of tax-free bonds at very high yields. Since he made the trade, the bonds have steadily risen in value and are now up more than 30%.
3. John Perry
- Age: 35
- Morgan Stanley, Indianapolis
- Production: $7.6 million
- AUM: $477 million
John Perry, No. 3 in our 40-under-40 rankings and new to the list, sums up his career this way: "Hard work meets opportunity."
Perry is titular head of Perry Wealth Management at Morgan Stanley, a team of four with a client base of 28 ultra-wealthy families, each with a minimum net worth of $25 million. "I strive to be a client of myself someday," he quips.
Perry figures he could grow his practice to 35 or 40 clients without diluting his service, but he's not convinced that he wants or needs that many to reach his five-year goal of $1 billion AUM. "All 28 clients are my friends, and they all know they have absolute access to me 24 hours a day, seven days a week," he says.
Small, intimate groups are nothing new for the 35-year-old advisor. Growing up in Lafayette, Ind., there were 49 students in his high school. From there he attended the much bigger Indiana University and then Butler University, where he earned his MBA while working days and attending classes at night.
To build his practice, Perry relied heavily on contacts from his school network, but he also decided that to succeed he needed to "make myself uncomfortable." That meant making cold calls to prospects.
Describing his approach to investing, Perry says his goal is to earn high single-digit returns for his clients regardless of what the market does. "People don't come to me to get rich," he notes. "They come to me to stay rich."
A triathlete, Perry starts his day early with a run and then catches up with the markets. His biggest challenge "is to continue to find new and original investment ideas in a market that's increasingly efficient."
He adds, "Truly adding value to a family that's already worth $100 or $150 million is not easy."
Most of Perry's growth comes from referrals, and yet he also pushes himself to make cold calls. "I still want to make myself uncomfortable," he says.
4. Peter Princi
- Age: 38
- Morgan Stanley, Boston
- Production: $7 million
- AUM: $3.42 billion
Peter Princi grew up aspiring to be a professional baseball player. When he was choosing a college, his father urged him to look at the big picture. "He knew the likelihood of a professional baseball career was minimal," Princi says.
He landed at Wake Forest University and got a degree in business finance.
Princi played baseball in college and was good enough to be signed by the New York Mets. He played in the team's minor league system for almost three years. In the offseason, he worked at Smith Barney.
When his baseball career was over, Princi became a full-time advisor. The rest is history. This is Princi's sixth year on On Wall Street's list, and he credits much of his success to being consistently well-read about industry issues.
When he started his career as a 24-year-old with limited experience, he took it upon himself to research as much as he could. "The No. 1 key early on was building my level of competency and sophistication to a high level quickly," Princi says.
Now, he is the director and lead strategist of a team of 10. It includes three analysts, two CFPs and a formal investment committee that meets twice a week to generate ideas.
This approach has allowed him to build his career quickly. "You can't do everything well," Princi says. "The top producers surround themselves with other great minds that can help out in other areas."
Princi says the goal for his team is not necessarily to land the biggest accounts but to provide the best possible service to every client it works with.
5. Jonathan Beukelman
- Age: 39
- UBS, Lincoln, Neb.
- Production: $6 million
- AUM: $898 million
It wasn't planned, but Jonathan Beukelman found himself immersed in his career immediately after college.
As an undergrad at Taylor University, he took a class with a professor who was in the wealth management business. The class offered students the opportunity to get their Series 7 licenses. Graduating with this license "really gave me an opportunity to jump right in," Beukelman says.
Once in the business, Beukelman focused on building his client base. His career took off, he says, after he connected with a client who was the founder of one of the largest privately owned companies in the country.
Over time, the client talked about his deepest fears and goals. What he really cared about, he told Beukelman, was "keeping my money and making sure that my family is prepared for the money."
This conversation helped Beukelman become more planning oriented. Over the years, he has developed a team at UBS whose members specialize in client concerns.
In a yearly cycle, the team concentrates on specific facets of clients' portfolios: in the first quarter, the team focuses on financial planning; the second quarter, on investments; the third quarter, on an estate planning overview; and the fourth is spent on tax efficiency.
The trust that Beukelman and his team have built with their clients is one of their strongest marketing tools. Many clients have been referred to them by other clients. And service is a huge priority his firm regularly meets with the children of clients. "The best thing that an advisor can do, instead of selling a product, is to sell themselves," Beukelman says.
His advice to young advisors? "Figure out how do I grow?' Get in the right meetings and ask the right questions. Focus on what the client needs instead of what you need."
6. Sean Yu
- Age: 37
- Morgan Stanley, Pasadena, Calif.
- Production: $5.3 million
- AUM: $545 million
Sean Yu says he is as much a psychologist as a financial advisor.
Yu heads a practice that caters almost exclusively to Asian-American clients; it currently serves about 70 households. Many of these families made their money before they decamped for the United States, with their children growing up as first-generation Americans.
He recalls taking on one family with a $70 million fortune that the patriarch had amassed in China, but was looking to turn over to his only daughter to manage. But the father was still in the picture, and Yu found himself having two very different conversations when the market took a dip. "When there was a drop from $70 million to $69 million, the dad would get freaked out," he says.
Yu's practice today is thriving, with a base of clients whose average AUM he estimates at $20 million to $30 million.
But it wasn't always that way. After hitching on with Morgan Stanley, he began cold calling residences and soon moved on to making presentations to associations like the local chapter of Kiwanis International.
"The most difficult part was psychological," Yu says, noting that he was not prepared for the steady diet of rejection.
Selling himself is much less a part of Yu's life today. He is highly selective when it comes to choosing which clients he will work with. The ideal client, Yu says, is one who has some investing experience who won't be spooked by the ups and downs of the market and who trusts him enough to give him space to operate.
7. Bruce Munster
- Age: 39
- Morgan Stanley, Los Angeles
- Production: $5.2 million
- AUM: $1.13 billion
Bruce Munster serves an eclectic base of wealthy clients, but one common thread aside from their sizable fortunes is that they tend to be highly motivated and entrepreneurial.
"Virtually every client we work with made the wealth themselves," Munster says. "It's this interesting collection of Horatio Alger stories, which really makes it amazing to go to work every day."
Munster says his clients are typically middle-market entrepreneurs, the heads of businesses with enterprise values of $50 million to $500 million.
But their industries are diverse, ranging from aerospace to business technology, real estate to payments, along with a healthy contingent from the entertainment sector, including a top athlete and a Hollywood A-lister, whom Munster says is "not the guy who believes in aliens and jumps on Oprah's couch" but is comparably wealthy.
"It's very much a reflection of Southern California," he says.
Munster calls his entry into the advisory world "a happy accident." While running a property casualty insurance firm, he was manning a booth at a job fair and got to talking to a recruiter from Paine Webber. He ended up joining the firm in 1999.
In the early days, Munster spent most of his time cold calling, and things didn't much improve following UBS' acquisition of Paine in 2000.
But, in time, the opportunity at Morgan Stanley presented itself, and Munster was off to the races. "Morgan Stanley ended up promising the stars and ended up giving us the moon, which was good enough," he says.
Today, he heads a 10-person practice serving 67 families. Munster says that his team is organized along very specific roles, allowing him to operate as the lead advisor to the largest accounts, while also serving as chief investment officer, marrying his two favorite parts of the business.
Munster prides himself on the hands-on approach that his team takes toward investing.
"I think our focus on being investors is a big differentiator," he says. "You could have the best plan in the world but if you don't invest the money properly, you're not going to meet your return objectives."
8. Keith Rowling
- Age: 32
- Morgan Stanley, Troy, Mich.
- Production: $5 million
- AUM: $400 million
In Keith Rowling's practice, advising is a family affair.
He heads up a small but thriving practice catering to ultrahigh-net-worth families, many of whom set up family offices to manage their money.
This means his clients are focused on the long run. For Rowling, who describes his philosophy as "slow and steady wins the race," that's just fine. Most of his clients are interested in earning a reasonable rate of return, optimizing their tax situation and planning for the eventual transfer of their wealth.
Rowling sees his job as keeping a firm hand on portfolios grounded in dividend-paying growth stocks, while taking advantage of favorable opportunities like secondary markets and IPOs that Morgan Stanley's capital markets platform provides.
Rowling says his firm handles about 50 family accounts and typically adds three or four new ones each year.
When Rowling started at the practice, it catered to wealthy individuals, but over time has shifted to include more family offices with assets in the $15 million to $20 million range.
Rowling owns about 80% of the practice, with the rest held by his partner and mentor, Martha Adams.
He doesn't consider his age a drawback. On the contrary, many of his clients are happy to work with an advisor whom they expect will be around to serve their children and grandchildren.
And Rowling, who got his license while in college, isn't planning on leaving the industry any time soon. "This is all that I know," he says.
9. Eric Payne
- Age: 38
- Merrill Lynch, Carmel, Ind.
- Production: $4.9 million
- AUM: $736 million
Almost to a person, advisors talk about the importance of cultivating clients' trust. But Eric Payne speaks more globally, expressing a passion to restore consumers' faith in the financial services sector writ large. "I really believe it comes back to those of us in the industry starting to become role models again," he says.
Payne and his partner, Ronald Mencias (No. 27 on this year's 40 under 40 list), head a team of 15, catering to around 220 high-net-worth families and providing clients with what he describes as a "boutique feel" marked by high level of back-office support.
"Administratively, we try to bring a white-glove approach," he says. "We overinvest in administrative capability."
But Payne sees the job as much more than tending to his clients' finances. He and other members of the team serve on the boards of various nonprofits and cultural organizations, including a local performing arts center. Payne supports charities like the United Way and the American Cancer Society, and the firm recently joined with the Make-a-Wish Foundation to send a 4-year-old boy stricken with renal cancer to Disney World.
Payne also believes that industry practitioners should take an active role in reaching out to local schools to recruit "the next wave of advisors" and mentor junior associates. "I think we've got great responsibility to do that," Payne says.
For his clients, Payne will often help devise strategies for transferring wealth to the younger generations and setting philanthropic priorities. Sometimes, that means establishing a family foundation. The clients' children and grandchildren might serve on the board and be responsible for recommending causes and organizations that might be worth a financial contribution.
Payne got his start in the industry as an accountant, working at Ernst & Young, but was soon drawn to the more personalized world of advising.
He and Mencias, also an accountant, are now CFPs and offer a full suite of services. But their tax expertise counts for a great deal with a pool of wealthy clients who cite tax efficiency as a major concern.
10. Michael Merlin
- Age: 39
- Morgan Stanley, Atlanta
- Production: $4.4 million
- AUM: $750 million
Michael Merlin worries about the next generation.
One of the two senior partners heading a thriving practice in Atlanta, Merlin and his team offer comprehensive wealth management services and a suite of proprietary investment strategies to about 200 households nationwide.
The clients include many entrepreneurs, business owners and corporate executives. Aside from their considerable fortunes, a common thread that ties Merlin's clients together is the worry that their money and their values will dissipate as their wealth passes down within the family.
"They all have significant wealth to now pass down to next generation," he says. "And I think they're concerned that their attributes and values are not present in the next generation."
Merlin thinks of this challenge on both a macro and individual level.
He sees the potential for vast family fortunes to be squandered as money passes to children and grandchildren. "Our thesis is that generation is woefully unprepared," he says.
But if many clients' children appear indifferent toward the family business or ill-equipped to handle their parents' fortune, some of the blame must fall to the older generation as well. Too often, Merlin says, baby boomer clients are uncomfortable talking about money within the family.
Merlin and his team have been counseling them on ways to bring their children into the family financial plan, and have helped organize many multigenerational meetings. And going forward Merlin may try to arrange for larger events with the families his practice serves.
Elliot M. Kass, Maddy Perkins, and Kenneth Corbin are contributing writers for On Wall Street.
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