— Lorie Konish
Gregory Hersch, 34
UBS / New York
$2.06 billion in assets
Gregory Hersch, who takes a position on On Wall Street's Top 40 list for the third year in a row, credits his success as a financial advisor in part to his ability to seeing the big picture when opportunities arise.
Hersch leveraged that skill while working with founders of a private company who were given stock from a public company that was acquiring that business. While banks typically do not like to lend against restricted stock, Hersch saw the potential opportunity that working with those clients could bring the firm's investment bank in the future. He then worked tirelessly convince senior leadership to provide those clients with liquidity. That included coordinating different parts of the firm, including its credit and mortgage groups, to also get on board with that goal.
"I am very good at seeing the bigger picture and not getting caught up in the near-term noise," Hersch says. "That allows me to avoid running into a lot of the land mines that I think advisors do in the business."
One thing Hersch says he tells all young advisors who solicit his advice on how to improve: become a better listener. "If you don't listen well in this business, you're going to make mistakes," Hersch says. "If there's one thing that you can do to immediately improve the trajectory of your business, it's just to work on listening." Hersch works with 40 family clients, each with a net worth of $20 million or more. And he is the lead financial advisor on his five-person team.
Hersch's investment strategy focuses on alternative investments. When the crisis hit in 2008, he says, some of those alternative investment strategies lost significantly less than the broader indices, while others actually made money. In the past few years, clients have wanted to balance those investments with other strategies that emphasize liquidity. That has led to diversified portfolios including preferred stocks, mortgage-backed securities, high yield and floating rate funds. Hersch strives to differentiate his wealth management practice by presenting unique investment strategies to current and prospective clients.
"These are some of the most sought after families in the country," Hersch says. "They get shown a lot of products, so I have to work doubly hard to source investment opportunities within alternatives that are both unique and are going to perform." After 12 years in the business, Hersch says that taking on new clients comes down to whether they have a mutual understanding. "My clients come to me wealthy," he says. "My job is to keep them wealthy. So much like a doctor; first, do no harm."
— Lorie Konish
Kevin Scott, 39
Merrill Lynch / Los Angeles
$1.70 billion in assets
As he makes his third appearance on this list of young, trendy investing experts, Kevin Scott's management philosophy sounds refreshingly old-fashioned.
While many advisors drop lines about post-modern portfolio theory, derivatives, managed money and hedge funds, Scott espouses Warren Buffet, Phil Fisher and Benjamin Graham's 1949 book The Intelligent Investor about determining fair stock valuations. The bread and butter of his business is betting on companies' ability to grow.
"We don't think of stocks as much as we try to think about buying businesses," Scott says. "I never thought about it that way, but I think maybe I do have an old-fashioned outlook for my being 39-years young."
Blame it on his partner and father, 45-year industry veteran Bill Scott, who is the manager of the Los Angeles-based family practice office. Kevin joined his father after working in a technology sales position following college.
"We're individual stock guys and maybe that is somewhat informed by my dad," Kevin Scott says. "He started when managed money didn't exist, mutual funds didn't exist."
Of course the father-son team now incorporates mutual funds as well as a number of other products such as bonds and real estate investment trusts to help build out their client's portfolios. Like many advisors, Scott and his father have leaned more on fixed income since 2008 (although, true to their roots, they supplement those positions with dividend income from stocks).
"[Fixed income] serves as a diversifier and hopefully a safe part of the portfolio such that if the markets do really correct dramatically like they did in 2008, there should be a part of the portfolio that's a safe harbor," Scott explains. "We have gravitated a little bit more toward a role of high quality dividends or companies that pay a healthy 3% to 4% dividends as a way to replace some of that income."