The Zeal of a Convert: My Origin Story

Earlier this year, in his weekend “Intelligent Investor” column in the Wall Street Journal, Jason Zweig wrote a memorial tribute to Jack Bogle, founder of the Vanguard Group, that compared him to St. Paul, the early Christian missionary. When Zweig wrote that Bogle “blazed with the zeal of the convert” the words jumped off of the page. I stopped reading, set down my coffee and let a rush of memories flow through my head.

I had always felt a certain kinship to people like Bogle who held high conviction beliefs about investing, but I had not put much thought into his role as an evangelist or how he came to his beliefs. As it turns out, this champion of low-cost investing started out on the Dark Side, advocating for active management mutual funds and higher fees. It was only after being fired as Chief Executive of a mutual fund that he had his great epiphany: Investors could benefit from a firm like Vanguard being run with their interests at the forefront. An investing revolution ensued, and Bogle embraced his role as a zealot.

Anyone who knows me professionally could attest that I have strong beliefs about the business of financial advice. I believe that the only standard of care for Advisors should be the Fiduciary Standard. I believe that the brokerage business works against the interests of investors by using confusion and conflict of interest. I believe that good advisors are stuck in bad business models because their clients are “owned” by their parent company. I believe that wise counsel is the true value of any financial professional.

What many don’t know about me is the rocky path that I have followed to my current role as a leader of a Registered Investment Advisor (RIA) firm. The truth is, I was fired.  Cast off by the Wall Street firm that brought me into this business. I was left to rebuild my career as an advisor, as a professional, and as an advocate for a profession that could and should be better. On a different scale, Jack Bogle and I both had conversions on the Road to Damascus that changed the course of our careers.  Here is my story.

In 2005 I told my wife that I wanted to change my career path to embrace what I thought I had learned through my study of history and business in college and through my leadership experience as an Army officer. Specifically, I wanted to provide advice, leadership, and perspective to clients as a financial advisor. That meant leaving a corporate job, finding a firm to hire me, train me, and support me as I built a client base. What I didn’t tell my wife, who was pregnant with our first child at the time, was that it would help to know people in our community (which I didn’t) and know how to sell (which I didn’t). My first sale was to convince an established Wall Street firm to hire me. They admittedly took a chance in giving me a job after I failed whatever personality test that they included in the interview process. It probably told them I couldn’t sell lemonade in the Sahara.

I remember at one of the interviews they asked me to present my business plan. The only part I remember about the plan is that I titled it “Morton Advisory”. The branch manager took one look and reminded me that I worked for this big Wall Street firm, not “Morton Advisory.” My response was to say that the only way I will succeed is to frame it that way, as my own.

After passing my licensing exams, they sent me to three weeks of training to teach me how to sell investments to my clients. There were two ways to go about growing your book of business, the trainers told us. You can be a traditional broker and sell stocks, funds, and annuities to earn commissions and eventually become a top “producer.” Really? Producer not Advisor? The second option was described as what the forward-thinking brokers were starting to do. “What you want to do is build a sustainable, fee-based practice where you earn your flat percentage fee over time and it aligns your interests with clients.” That’s it! This makes sense. I don’t have to sell, so much as consult. I will do that.

I returned home and thought about business model #2. This is long-term, sustainable, and something I could be proud of. But there are trade-offs. I explained to my wife, who had just given birth and was planning to stay at home, that commissions would pay us more up front. It would ease the financial burden of this career transition. Flat fees would take a long time to develop into an income stream for us but would position me to be a true advisor, focused on the long-term. Are you ok with that? Yes, she said in an unflinching vote of confidence.

Then there were the details about how my success would be measured by the firm. In my fee-based business model, success would be defined by growing the number of households that I advise and my assets under management. Success for Wall Street, though, was and is measured on the amount of commission generated each month. If I earned enough in commissions, I would get to attend a second training session. If I sell even more product, I can attend a third training session. There was one more important detail. If, after 18 months I didn’t generate enough commission business, regardless of how many families I was serving and the amount of assets they had entrusted to me, I could be fired and my clients distributed out among the branch.

I understood. It was going to be hard. I couldn’t turn to old neighbors or community friends. Every day I had a sheet with the numbers 1-200 written on it. Every time I dialed a phone number, I crossed off a digit on my sheet, until I reached 200. Every day for 18 months. If I was going to do this, I had to be the best cold-caller in the branch. Within six months I was training new hires on how to build relationships over the phone. But I also saw my peers racing ahead. While I was talking about investing for the long-term, they were selling annuities and pitching the stock of the day. I didn’t qualify for the second training round and I don’t think they even told me about the third. The best training that I could get was by picking the brains of the people in the office who I respected the most. I was looking for anyone to tell me that yes, with a little blind faith, my model could work out.

A few small wins and lucky breaks started to go my way at the one-year mark. People who I had been calling for a year started to ask if I could look at all of their statements. I began working with my first clients with substantial planning needs. I started to gain confidence that there was demand for this role that I had imagined. Some other brokers in the office handed off small clients and I was able to build them into meaningful, holistic relationships. I no longer had to believe without seeing; It was starting to take shape. I convinced myself that my employer would see value in what I was doing.

That was my mistake. In late August of 2007, I was called into the branch manager’s office where he showed me a memo that I had signed when I joined the firm. “Do you remember signing this?” Yes, vaguely. The memo had the exact date for my last day if I didn’t earn enough in commissions. The date was in two weeks. The manager would go to bat for me. New York told him that the firm had to be consistent in evaluating all 16,000 of their advisors. If I did not sell enough high commission products, it didn’t matter how many great, long-term clients I had. He wanted me to stay, but he might need to fire me.

I went home that night and caught my wife just as she was heading out the door to an evening meeting.  I broke the news and she did not bat an eye. “Have you done this the right way?” Yes. “Is this a career that you love?” Yes.  “Then we will figure this out.” Says the confident wife to her broken husband, the family’s sole breadwinner. Only two weeks earlier, she had given her final notice to her former employer and closed the door on going back to her old job. We had burned the ships. We were committed.

Phone calls were made, letters were written. At the end of September, I received the verdict. While New York appreciated my efforts and it was obvious that the local team wanted to keep me, they had to toe the firm line. I was fired. Immediately.

The next morning, before I could begin making calls to other investment firms, my former colleagues were already reaching out. They offered to make introductions, they offered encouragement, they expressed disbelief. I couldn’t help but notice that I was fired while all of the other trainees a few classes ahead and a few classes behind me were quitting. The only ones surviving the cuts were the product salespeople.

Within a week, the old firm had reached out with a path forward. “We think we have a way to bring you back in, as if you never left. You will just have a different title.” That is what we did, and I continued there for another six months, before leaving to join an independent advisory firm. Upon my resignation, the branch manager asked me, “How will you attract clients without the strength of a large brokerage house?” Ironically, the question was asked in a month (March, 2008) when the firm’s stock was 60% lower than it had been 9 months prior.

I left behind the Wall Street model forever, but the lessons learned were many. No one who knew me at the firm had any influence over the true decision makers in New York. The best interests of my clients were never a consideration throughout my entire employment process. The incentives of the brokerage world were and are warped and short term. I knew right then what the advisory business should not be, but had yet to discern what it could be.

The next 10 years of my life were devoted to that journey, culminating in the founding of Morton Brown Family Wealth in 2018. In a very positive way, I am proud of what we stand for as fiduciaries, professionals, and advisors. Based on my early experience, though, I also have strong feelings about what we stand against. The financial industry is still fighting against the Fiduciary Standard. It is still not training and developing the talented people needed to serve clients. And it is still, if you read the fine print, protecting the conflicts of interest that serve the company first, all others second. In reflecting on my growth in the last several years, my passion for delivering this better model was kindled in the tortuous experience of losing my job.

I had never thought of myself as having the “zeal of a convert” like Jack Bogle. Zealot is a strong word, because it implies an uncompromising spirit. But maybe the shoe fits. I have seen behind the curtain and observed the sorry state of the brokerage business. I have seen what is possible in the form of visionary advisory firms around the country who are changing the profession of financial advice. If a zealot is someone who keeps a “Motivation” folder in his desk containing the letter firing him from Wall Street as a reminder, then maybe I should own that identity.  It is my story of Independence.

We all have a moment in our lives, personal or professional, when we found our purpose. Click here to share when your Origin Story began; I would love to hear it.

Who Needs a Plan? We Do. You Do.

It is a fair question to ask your financial advisor if he or she “eats their own cooking.” In other words, do they invest in the same way that they advise their clients to invest? If so, it shows that they have strong enough beliefs about investing to follow their own advice. That would be a comforting feeling if I were in a client’s chair.

We could take it a step further, though, and ask an advisor (continuing the food analogy): Do you follow the recipe? In other words, do you have a plan for how to get to the desired result. As someone who can’t help but plan for every eventuality, I think this is an even more important question than asking about the investments. If a professional tells you they will help you meet goals, make decisions, and understand your situation, are they disciplined enough to do it themselves when it counts?

I mention this because Katie and I were invited to be guests on a podcast hosted by our friend, Steve Sanduski, entitled Between Now and Success. Steve had come to know how we were planning our business in a very purposeful way and wanted to explore our methods for the benefit of his national audience. You can listen to the conversation and read the show notes here.

To summarize an hour’s worth of conversation, we have thought very deeply about what it takes to serve the families who trust us now and those who may come to us in the future. We know that being good planners and investors will help a lot of people, but we also know that firms like ours hit stumbling blocks along the way. They fail to plan for growth. They fail to use technology to improve the client experience. They fail to develop talented people. From our inception we have embraced the idea that Morton Brown Family Wealth could grow accidentally. There are too many people in need, and the number of qualified advisors is shrinking. We need to have both the ability and the capacity to serve.  We need to be prepared.

We started with a Creed that defined our values and focused our efforts on helping families make Confident decisions. Then we started building Playbooks that helped us articulate what we do, how we do it, and deliver on those promises. The client experience should be consistent and robust; Playbooks have focused our attention on both of those goals.The result is a living, breathing plan that evolves with every new day, much like the financial plans that we create for our clients.

Financial decisions are too important to not have a plan. Our work here is too important to not have a plan. We follow the recipe, eat our own cooking, and are happy to be able to pull back the curtain and share some of the work that goes on behind the scenes.

 

One Year On: Freedom, Fearless, Celebrate

Morton Brown Family Wealth has crossed the milestone of one year since our founding. Katie and I continue to be overwhelmed with gratitude for the trust of the families whom we serve, the team who has bought into our vision, and all of the family and friends who give loving support for the work that we do.

I keep a Moleskine notebook with me every day and write (illegibly) my thoughts and observations, some of which eventually make it here to the blog. I am trying to get better at this writing habit because at times like this, when I want to reflect, I can reach back to what I thought in the moment.

What did I think when we flipped the switch and the firm went live? Humbled. When the markets sank at our first year-end? A healthy test for us and our clients. When work was coming back from vendors sub-standard? Fight for higher standards.

The most recurring words that surface though, are the three words that we decided at the start would define our first year: Freedom, Fearless, Celebrate. They are simple reminders for us of the opportunity ahead, the challenges we will face, and the attitude that will make it all worth it.

Freedom: I have heard it said that the highest expression of Freedom is Commitment. I could do anything, I choose to do this. A year ago we could have built a firm any way that we chose, but we expressed our freedom by defining what we are creating: Confident families. We will not be all things to all people, but rather focus on supporting the unique decisions that families make about money. That commitment has been liberating.

Fearless:  Launching Morton Brown felt bold in the moment, but that need for boldness has not subsided. We have found that it takes guts to have candid conversations with clients, to speak out loud about our strongly held beliefs, and to take on some of the lesser practices of our industry. It is necessary, though, and it builds muscle. I think we are much better today at seeking out those fearless moments, supporting each member of the team as they do courageous things, and using the strength that we build to benefit our clients.

Celebrate:  This one’s for me, especially. I feel blessed to always have an eye out toward the horizon, looking ahead to see what might be coming. That means the blind spots are often in the moment, when great accomplishments and special moments are happening here and now. I want our culture to be one of celebration, where we pause to recognize how amazing it is that we get to do this work. For people we care about. With people who cheer for each other.  Supported by the people who love us. Cheers!

I am going to keep these words top of mind for the remainder of 2019, then retire them and look out for what will define 2020. Looking back, Freedom, Fearless, and Celebrate, felt right as a concept a year ago and helped build a culture of which I am very proud.

How to Interview a Financial Advisor

When someone reaches the point when they need financial advice, the idea of interviewing a professional is intimidating.  For many years, we met with people who admitted that they did not know what to ask and were making decisions on hiring someone based on their gut.  You can imagine the risk in that.  The advisor who is hired may be the most charismatic salesperson, but are they the best fit? 

As a tool for people who might want to interview our firm, or anyone else for that matter, we created a list of questions for a prospective client to ask an advisor.  The questions cover the business model, credentials, compensation, and expertise of the person to whom they would entrust their financial future.  After comparing answers, the family can at least know that they have made an apples-to-apples comparison of different firms. 

Questions for a Financial Advisor

  • Are you a Fiduciary, required to provide advice in my best interests at all times?
    • Registered Investment Advisor (Fiduciary Standard)
    • Broker/Dealer (Suitability Standard)
  • What type of business is your firm?
    • Corporation
    • Partnership
    • Who are the decision makers?
  • What are your credentials and experience?
    • Professional designation (CFP®, CFA, CPA, etc.)
    • Licensing, registration
    • How long have you been providing this kind of advice to clients like me?
  • Financial Planning
    • How do you incorporate the financial planning process into your services?
    • What kind of financial plan can we expect?
  • Typical Client Type
    • How many households do you work with?
    • What is the risk profile of a typical client?
    • Do you work with institutions and businesses or just families?
    • What is the financial profile of a typical client and how much have they invested with you?
  • How are you compensated?
    • Fee
    • Salary
    • Commission
  • How will we work together?
    • Who will I work with?
    • How often do we communicate and meet?
    • How is performance reported?
    • What is the size of your team?
  • How do you approach investing for people like us?
    • What types of investments do you use in your portfolios?
    • What are the costs of the investments that you use?
    • What is your philosophy?
    • Who makes the investment decisions?
    • How frequently do you trade?
  • Where will my assets be held?

We often talk about the importance of confidence in financial matters and what better way to start an advisory relationship than with the confidence that you have asked the right questions.

Contact Dennis

Important Disclosures