The Wealth Issue on Wall Street
The Wealth Issue on Wall Street
The Wealth Issue on Wall Street
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Generati<strong>on</strong> X milli<strong>on</strong>aires and their financial advisors speak out<br />
For Elite Advisors Managing Affluent Investors September 2008 • Volume 18, No. 9<br />
High-net-worth investors<br />
Eric Schnell (left),<br />
Mark Selden (middle),<br />
and Jarrod Kahn (right)
<str<strong>on</strong>g>The</str<strong>on</strong>g>y’re young,<br />
they’re rich and<br />
they’re not afraid<br />
of risk.<br />
This new generati<strong>on</strong> takes a<br />
different approach to investment<br />
advice. Informal referrals from<br />
their friends are the rule.<br />
And they put advisors through<br />
their paces.<br />
Meet the<br />
GEN X<br />
Milli<strong>on</strong>aires<br />
By Helen Kearney<br />
Photography by David Lubarsky<br />
<br />
ONWALLSTREET
WHEN FASHION INDUSTRY ENTREPRENEUR JARROD KAHN FIRST DECIDED<br />
he needed help managing his finances, he signed up with his father’s l<strong>on</strong>g-standing advisor.<br />
While he appreciated the c<strong>on</strong>servative, steady approach that had worked well for his parents,<br />
Kahn, 39, felt he was missing out <strong>on</strong> the gains that his friends were enjoying from a more aggressive<br />
style. “I felt that I was a lot younger than my dad and I was just looking to be a little more<br />
aggressive [and] a little more diversified,” says Kahn, who has shifted his account to financial<br />
advisor David Binstock at Oppenheimer. He now enjoys a diversified portfolio that includes<br />
investments in hedge funds and real estate.<br />
Kahn’s experience is far from unique am<strong>on</strong>g Generati<strong>on</strong> X clients<br />
(roughly between the ages of 28 and 42). According to Northern<br />
Trust’s 2008 <str<strong>on</strong>g>Wealth</str<strong>on</strong>g> in America study, Gen Xers have a markedly<br />
different approach to investing from their parents and grandparents.<br />
Not <strong>on</strong>ly are they unwilling to blindly take <strong>on</strong> their parents’ financial<br />
counselors, they’re also opini<strong>on</strong>ated about the attributes they look<br />
for in an advisor when they strike out <strong>on</strong> their own. From a round of<br />
interviews with the young jet set and their advisors, it became clear<br />
that past performance and impressive returns aren’t sufficient to gain a<br />
Gen X client’s business. What’s even more important to this generati<strong>on</strong><br />
is a feeling of assurance that the individual advisor has integrity and<br />
trustworthiness. As a result, these clients tend to rely more heavily <strong>on</strong><br />
recommendati<strong>on</strong>s from friends and colleagues when making their<br />
selecti<strong>on</strong>s. <str<strong>on</strong>g>The</str<strong>on</strong>g>y are more likely than previous generati<strong>on</strong>s to use their<br />
pers<strong>on</strong>al lives as networking possibilities, down to their children’s<br />
soccer games and other sports events.<br />
Gen X investors also have shown an enthusiasm for alternative<br />
investment vehicles, such as hedge funds and currency funds, that<br />
has largely escaped their older counterparts. Just like the early baby<br />
boomers who invested in plastics because that’s what was hot in their<br />
day, today’s Gen Xers came of age when alternatives were all the rage.<br />
And that, at least in part, has shaped their investment outlook.<br />
Advisors agree that their younger clients are more likely to be<br />
aware of these investments than older clients, who tend to cling to<br />
the traditi<strong>on</strong>al stocks/b<strong>on</strong>ds/cash portfolio c<strong>on</strong>structi<strong>on</strong>. Michael<br />
Dadich, a Los Angeles-based advisor with Oppenheimer & Co., says<br />
it’s harder for older clients to accept alternative investment tools that<br />
have become popular over the past decade or so. “For younger clients<br />
in their thirties, it’s all they know. It’s normal for them,” he says.<br />
Indeed, according to Northern Trust’s survey, Gen X households<br />
have an average of 23% of their assets in alternatives, compared<br />
with 13% for boomer households. And the more aggressive Gen X<br />
approach is most noticeable in some of the specific asset allocati<strong>on</strong>s.<br />
For example, 15% of Gen Xers have invested in structured notes while<br />
just 6% of boomers have d<strong>on</strong>e so; 14% of Gen Xers have invested in<br />
currency funds compared to 6% of boomers; and managed futures<br />
funds have enticed 15% of Gen Xers versus 7% of boomers.<br />
One observati<strong>on</strong> that emerged from the interviews with advisors<br />
and their Gen X milli<strong>on</strong>aire clients was that most younger customers<br />
are generally thought to require less liquidity than their older, retired<br />
parents and grandparents. <str<strong>on</strong>g>The</str<strong>on</strong>g>y can afford to tie up their funds in<br />
alternative investments that may have a 10-year time horiz<strong>on</strong>.<br />
But there was also some disagreement with this rule of thumb.<br />
Greg Ghodsi, 44, an advisor at Raym<strong>on</strong>d James & Associates in<br />
ONWALLSTREET <br />
North Tampa, Fla., who oversees about $250 milli<strong>on</strong> in assets, doesn’t<br />
generally use alternatives with his younger clients in the $2 milli<strong>on</strong><br />
to $3 milli<strong>on</strong> range. “When you’re dealing with younger people with<br />
growing families, expenses tend to be higher than they anticipate,”<br />
he says. “<str<strong>on</strong>g>The</str<strong>on</strong>g>y could also have times when they’re between jobs or<br />
want to start a business. If their m<strong>on</strong>ey is tied up in alternatives, it<br />
pinches a pers<strong>on</strong>.” On the other hand, for older clients, Ghodsi says<br />
he recommends putting around 5% to 10% in alternatives.<br />
If younger clients do want to invest in alternatives but are c<strong>on</strong>cerned<br />
about tying up their cash l<strong>on</strong>g-term, some advisors recommend setting<br />
aside an emergency fund. Dadich, and his partner, David Binstock,<br />
require that clients keep at least six m<strong>on</strong>ths of living expenses in<br />
short-term cash to cover emergencies, such as the loss of a job.<br />
Sometimes, a Gen Xer’s zeal for alternative investments can go too<br />
far and needs to be reined in. Shane Brisbin, an advisor with Smith<br />
Barney in San Francisco, says that some of his clients dem<strong>on</strong>strate a<br />
little too much tolerance for risk. “Many of our clients are business<br />
leaders and natural risk takers. Sometimes we have to encourage<br />
them that they d<strong>on</strong>’t need to take that much risk in their pers<strong>on</strong>al<br />
finances.” Still, Brisbin, who oversees about $2.3 billi<strong>on</strong> in assets, is<br />
a prop<strong>on</strong>ent of alternatives provided they suit the individual client’s<br />
needs. About 40% of his clients are under 45 and are primarily involved<br />
in technology, venture capital and private equity.<br />
ATTRACTING YOUNGER CLIENTS<br />
Not surprisingly, advisors with a higher proporti<strong>on</strong> of Gen X<br />
clients tend to be in a similar age group themselves. Younger advisors<br />
naturally tap into their social circles to gain access to this group. Ghodsi<br />
of Raym<strong>on</strong>d James says that indulging in his passi<strong>on</strong> for soccer has<br />
benefited his business. “We’ll be out kicking the ball or at a game and<br />
some<strong>on</strong>e might ask questi<strong>on</strong>s about investments,” he says.<br />
Others say that the age-old methods of networking and c<strong>on</strong>necting<br />
with prospects are especially important with this group. Younger<br />
clients are looking for answers and advisors just need to positi<strong>on</strong><br />
themselves properly to snag that business, says Jeff Martinovich,<br />
42, chief executive of Newport News, Va.-based MICG Investment<br />
Management. “Younger people starting to make good m<strong>on</strong>ey but<br />
[who] d<strong>on</strong>’t have a financial advisor, are asking their friends: ‘Who<br />
do you use?’ That age group is a lot more relati<strong>on</strong>ship driven,” he says.<br />
Martinovich finds that community activities, being <strong>on</strong> the boards<br />
of charitable organizati<strong>on</strong>s and country club memberships are good<br />
tools for building such relati<strong>on</strong>ships.<br />
Referrals and word-of-mouth marketing play out even<br />
more so in select industries, says Rob Bodio, 39, an advisor with<br />
c<strong>on</strong>tinued <strong>on</strong> page 40
Eighties fashi<strong>on</strong> may<br />
be something most<br />
of us would rather<br />
forget, but for Gregg<br />
Marcus, it provided his fi rst<br />
foray into the business world.<br />
As a 10th grader in the suburbs<br />
of L<strong>on</strong>g Island, New York,<br />
Marcus eschewed the regular<br />
after-school gigs of his friends,<br />
stacking supermarket shelves<br />
for minimum wage. Instead he<br />
saw an opportunity in the craze<br />
for Olivia Newt<strong>on</strong>-John style<br />
headbands. Getting discounted<br />
material from his father,<br />
who worked in the garment<br />
business, Marcus and a high<br />
school buddy started making<br />
the headbands in his family’s<br />
living room and selling them at<br />
local flea markets. Not satisfied<br />
with this, Marcus also managed<br />
to sell the headbands to<br />
wholesalers and department<br />
stores, including JCPenney.<br />
After high school, Marcus went<br />
to college for a year but quickly<br />
decided it wasn’t for him. “I<br />
was chomping at the bit to get<br />
out and do my thing,” he says.<br />
When he was 21, he moved into<br />
“I trust him. When he<br />
asks me to write a check<br />
and invest, I think he’d<br />
write the same check<br />
and invest himself.”<br />
Gregg<br />
Marcus<br />
Age: 42<br />
Company: Somerset<br />
Mortgage Lenders,<br />
Melville, New York<br />
Advisor:<br />
Steve Brett<br />
Age: 44<br />
Merrill Lynch,<br />
Locust Valley, New York<br />
AuM: Over $40 milli<strong>on</strong><br />
the real estate business and<br />
eventually struck out <strong>on</strong> his<br />
own starting Somerset Mortgage<br />
Lenders, which arranges<br />
residential mortgages for <strong>on</strong>e<br />
to four-family homes. It now<br />
provides approximately $300<br />
milli<strong>on</strong> per year in lending.<br />
As success came, Marcus<br />
hired a local advisor who had<br />
a good reputati<strong>on</strong> for investing<br />
in mutual funds. “Trusting<br />
some<strong>on</strong>e with my m<strong>on</strong>ey was<br />
a little c<strong>on</strong>cerning at fi rst,”<br />
he says. “It was my m<strong>on</strong>ey,<br />
I busted my ass for it.” After<br />
seeing some steady returns,<br />
Marcus was c<strong>on</strong>vinced to invest<br />
with another broker friend<br />
who was enjoying the heady<br />
profits of the tech boom. But<br />
then came the bust. “For a<br />
year or two it was okay, and<br />
then <strong>on</strong>e day I saw the carpet<br />
pulled out from under me and<br />
everybody,” he says.<br />
<str<strong>on</strong>g>The</str<strong>on</strong>g> experience made Marcus<br />
wary of the markets and<br />
the financial advisory business,<br />
so it’s hardly surprising to hear<br />
his foremost requirement for<br />
a fi nancial advisor: trustworthiness.<br />
And he believes he’s<br />
found that with his advisor of<br />
two years, Steve Brett from<br />
Merrill Lynch’s Locust Valley,<br />
New York branch. “He’s not<br />
pushing anything <strong>on</strong> me,” says<br />
Marcus. “I trust him. When<br />
he asks me to write a check<br />
and invest, I think he’d write<br />
the same check and invest<br />
himself.”<br />
Marcus met Brett through<br />
his children’s sports teams.<br />
Brett started a football league<br />
in the local school district and<br />
that made an impressi<strong>on</strong> <strong>on</strong><br />
Marcus.<br />
Brett says: “I’d shown<br />
[Marcus] integrity and trust<br />
based <strong>on</strong> some of the things<br />
I was involved in the community.<br />
With running the league,<br />
I’ve shown an attenti<strong>on</strong> to<br />
detail and an ability to put<br />
other people’s interests ahead<br />
of my own.”<br />
Marcus initially asked<br />
Brett to work <strong>on</strong> his company’s<br />
401(k) plan and was impressed<br />
by his interacti<strong>on</strong> with the<br />
employees and his successful<br />
boosting of enrollment in the<br />
plan. He now also takes care<br />
of Marcus’ pers<strong>on</strong>al fi nances.<br />
But Marcus is cautious at the<br />
moment, investing primarily in<br />
blue-chip stocks and mutual<br />
funds. As a result, he doesn’t<br />
feel the need to be in c<strong>on</strong>stant<br />
c<strong>on</strong>tact with Brett, and says<br />
their m<strong>on</strong>thly ph<strong>on</strong>e calls and<br />
quarterly reviews are suffi -<br />
cient. “I think that because I’m<br />
in the space that’s brought this<br />
c<strong>on</strong>tagi<strong>on</strong>, this whole global<br />
nightmare, I’m more c<strong>on</strong>servative<br />
now than I’ve ever been,”<br />
says Marcus. <br />
<br />
ONWALLSTREET
Jarrod Kahn knows<br />
his business from<br />
the ground up, literally.<br />
As a teenager<br />
he spent summers working<br />
at Cipriani Accessories, the<br />
business his father and uncle<br />
started. His job? Sweeping<br />
the floors, al<strong>on</strong>g with packing<br />
boxes and loading trucks. But it<br />
ignited an interest in the family<br />
business. “I would go to work<br />
every morning with my father<br />
and we always discussed the<br />
business,” Kahn recalls.<br />
School, however, was a<br />
different story. Kahn struggled<br />
with a learning disability and<br />
found studying tough. Despite<br />
this, he graduated from Northeastern<br />
University in Bost<strong>on</strong><br />
before returning to New York<br />
to join Cipriani.<br />
While he no l<strong>on</strong>ger had to<br />
sweep the floors, there were still<br />
few family privileges and he was<br />
put to work as a salesman cold<br />
calling. He worked his way up<br />
in the sales department and five<br />
years ago he became co-chief<br />
executive officer. Cipriani, with<br />
annual sales of approximately<br />
$100 milli<strong>on</strong>, currently has licensing<br />
agreements to manufacture<br />
accessories for the likes of Calvin<br />
Klein, Lacoste and Guess.<br />
Jarrod<br />
Kahn<br />
Age: 39<br />
Company: Cipriani<br />
Accessories,<br />
New York City<br />
Advisor:<br />
David<br />
Binstock<br />
Age: 38<br />
Oppenheimer & Co.,<br />
New York City<br />
AuM: $250 milli<strong>on</strong><br />
(combined with<br />
partner Michael<br />
Dadich)<br />
Around the same time he<br />
took over the co-CEO role, Kahn<br />
began to questi<strong>on</strong> his choice of<br />
advisor who had worked with<br />
his father for years. “I just realized<br />
that his advisor was right<br />
for him but not for me,” he says.<br />
Kahn was looking for a slightly<br />
more aggressive and diversified<br />
investment portfolio that would<br />
suit his stage of life.<br />
Gen X’s Next Gen<br />
WHILE MANY GENERATION X INVESTORS ARE<br />
shunning their parents’ view of fi nancial advice<br />
and going their own way, the children of existing<br />
clients still offer a potential source for building your<br />
Gen X client base, provided you positi<strong>on</strong> your<br />
services in the right way.<br />
Merrill Lynch has d<strong>on</strong>e just that. To reach this<br />
group and hopefully ensure it remains attached<br />
to the fi rm, in 2004, the fi rm’s private bank set<br />
Kahn tried a few advisors before<br />
settling with David Binstock,<br />
from Oppenheimer & Co., who<br />
he knew from college. Binstock<br />
recommended a diversified portfolio<br />
that included alternatives<br />
like hedge funds and real estate.<br />
While Kahn felt he’d missed out<br />
<strong>on</strong> some of the gains of past market<br />
runs, he was still c<strong>on</strong>cerned<br />
about the risks. “My nature is to<br />
be c<strong>on</strong>servative. I earn my m<strong>on</strong>ey<br />
working in my business; that’s<br />
my expertise. I didn’t want to<br />
be too risky with my pers<strong>on</strong>al<br />
investments,” he says. Kahn<br />
believes Binstock helped him<br />
strike the right balance and feels<br />
comfortable speaking to him at<br />
least <strong>on</strong>ce a week, particularly in<br />
the current down market. “I felt<br />
in the past that you can become<br />
just another number. David is<br />
looking at my investments and<br />
calling me to discuss them,”<br />
Kahn says.<br />
Binstock has a face-to-face<br />
meeting with Kahn every quarter<br />
to review his portfolio and sends<br />
him a m<strong>on</strong>thly report. Binstock<br />
believes that being a Gen Xer<br />
himself has been advantageous<br />
in attracting clients. “Being with<br />
some<strong>on</strong>e who’s about the same<br />
age brings comfort. <str<strong>on</strong>g>The</str<strong>on</strong>g>y’re<br />
working with some<strong>on</strong>e who is<br />
their peer,” says Binstock.<br />
Kahn has also recommended<br />
Binstock to friends. “He cares<br />
about his clients, it’s his number<br />
<strong>on</strong>e priority,” he says. <br />
up client advisory boards, made up of the bank’s<br />
customers, to provide feedback and suggesti<strong>on</strong>s.<br />
<str<strong>on</strong>g>The</str<strong>on</strong>g> message from the boards was clear. It wasn’t<br />
the performance of their portfolios or investment<br />
strategies that was <strong>on</strong> the minds of the bank’s<br />
wealthiest clients; it was how their children and<br />
grandchildren would cope with their wealth, says<br />
Karen Klein, a director in Merrill’s private banking<br />
and investment group.<br />
In resp<strong>on</strong>se, Merrill set up fi nancial “boot<br />
camps” for the children of their private banking<br />
and advisory clients. Participants range in<br />
ONWALLSTREET
Eric<br />
Schnell<br />
Age: 37<br />
Company: Steaz<br />
Bucks County,<br />
Pennsylvania.<br />
Advisor:<br />
Michael<br />
Dadich<br />
Age: 39<br />
Oppenheimer & Co.,<br />
Los Angeles<br />
AuM: $250 milli<strong>on</strong><br />
(combined with partner<br />
David Binstock)<br />
Eric Schnell likes to<br />
practice what he<br />
preaches. As the cofounder<br />
of an organic<br />
soft drink company that promotes<br />
natural foods, fair trade<br />
and envir<strong>on</strong>mentally friendly<br />
business practices, he feels his<br />
pers<strong>on</strong>al investments also need<br />
to reflect his philosophy. “I may<br />
not make as much in <strong>on</strong>e of my<br />
investments as maybe another<br />
company that’s not socially resp<strong>on</strong>sible,<br />
but I can sleep better<br />
at night knowing that the m<strong>on</strong>ey<br />
I put in is doing good in the<br />
world,” he says.<br />
Schnell’s social c<strong>on</strong>science<br />
was developed early. Growing<br />
up in Bost<strong>on</strong>, Mass., his<br />
parents were “die-hard hippies.”<br />
Schnell’s mother owned<br />
a wellness center that offered<br />
natural therapies.<br />
age from 21 to their early 40s, with most of<br />
them in their late 20s. <str<strong>on</strong>g>The</str<strong>on</strong>g> camps are run<br />
in c<strong>on</strong>juncti<strong>on</strong> with the business schools<br />
at Whart<strong>on</strong>, the University of Chicago and<br />
UCLA, and last for two and a half days. <str<strong>on</strong>g>The</str<strong>on</strong>g>y<br />
include classes <strong>on</strong> understanding fi nancial<br />
c<strong>on</strong>cepts as well as topics such as talking<br />
to others about wealth, sharing assets with<br />
siblings and pre-nuptial agreements. “<str<strong>on</strong>g>The</str<strong>on</strong>g>y<br />
fi nd that for the fi rst time they are able to be<br />
open about their c<strong>on</strong>cerns, their lifestyles<br />
and their challenges,” says Klein.<br />
Schnell’s financial advisor<br />
of three years, Michael Dadich,<br />
is very open to his approach. In<br />
fact, Dadich’s partner, David<br />
Binstock, actually helped Schnell<br />
devise a 401(k) plan that<br />
invests in socially resp<strong>on</strong>sible<br />
funds to offer his employees.<br />
Steaz, the company Schnell<br />
co-founded in 2002, produces a<br />
line of organic sparkling green<br />
teas and beverages. Three years<br />
ago it took in a minority equity<br />
investment from Maris Acquisiti<strong>on</strong>s<br />
and three m<strong>on</strong>ths ago<br />
Swiss-based Inventages private<br />
equity fund invested $10 milli<strong>on</strong><br />
in the beverage company. Steaz<br />
is <strong>on</strong> target to hit sales of $14<br />
milli<strong>on</strong> for 2008. Schnell intends<br />
to sell the company within the<br />
next five years.<br />
Schnell sought out Dadich’s<br />
advice three years ago when his<br />
business started to expand. As<br />
a former broker <strong>on</strong> <strong>Wall</strong> <strong>Street</strong><br />
himself, Schnell knew what<br />
<str<strong>on</strong>g>The</str<strong>on</strong>g> entry requirements are stiff. For the<br />
private banking camps, the family must have<br />
a net worth of at least $50 milli<strong>on</strong>; for the<br />
advisory camps, at least $25 milli<strong>on</strong>.<br />
While there aren’t any advisors present<br />
at the camp, Klein says it still makes the<br />
participants more interested in fi nancial<br />
affairs. “<str<strong>on</strong>g>The</str<strong>on</strong>g> goal isn’t to turn them into<br />
MBAs,” she says. “We want to have them<br />
feel comfortable with the language of fi nance<br />
and be able to ask questi<strong>on</strong>s of their advisors<br />
and at family meetings.” <br />
he wanted in an advisor. “I<br />
was looking for an advisor I<br />
could trust, that also has an<br />
unbiased opini<strong>on</strong> of the products<br />
he recommends and is<br />
very proactive in his approach,”<br />
he says. He asked friends for<br />
recommendati<strong>on</strong>s and Dadich’s<br />
name stood out.<br />
<str<strong>on</strong>g>The</str<strong>on</strong>g>y now speak <strong>on</strong>ce or<br />
twice a m<strong>on</strong>th. “I know Eric’s<br />
a busy guy,” Dadich says. “He’s<br />
in a high-growth phase of his<br />
business, so he wants to do the<br />
initial meetings and then hand<br />
it off to some<strong>on</strong>e. That’s where<br />
the trust comes in.”<br />
Right now, Schnell and<br />
Dadich are focusing <strong>on</strong> estate<br />
planning, in anticipati<strong>on</strong> of the<br />
sale of the company, and sticking<br />
to safer investments such<br />
as blue-chip stocks, mutual<br />
funds and Treasuries. Schnell<br />
wants to stay fairly liquid in<br />
case an opportunity arises for<br />
the company to acquire another<br />
brand. “But I look forward to the<br />
day when I can call my advisor<br />
and say: ‘Hey, we’re sitting <strong>on</strong><br />
$25 milli<strong>on</strong> right now, let’s have<br />
some fun,’” says Schnell. <br />
<br />
ONWALLSTREET
It’s Mark Selden’s time to<br />
be aggressive. At the age<br />
of 34, he believes he can<br />
afford to take some risks.<br />
“If I’m going to roll the dice <strong>on</strong><br />
some speculative investments,<br />
now’s the time to do it. When<br />
you’re older and the family is<br />
growing, you d<strong>on</strong>’t want to<br />
gamble as much,” he says.<br />
Selden’s willingness to take a<br />
chance started early. He recalls<br />
being a six-year-old trying to sell<br />
finger paintings <strong>on</strong> the corner<br />
of his block for $10 each. His<br />
father, c<strong>on</strong>cerned his s<strong>on</strong> would<br />
be disappointed by the lack of<br />
interest, suggested he sell them<br />
for $1 instead, and then maybe<br />
some<strong>on</strong>e would feel sorry for<br />
him and give him a quarter. “I<br />
said, ‘yeah dad but if I sell them<br />
for $10 maybe some<strong>on</strong>e will give<br />
me a dollar,’” Selden says.<br />
Mark<br />
Selden<br />
Age: 34<br />
Company: CrosStar<br />
Network Soluti<strong>on</strong>s<br />
and diversified<br />
business interests,<br />
New York City<br />
Advisor:<br />
Jeff<br />
Martinovich<br />
Age: 42<br />
MICG Investment<br />
Management,<br />
Newport News, Va.<br />
AuM: $200 milli<strong>on</strong><br />
After graduating from<br />
Syracuse University, Selden<br />
started a calling card company,<br />
which evolved into CrosStar<br />
Network Soluti<strong>on</strong>s, his telecommunicati<strong>on</strong>s<br />
c<strong>on</strong>sultancy that<br />
helps businesses find the lowest<br />
rate carriers. Al<strong>on</strong>g with that<br />
firm, Selden has investments in<br />
a number of businesses, including<br />
New York-based restaurant<br />
chain Big Daddy’s Diner.<br />
As Selden’s business interests<br />
expanded he felt he<br />
needed some help managing<br />
his pers<strong>on</strong>al fi nances. He met<br />
his current fi nancial advisor,<br />
Jeff Martinovich, seven years<br />
ago at an event for the Young<br />
Presidents Organizati<strong>on</strong>, a<br />
leadership and networking<br />
group. He was impressed by<br />
Martinovich’s frank approach<br />
and knowledge of the markets.<br />
“When he talked about the<br />
markets, he talked about them<br />
realistically,” he says.<br />
Martinovich is a keen prop<strong>on</strong>ent<br />
of alternative investments<br />
as a diversificati<strong>on</strong> tool. He<br />
generally invests 5% to 20%<br />
of a portfolio in alternatives.<br />
“So many people boom and<br />
bust,” he says. “In tough market<br />
times, [using alternatives]<br />
means younger clients d<strong>on</strong>’t end<br />
up riding a roller coaster.”<br />
Selden is impressed by the<br />
variety of investment opportunities<br />
that Martinovich offers and<br />
appreciates how he guides him<br />
through the process, explaining<br />
what the investments are and<br />
why he thinks they’re a good<br />
match for his portfolio. And, he<br />
says, the returns have also been<br />
impressive. But that’s not all that<br />
keeps him with Martinovich. “I<br />
trust him because I know whatever<br />
I’m doing he’s doing as well.<br />
He’s risking his own m<strong>on</strong>ey as<br />
well,” Selden says. <br />
c<strong>on</strong>tinued from page 36<br />
Wellesley, Mass.-based GW & Wade. Approximately <strong>on</strong>e-quarter of<br />
Bodio’s clients are under 45 and a number of them have made their<br />
m<strong>on</strong>ey in the technology sector. Bodio notes that technology is a<br />
tightly-knit community. “<str<strong>on</strong>g>The</str<strong>on</strong>g>y’ll tell each other about their [advisors]<br />
and they say: ‘If it’s good enough for this guy, who’s my colleague or<br />
boss, and I trust him, then it’s good enough for me.’”<br />
Another finding from the Northern Trust survey shows that<br />
Gen Xers communicate more frequently with their advisors than<br />
previous generati<strong>on</strong>s. In fact, 61% of those surveyed say they prefer to<br />
collaborate with their advisors compared to 50% of boomers.<br />
However, the form of communicati<strong>on</strong> they favor can differ. Bodio,<br />
who oversees nearly $300 milli<strong>on</strong> in assets, says that younger clients<br />
prefer email c<strong>on</strong>versati<strong>on</strong>s and WebEx meetings. “Nine-tenths of<br />
corresp<strong>on</strong>dence and meetings are d<strong>on</strong>e over the Internet. Getting<br />
them in for quarterly meetings is nearly impossible,” he says. When he<br />
ONWALLSTREET <br />
does have face-to-face meetings, Bodio has learned to keep his dress<br />
style fairly casual. He recognized this after turning up for a meeting<br />
with the chief executive of a technology company <strong>on</strong>ly to realize that<br />
he was overdressed in his regular suit and tie. “He comes out of the<br />
elevator wearing cargos, a black Ram<strong>on</strong>es T-shirt and a pair of Vans,”<br />
Bodio recalls. Now the advisor sports khakis and a golf shirt for such<br />
occasi<strong>on</strong>s. “<str<strong>on</strong>g>The</str<strong>on</strong>g>y’re not looking for a cookie-cutter financial advisor.<br />
<str<strong>on</strong>g>The</str<strong>on</strong>g>y want some<strong>on</strong>e who fits their profile,” he says.<br />
Smith Barney’s Brisbin also finds differences in the way his<br />
younger clients communicate with him. <str<strong>on</strong>g>The</str<strong>on</strong>g>y d<strong>on</strong>’t necessarily<br />
c<strong>on</strong>tact him more often, but they tend to do more due diligence<br />
before hiring an advisor. “<str<strong>on</strong>g>The</str<strong>on</strong>g>y make you put in sweat equity to<br />
win their business,” Brisbin says. “We present a lot of scenarios and<br />
models before we even win the business and that analysis makes<br />
the clients feel comfortable with us.”