I’m in a brownstone converted into an office somewhere in Manhattan. There’s a random dog walking around. Everyone who works there is under thirty except for the woman who founded the “wealth management” firm. She is over 60, having spent her career as a financial advisor. I met her filming something at the Nasdaq for WSJ. “Come by my office, let’s talk shop,” she tells me. So I come, and the dog sniffs me.
“What’s your strategy?” I ask her. I’m truly curious. This is the period between establishing my own practice and launching our own firm. I am open to new ideas from everywhere.
She goes into this whole story about how she gets involved with charities in Connecticut or Westchester and shows up with the hors d’oeuvres, which she makes herself. And I’m like What the hell are you talking about? Then I realize as she answers me. She’s talking about her marketing strategy, not her investment strategy. She doesn’t have an investment strategy, yet there are hundreds of millions invested with her. Because she’s great at showing up at charity events with pigs in a blanket and talking her nonsense.
I realize she is just faking it. All of it. Meeting people, sizing them up and telling them what they want to hear.
A young man pops into the conference room and says “Market closes in 5 minutes, what do you want to do with this TZA?” He is asking about an ETF that trades at a 3X inverse to the Russell 2000 index intraday. It’s 2011, so it’s not so strange that I know what this is. Everyone still thinks the market is headed to zero and trades accordingly. Still, it seems like a ludicrous position for an alleged wealth manager.
“Hold onto it overnight,” she tells the kid. I don’t quite remember but I think his name was Glen.
She didn’t look at a TZA quote or a news report or anything. This is clearly a 100% feel thing. She is managing money by making it up as she goes along. The goddamn dog is roaming around under the table brushing up against me. I think I’m hallucinating as I hear this exchange. The lady who makes the hors d’oeuvres to prospect for clients is daytrading 3X leveraged ETFs on the Russell 2000 off the top of her head. She probably has a whole spiel with her clients about how she is hedging positions.
She explains how her firm operates. “We don’t pitch asset management, we pitch the financial plan, which costs $5,000 for us to execute. Then we hand them this book. Takes forever for the printer to spit out,” she laughs. The book looks like an encyclopedia, hard bound and four inches thick. “Once we hand it to them, they don’t know what to do with it. But they’ve already paid us, so…” The dog runs to the window as a horn blasts outside. Her hustle is that a giant, printed financial plan doesn’t do the customer any good without someone to do the trades and the investing, so she basically gets $5,000 to hand them an advertisement for her investment management. “I get paid up front no matter what, and then I get the account anyway 99 percent of the time.”
Glen is bringing us bottled water from the fridge. He looks weirded out by her willingness to say this out loud to a visitor.
“Listen Josh,” she says. “I’ve heard you on NPR and Bloomberg Radio. I do a lot of Fox Business on TV. I’ll tell you what. You give me your producer’s contact info and I’ll give you mine. I’d love to be on NPR and you would love doing Fox.”
“You don’t understand,” I tell her. “They only call me for the radio when I write a blog post about something and it’s really good. I don’t just go on to talk about anything.”
“Blogposts?” she says. “What?”
“I write about investing and do a lot of research while I write to try and get smarter and better at this. Sometimes I write it up on my blog.”
“Let me tell you something kid. Rich people don’t read blog posts, they watch me on Fox. Don’t waste your time with that.”
“I hear ya. But what you need to understand is that I would be writing the same posts even if no one was reading them. I’m obsessed with becoming a better investor and helping people. I don’t need a return on that investment, I just need to enjoy the process.”
“Okay Josh, thanks for stopping by. Definitely email me your NPR contact when you get a chance.”
“Okay thanks. No, I’m not going to do that.”
“Because I think people need to hear more from me and less from you in order to retire and achieve their goals. No offense, but I think I am the opposite of you.”
“Glen, show Josh out.”
The dog follows me to the door. I rub him behind the ears. I love dogs. It’s not his fault he lives with a charlatan. I want to rub Glen behind the ears too.
“Get out while you can,” I’d tell him.