The Butcher of Park Avenue

I don’t look the part.

I never did. Neither does my crew. It wasn’t always so.

Once upon a time, working at a series of third-tier brokerage firms, I was trained to always be the best dressed person in any setting. It was a broker thing. Armani suits, thick and lustrous Canali ties, Gucci belts, Ferragamo shoes, Rolex watches and, believe it or not, literally cufflinks. Guys were walking around these coldcalling offices wearing pinstripes as wide as highway dividers and some even wore suspenders. Suspenders! 

It was the late 1990’s and early 2000’s. The bosses of these firms were raised on ‘Wall Street‘ and Gordon Gekko. Go get yourself a decent tailor, kid. One firm even had a bathroom attendant handing towels and mints out to brokers in the middle of the day.

One of the few useful things I learned from these monsters was that style over substance can actually work. “You’re selling the sizzle, not the steak,” we were told whenever one of us had a question about the investment product du jour we were expected to promote.

The thing is, this approach of looking the part only works for a little while. Eventually clients figure it out. So do employees. Image is worth nothing and people won’t pay for it forever. At a certain point, there’s got to be something of substance backing it up.

I like my suits. I’m a Joseph Abboud guy. He just gets me (seriously, I’ve met him). His stuff just fits my retired-offensive-lineman’s frame. But I’m much more likely to be in jeans and sneakers than in a suit most days. Because I’m here to work and get stuff done, not to impress people who ought to know better.

And if someone chooses a different wealth management firm because this whole squad’s rockin’ Nikes and New Balance, then frankly, we’ve dodged a bullet. That’s the wrong client for us. We want to work with people who are talking to us for the right reason – wealth management, investing expertise and true financial advice. We don’t know from regattas.

My office is a sublease on Park Avenue in the 40’s. We moved in here when we first launched the firm and it was a stretch to afford it. We’ve quintupled our assets under management from this space. We’re bursting out of it in terms of size needs at this point, but it was the right place for us as a startup. I’m sure we’ve had people see it over the years and judge us for it. “They don’t even have their own space!” I felt a little bit subconscious about it. Until this morning.

The New York Times featured our firm on the first page of their business section today. The story is about how enterprising advisors like us are able to leverage technology and support in order to build the firm of their dreams.

From the article:

When it comes to traditional financial advisers, Josh Brown of Ritholtz Wealth Management does not quite play to type.

Instead of schmoozing with clients over lunch, Mr. Brown brings in business via a storm of tweets and posts on his blog, The Reformed Broker, that he generates from a cramped, sublet office space in Midtown Manhattan.

As for Mr. Brown’s back office — the swarm of lawyers and compliance professionals that is the backbone of financial firms large and small — it, too, is virtual. Just a click on any type of screen connects a Ritholtz adviser to Charles Schwab or TD Ameritrade, where a team of operations experts keeps a hawk’s eye on the rapidly growing $532 million in client assets managed by Ritholtz Wealth, an independent financial adviser.

Much as Amazon has disrupted the retail industry by revolutionizing shopping habits, Schwab and firms like it have empowered a fast-growing vanguard of wealth advisers who offer independent and conflict-free financial advice by relying on easy-to-use technology.

We could never do what we do without our partnerships and vendor relationships. Working with Schwab, TD, Orion, Vanguard, Dimensional, Riskalyze and all of the other companies you see me talking about here is what allows us to focus on what we do best. We leave the rest to the experts that we’ve built up trust with. Putting the whole package together into a great client experience is the magic.

We’re trying to improve and find that magic all the time. Looks and appearances and $150 per square foot office space is not part of that quest. The Times article calls our space “a cramped, sublet in Midtown Manhattan.” They’re right. We are unapologetic, although stay tuned because we’re moving in October to something that will be bigger and cramped 😉
I’m proud of what we’ve been able to accomplish here. It’s an affirmation that clients who have begun a relationship with us have done so for the right reasons.

There’s a wirehouse brokerage firm a few blocks away from here that has an art museum in the branch. The prospective clients who are given a tour are essentially visiting with their own money, staring back out at them from behind the display cases. We have no museum.

In 2010, I drove to a prospective client’s home to meet his wife for the first time in a tony section of Long Island. I had a Jeep Grand Cherokee with two car seats for my babies in the back. He didn’t like my car and said so. He then became the first client I ever turned down in my career. These days, I can afford to drive whatever car I want. Guess what – I have a 2015 Jeep Grand Cherokee. I’ll probably get another one. It sits at the train station all day anyway and I’m not trying to project anything to the world. My friend Michael Kitces drives a Kia Spectra. If you think your wealth manager knows more about financial advice than Michael Kitces, you’re smoking crack.

One of my favorite authors and thinkers, Nassim Nicholas Taleb, wrote something the day before my 40th birthday this past February that almost had me in tears. I was definitely on the verge. It grabbed me because for the first time I felt like someone was describing exactly the way I’ve always thought about myself and what I’ve been trying to do. I could never quite put it into words but Taleb is a better writer than I am.

From “Surgeons Should Not Look Like Surgeons”…

Say you had the choice between two surgeons of similar rank in the same department in some hospital. The first is highly refined in appearance; he wears silver-rimmed glasses, has a thin built, delicate hands, a measured speech, and elegant gestures. His hair is silver and well combed. He is the person you would put in a movie if you needed to impersonate a surgeon. His office prominently boasts an Ivy League diploma, both for his undergraduate and medical schools.

The second one looks like a butcher; he is overweight, with large hands, uncouth speech and an unkempt appearance. His shirt is dangling from the back. No known tailor in the East Coast of the U.S. is capable of making his shirt button at the neck. He speaks unapologetically with a strong New Yawk accent, as if he wasn’t aware of it. He even has a gold tooth showing when he opens his mouth. The absence of diploma on the wall hints at the lack of pride in his education: he perhaps went to some local college. In a movie, you would expect him to impersonate a retired bodyguard for a junior congressman, or a third-generation cook in a New Jersey cafeteria.

Now if I had to pick, I would overcome my suckerproneness and take the butcher any minute. Even more: I would seek the butcher as a third option if my choice was between two doctors who looked like doctors. Why? Simply the one who doesn’t look the part, conditional of having made a (sort of) successful career in his profession, had to have much to overcome in terms of perception. And if we are lucky enough to have people who do not look the part, it is thanks to the presence of some skin in the game, the contact with reality that filters out incompetence, as reality is blind to looks.

Do I look like Taleb’s butcher archetype? Or “a third-generation cook in a New Jersey cafeteria”? Probably not quite to that extreme, but his point is a powerful one. No one who works at Ritholtz Wealth got in the door on pedigree or sartorial splendor. When you see us on the firm’s Instagram feed being normal people, it’s not shtick, it’s reality.

In my experience, the people in this industry who are most concerned with how everything looks are compensating for something else. Most likely, an inner realization that they are selling a service that they cannot actually provide.

Our clients get it. Our fans get it. It’s not for everyone. There’s no sizzle here. We’re doing our best, however, to do good steak.

Sources:

Wealth Advisers Set Up Shop With a Shared Back Office (New York Times)

Surgeons Should Not Look Like Surgeons (Incerto)