Revisiting the #1 Team on Wall Street

Bill Good

Oct 01 2005

Author's Note: The January 1998 issue of Research carried a cover story I wrote on Ira Walker and his team at Morgan Stanley, "The #1 Team on Wall Street."  In the first paragraph, I wrote, "Okay, okay.  I know there are some teams in the industry that produce more than Ira's.  But the teams I'm aware of are large partnerships, or they're not on Wall Street.  To my knowledge, the Ira Walker Team is the biggest, most productive team on Wall Street.  And if I'm wrong, I'm sure I'll hear about it.  For now, I'll stick with my title."

Almost 7 years later, I'm still sticking with that title.  While Ira and his group moved from the World Trade Center in April 2001 to Red Bank, NJ, it's not too big of a stretch to say that "Wall Street" covers nearby suburbs.  And while many of the big production teams include multiple financial advisors, the Walker Group is Ira Walker supported by a veteran, well-oiled support team.

At the time I originally interviewed Ira, sometime 4th Q 1997, he had built his business to $800 million in assets.  Following a 554 point drop early October, the Dow was trading in the 8,000 range.  It's now in the 10,500 range.  So from when we spoke in late 1997 to now, and allowing for a 20%+ nudge from the market, the Walker group has doubled assets under management.

Has revenue doubled?

No.

In that original article, I wrote, "Commissions are trending down.  The implication of this trend is harsh and unforgiving.  With commissions--and fees--coming down, you have to manage more clients and more assets just to stay even."  Ira and his team have done just that.

Fast-Forward to 2005

On July 28 I did a wide-ranging interview with Ira; Dinah McCoy, his Chief of Operations; and Andrea Dagnelli, his Marketing Director.  We reviewed the past, present, and vision for the future of the Walker Group and the industry in which it lives.

Today, the Walker Group is dealing with the twin issues of producing the best possible client value while making a good living for themselves.

And as usual, Ira has come up with an answer, which I believe puts him in a very, very small group of elite advisors.  Like the fabled Wayne Gretzky in hockey, Ira is skating to where the puck is going to be, and that puck is heading back to the industry's roots:  Back to before the split between managing money and raising money, back to when "brokers" managed money for clients.

The Separation Trend: How Money Management and Money-Raising Split Apart

Let's review some basic industry trends.

In many ways, the industry owes its present form to Jonathon Krass.  In the late 1970s and early 80s, he recognized he could do an excellent job managing money or raising money but not both.  He was then with EF Hutton and convinced them to let him use commodity managers to manage client assets, so he could focus on planning and raising the funds.

The Managed Futures Department that he established at Hutton became the Managed Money Department at Shearson, which became the Goliath at Smith Barney.  In my opinion, with no territory left to capture this trend has now run its course.  With the exception of some tightly constructed portfolio management systems at some of the major firms, the financial advisor today certainly raises money and helps plan the affairs of his or her clients but does not manage the money thus raised.  Other exceptions are about as rare medical doctors who make house calls.

So I not surprised to find Ira—oftentimes a contrarian in his investment philosophy—bucking this seemingly inexorable tide.  He and his team are using new financial tools to create and manage their own portfolios.

Getting Back Together?

Ira told me, "The business has changed dramatically since 1997, Bill.  I think most advisors are aware of that.  I mean, the transactional business that existed in '97, '98, and '99 has totally disappeared.  Our business is really more focused on managing money.  I think a larger and larger portion will be fee-based, and I think most of the large brokerage teams will become mirror images of boutique money management firms that started in the early eighties, similar to famous money management firms that we have given money to over the years."

So—at least in Ira's opinion, the industry comes full circle.  The money raisers and financial planners need to add money management back to their job description.  Otherwise, the fee compression that Ira, I, and others have forecast for years will make it very difficult or impossible to profitably do business.

Here's Ira's strategy: "So now, everyone's battling for that 1 to 1.5%; ultimately I think 1% is the number and that's where it stops.  So if you can manage your own money and develop your own money management skills, you don't have to share that fee with an outside money manager, and that's what we've done here.  We have sophisticated capability to manage our own money now, which we have developed over the last five years."

In the earlier model, as conceived by Jon Krass and countless imitators and duplicators, a broker could not simultaneously be good at two things—raising money and managing money.  They were each seen as an all-consuming skill set.

It was held that one could not be good at both things, simply because it took full time to be good at one.  Besides, just managing a financial services business practice was also nearly a full-time job.


But advanced technology and the team system again make possible the use of one advisor to raise, plan, and manage money ... at least in the Ira Walker playbook.

And so perhaps the pendulum swings back.

Note to Editor: In the original 1998 article, there was a shaded box with some pull quotes.  I'd like to reproduce that box with those quotes, as follows.  (You might add citation of original article in your style.)

What we've done over the last five years is literally transform our businesses into a boutique money management firm; and a lot of the money that we have right now is managed in our program utilizing ETFs.  We have the client fill out a detailed questionnaire to identify risk tolerance.  Based on that, we then deploy an asset allocation model that meets the client's risk tolerance.

I think it's very important for advisors today to understand that what happened to mutual funds and money managers in the eighties and in the nineties is going to be replaced by ETFs and I-Shares today, which I think are going to boom over the next 10 and 20 years.  Clearly, this is the future of money management in this country.

So with an ETF portfolio that we manage using proprietary research, which encompasses style investing, capitalization investing, sector rotation, we're able to develop a portfolio for a client that's very sophisticated and that we hope will beat the market returns over time.

The Five Phases

Ira built his business in four phases and is now moving into a fifth.

In the first, he did what every rookie of the 1980s did, which was just make thousands of phone calls until he had enough clients to get his head above water.

In Phase 2, which started in 1989, Ira attacked the small-business pension and profit-sharing plan marketplace in the New York City area.

Phase 3, seminars, overlapped Phase 2 somewhat.  One of the things that has always amused me about Ira is that he doesn't pay much attention to other advisors and therefore does not know what doesn't work!  For instance, I can recall countless brokers in the early 1990s telling me that you could not see people in New York City.  Ira didn't know that.  He grabbed my model day, which said you need to see 15 people a week, and went for it.

He also was also quite unaware that people would not attend seminars in New York City.  And so for some years in the early to mid-90s, his seminars would pack the Dean Witter conference room in the World Trade Center with doctors and small-business owners.  He even made them pay for their own parking.  But he did feed them.  "Food is very important in seminar selling," he said.

In 1998, with $800 million in assets, he moved into Phase 4.  Even while the seminars of Phase 3 faded, Ira was ready with this new phase, the referral networking phase.

"In the ultra-high-net-worth and high-net-worth segment, it's difficult to be aggressive and ask for referrals directly, so we try to do it very subtly--golf outings, client events, things of that nature.  And clients who are wealthy are very aware of the networking process, so referrals become simple because the clients quickly understand that, hey, I'm attending this and Ira's a good guy, and he's doing this to promote business.  I'm here to enjoy myself, but I'm also here to help him.  And that's never said."

Here is the key to the kind of networking he does: "We try to keep it really intimate, because the high-net-worth and the ultra-high-net-worth segment want to do things that they can't do on their own."

He took a group of clients to a Rod Stewart concert.  Granted, they could have each called a scalper and bought their own tickets.  But he rented a tent, had it catered, and arranged special seating.  And I assure you, many of the guests of current clients who came along noted to themselves, "My advisor doesn't do this for me."  He also took another group of clients to Yankee Stadium, took them down on the field, and arranged for them to meet Derek Jeter.  That's something none could have managed on their on their own.

Another part of Phase 4 (and still continuing) has been community and charity work.  Ira was appointed by then-Governor Whitman to be a trustee for Montclair State University.

One's public and business lives help each other.  As Ira put it, "When people see the character of an individual off the field, let's say, they get confidence in that person on the field.  I think that that's what we're doing when we get involved in local charities, when we get involved in my alma mater, when we get involved in Montclair State University.  People want to know that they're dealing with reputable people."

And there may be a Phase 5 starting.  Ira is number 18 of Barron's Top 100 for 2005.  The New Jersey Monthly, March 2005, called him the "number one wealth advisor in New Jersey."  He's now begun to leverage that by advertising in the magazine in New Jersey that goes to exactly the people he needs to be in front of.

Success Factors

In 1989, before moving my column to Research Magazine, I ran a survey in Registered Rep looking for "THE SECRET" of spectacular success.  I imagined there was one thing that top producers in the industry did that, when revealed, would open the gates for others.  When I analyzed my data, there was no SECRET, or so I initially thought.  Instead I found that those who took their businesses to the end of the rainbow were better in all of the core competencies in the industry.  Nothing stood out ... Bingo!--except that they had mastered all the core.  They were better at ALL the core practices that made up the business, as listed below.

Ira did it.  Can you?

1)  A Vision of Greatness

Without the vision, all the other factors are just so much eyewash and idle machinery.  No one can give you this but you.  It's what drives you, keeps you moving, gets you out of bed with a jump.

No vision, no glory.

Do you have a vision?

2)  Integrity

Ira has been in the business 20 years.  During that time, he's never had a complaint.  In one of the many conversation we've had over the years, he told me, "I don't need a branch manager to tell me what to do.  I need a branch manager cross checking me to make sure I don't screw up."

As recent history has proven, those who betray the trust they've created eventually smash back down to earth, leaving a fiery trail of ill will, legal investigations, and trouble that scorches us all.

I hope none of my readers are in that group!

3)  Craft

In my estimate, providing good investment advice is obviously necessary to retain one's clients.  But while there are good craftsmen in any field, some are great.  For those looking at the end of the rainbow and wondering how to get there, it takes a long time to achieve mastery.  Along the way, Ira had a very bright idea to help him get to the top of his game.  He went to the acknowledged masters and picked their brains.

As his business grew in the late 1980s and early 1990s, Ira became credible to fabled outside money managers.  In part because of his persistence, persuasiveness, and growing asset base, many would take his call.  Over a many-year period, Ira interviewed literally hundreds of managers controlling billions, if not trillions.  He took what he could use and built on it.

Today, he's in a position to spend hundreds of thousands of dollars annually to buy the specialized research he needs.  But it started with a relentless persistence to learn the craft from the best in the business.

What's your continuing-education plan?

4)  Hard Work

In my 1998 article on Ira, he commented on prospects for the rookies of the day.  "I'm an optimist in the sense that I think the business will always provide great opportunity for those who're willing to put in the hours.  I'm a pessimist in the sense that I see a lot of the rookies coming out of Ivy League schools thinking they're going to earn $200,000 a year working 9 am to 5 pm.  In other words, I think a lot of the younger guys are not willing to put in the time to be successful.  And I think those who are willing to put in the time to be successful will ultimately be successful like I was back in 1985 and like other brokers were in 1972 and 1973."

Ira put in the hours.  While his hours are not now as brutal as they once were, I do know that when he works, he works hard.  Success knows no other master than hard work.

So what's your schedule?  When you're at work, do you work?  Surf?  Go to lunch with your peers?

5)  A Completely Dedicated Team

It's not enough to have a bunch of people working for you.  They need to be welded into a team.

In preparation for this article, Andrea was kind enough to send me the updated team job descriptions for the Walker Group.  I was struck with the first duty in both her and Dinah's job description.

"Leverage and support Ira in any way possible--whatever it takes on a daily basis."

Dinah's other job duties include:

"Leverage and support Andrea.  Assist Andrea with marketing and sales projects as needed or in her absence."

And Andrea's duties include:

"Leverage and support Dinah in her absence or in emergency situation."

Ira and his staff are a team, not just a bunch of people doing a job.  It is reflected in their attitudes, caring, and competence.  They are really part of the #1 team on Wall Street.

Simply for space limitations, I cannot even come close to representing the synergy Ira's team generates.  So I'm creating an "Ira Walker Team Page" at www.billgood.com/walkergroup, with part of my extensive interview with Dinah and Andrea.  Want to know now the #1 team captains think about their job?  You'll want to spend some time there.  I'm also posting some other items of interest, such as a couple of the ads Ira has been running.

Do you have a team?  Part of one overworked assistant?  Nada?

6)  Model Day

Without any question, your most valuable asset is your time, and you only have so much that you can devote to work.  In order to accomplish the daily tasks that produce the accomplishments that in turn add up to your vision, your day has to be planned in great detail.  Rolling out of bed, scratching your head and wondering, "What am I doing today?" doesn't cut it.

Beginning in 1989, Ira took the Model Day I had designed and implemented it better than any of the other 5,000 advisors we have trained over 20 years.

In the interview with Andrea and Dinah, you will hear them refer to the "modified Model Day."  Yes, the Model Day has changed.  But so has Ira, and so has the industry.  But the Model Day concept, which breaks the day into optimum time blocks, is as valid today as it was in 1986 when I created it.

How is your day organized?  Are you making disciplined use of your most valuable asset?

7)  Business Management Systems

You must have systems to get the business side of a financial practice done.  Otherwise, you wind up doing all the work, over and over.

In the interest of full disclosure, I met Ira in October 1988 when he came to Utah to pick up his copy of the Bill Good Marketing System®.  I've told people for years that we build "roads and sewers."  Ira had decided to buy that infrastructure for his business rather than build it himself.

As an aside, he had "the vision" then.  During a course break, this brash kid from Brooklyn came up to me and said, "I just want you to know I will be the biggest producer ever to come through your system."  So far he has not been proven wrong.

If Ira couldn't buy a system, he built it.

Probably 15 years ago, I was in his office.  He had just come back from an appointment and had made some notes on a form he'd designed.  He gave it to his Computer Operator and said, "Get me the short proposal for Dr. Jones."  At the time, he had a "short proposal" and a "long proposal."  His theory at the time was that bigger asset pools deserved bigger proposals.

The way he had it organized, it would take Ira less than 15 minutes to fill in the blanks for a proposal.  It might take his Computer Operator a couple of hours to produce the end result: a good-looking, persuasive proposal.

He developed that system because he'd lost a big sale to Goldman Sachs.  Their proposal was better than his--which was probably the last time that occurred.  But like the organizational genius he is (an "organizational genius" is someone who captures an opportunity once or solves a problem once and uses that solution whenever a similar problem or opportunity arises), Ira created his proposal system in such a way that the repetitive work could be done by someone else, thus saving himself buckets of time every time he needed a new proposal.  In 1989—1992, that was probably 10 times a week.

$2 Billion and Counting

So Ira's vision is a boutique money management practice with at least $10 billion under management.  And down the road, "I want to grow this business for my children--they're 11, 13, and 14 right now--and I want them to inherit a money management business later on, and ultimately Andrea and Dinah will be helping them run this business, and I'd like to see this business grow dramatically. If we can raise three, five, ten billion dollars over time, that would be spectacular. I'm sure they'll raise 20, 30 billion. But maybe not in my lifetime."

Ira, I wouldn't bet against that!

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