Century City wealth management firm AdvicePeriod is brand new, but its founder, Steve Lockshin, has been around for a while. Two decades ago, he founded the wealth management firm now called Convergent Wealth Advisors. That company was sold to City National Corp. in 2007, though Lockshin stayed on as chief executive of the independently run shop until 2012. He’s still chairman at Convergent, but he’s now focused on building up AdvicePeriod, which he founded in January. An early player in the independent wealth advisory business, Lockshin last year published a book, “Get Wise to Your Advisor,” that calls out all kinds of industry practices he says keep clients in the dark and benefit brokers over consumers. In the preface, he writes: “The cynical and damaging way that the industry treats individuals and families is just wrong, and after observing the industry up close for two decades, I know too much to keep quiet.” He advocates for getting investment advice from agnostic advisers, not from brokerages that benefit by selling particular stocks, mutual funds or other investments. The market for that kind of investment advice has grown, though Lockshin said it’s still not as big in Los Angeles as in other parts of the country. That makes this a good place to start his new firm. “This market is rife with opportunity,” Lockshin told the Business Journal in a recent interview.
Your new firm is one of several new advisers to open recently. What’s driving all the growth here?
Los Angeles, for a city with as much wealth as it has, is a very immature market for objective financial services. And there’s a trend of folks leaving major firms and starting their own independent firms.
Sounds like you. You founded Convergent Wealth Advisors and you’re still chairman there. Why did you start another firm?
In May 2012, I gave up all my day-to-day management responsibilities at Convergent. Since then, a lot of my time has been spent on trying to create initiatives in the industry that I think will benefit consumers. I think the industry needs to change and even wrote a book about it. AdvicePeriod is an outcropping of that.
How does the industry need to change?
Some firms are like crack dealers – they’re trying to sell you the next deal and hope you get hooked. I’m a dietician. I’m trying to help clients stay on a healthy diet. It’s about discipline, minimizing taxes, minimizing fees and letting capitalism do its job. That’s not what most people in our industry sell.
What do you mean?
Conflicts of interest – people get paid more to put you in this investment versus that investment. That’s the majority of the industry. If you give a human a conflicted choice where there are economics involved, they will usually choose poorly.
That’s a good pitch, and one you and a lot of other independent firms make, but is it enough to convince clients to switch?
That’s one of the biggest issues. Marketing dollars trump quality almost every day of the week. Even a top adviser doesn’t have the $1 billion a year like Bank of America to spend on marketing and branding. People associate a brand with stability and stability with safety.
So, where does that leave you?
I’ve been fortunate to be ranked among top advisers by Barron’s for multiple years. I deal with ultra-affluent clients, so I do lots of estate planning work.
But you also want to work with less wealthy clients, right?
My average client today has about $50 million in liquid assets. AdvicePeriod is going to cater to that same clientele, but also leverage technology so we can offer similar solutions – without as much handholding – to a much bigger client base.
Where do you see the investment industry heading?
Technology is changing, giving access to information that Wall Street doesn’t want you to have. Investors will be able to see where their advisers are conflicted or not conflicted.
What other kinds of information do investors need?
There needs to be a move toward simplicity. Take mortgage documents: Nobody reads them and you can’t change them if you wanted to. But if they were simplified down to a level where you could figure out the stuff that’s important to you, it would be much easier to consume. That’s some of what needs to happen in this industry. We’re buried in legalese.
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