Advisor Rankings: Top Independents

Top 100 Independent Financial Advisors

Our annual roster of America’s best indies -- and what they recommend.

By Steve Garmhausen

August 22, 2015

Top 100 Independent Financial Advisors for 2015

Top 100 Independent Financial Advisors for 2014

Top 100 Independent Financial Advisors for 2013

The winds of change are blowing through the ranks of independent investment advisors. For starters, more advisors than ever are going independent, drawn by the promise of autonomy and greater latitude in how they serve clients. At this rate, says research firm Cerulli Associates, a quarter of all advisors will be indies by 2018, compared with 20% late last year. At the same time, going independent is more difficult than ever. The typical registered investment advisor “gets into the business because he or she wants to be elbow-to-elbow with clients,” says Martin Bicknell, CEO of Mariner Holdings. “Then they wake up one day and say, ‘Oh no -- I’m running a business,’ ” with all its operational and regulatory distractions.

The competing forces are giving rise to a new breed of independent firm -- large, multistate organizations like Bicknell’s, comprising dozens or even hundreds of advisory practices. The firms give advisors access to resources and scale that allow them to focus more squarely on the needs of their clients.

These firms are not a good fit for every independent advisor. Indeed, relatively few of our Top 100 affiliate with such firms. But the multistate firms are growing in size and number -- a good development for clients looking for choice.

Several of the multistates are headed by former Top 100 independent advisors, including Bicknell’s Mariner and Ric Edelman’s Edelman Financial Services. Bicknell, like Edelman, had long ranked among Barron’s top 10 independent advisors, but he voluntarily withdrew from the rankings as his executive duties became his primary function. Mariner is still represented in the rankings -- by this year’s No. 29 advisor, Valerie Newell.

Our ranking of the Top 100 independents is based on assets under management, the quality of the advisors’ practices, and the revenue they generate for their firms.

As a group, the Top 100 is an impressive lot, averaging 27 years of industry experience and $3.8 billion in client assets under management. Their client rosters average about 1,100 households, and a typical account for one of those households is just over $9 million.

When compared with elite advisors at the large Wall Street firms like Merrill Lynch and Morgan Stanley, the Top 100 indies serve 27% more client households and have teams that are more than twice the size. The average Top 100 indie team consists of 38 people.

We’ve profiled five of the Top 100 in the pages that follow, including the No. 8 advisor, Greg Miller, who offers some advice that might serve as a mantra for all indies: “If you want different results, you’ve got to do something different.”

A former executive with accounting giant Arthur Andersen, Steven Weinstein borrowed the company’s rallying cry to launch himself into independence.

“We had a saying that there are never any problems, only opportunities,” explains Weinstein, 63, who helped to design and build Andersen’s investment-advisory and personal financial-planning businesses nationwide.

In 2002, with Arthur Andersen fatally wounded in the Enron scandal, Weinstein saw the chance to set up a stand-alone firm that could control its own destiny. Good call: Chicago-based Altair Advisers now manages more than $3.8 billion with a team of 43.

At first, Weinstein seemed destined to follow his father into the field of law. As a kid, “I didn’t give much thought to being anything other than a lawyer,” he says.

When applying to law schools, however, Weinstein learned of a joint law and M.B.A. program at Northwestern University. Upon graduation from that program in 1978, he joined his father’s corporate law practice, but he soon found that he preferred dispensing advice and counsel to arguing cases. A few years later, Weinstein moved to a boutique advisory firm, which was subsequently acquired by Andersen.

Weinstein prides himself on identifying new ways to unlock investment value for clients. Not long ago, the firm’s research confirmed that the best-performing fund managers over the long term tend to have three- to five-year periods of substantial underperformance. So, taking a cue from value stockpickers, the team now looks to buy in on the cheap to high-quality funds that are temporarily down despite keeping their management and strategy in place.

“Short-term periods of underperformance by a really good manager can give you an attractive entry point,” explains Weinstein.

Likewise, understanding that even the best managers cycle through poor performance can help dissuade investors -- and their advisors -- from yanking their money prematurely. “The worst mistake a lot of advisors make is giving up too soon on a great manager,” says Weinstein.

Over the past year, Altair underweighted two of its most successful small-cap managers, and overweighted managers “coming out of a bad cycle.”

The result of that move: The firm’s small-cap investments are up more than 5% so far this year. The Russell 2000 index of small-cap stocks is up just 0.6% over the same period.

Weinstein and his firm support a range of charities, including the Ravinia Festival’s Reach*Teach*Play program, which provides music education for 18,000 public-school students in the Chicago area.

“There’s a correlation between art and other kinds of achievement,” explains Weinstein. “To us, this was an opportunity to ensure that high-quality music education can be available to kids no matter what their socioeconomic backgrounds.”

Modern portfolio theory -- with its emphasis on broad portfolio diversification -- is considered sacred by most investment advisors. But Greg Miller wants nothing to do with it. “We don’t really think modern portfolio theory works,” he says flatly.

Miller, 66, is a leading advocate for convertible bonds -- fixed-income instruments that can be converted to stock at specific time intervals. Convertibles, he argues, provide appreciation and principal protection in one neat package.

Thus, while most advisors advocate widely diversified portfolios, Miller typically invests more than 90% of his company’s assets in convertible bonds.

Miller originally embraced convertible bonds as a way to change his family’s investing fortunes. His grandfather made a fortune when he sold his drugstore chain, but he lost nearly everything in the 1929 crash. A similar fate befell Miller’s father -- who sold his industrial-cleaning-supply company in the early 1970s, invested the proceeds in mutual funds, and soon lost most of his money.

Miller started his career as a certified public accountant in 1972. But like his forebears, he ended up making his fortune as an entrepreneur. Miller invested in medical companies that were sold for $10 million in 1986. Determined to protect and expand his windfall, Miller began learning everything he could about investments. When he came upon convertible bonds, it was love at first sight.

Along with his 35-person team, Miller follows a disciplined approach to risk management. He buys notes and bonds only from profitable corporations with strong balance sheets.

He holds short- or intermediate-term convertibles -- and only buys longer issues that include an automatic put feature. The put feature allows the bondholder to resell to the issuer at certain time intervals. This allows Miller and company to unload bonds when an issuer’s credit deteriorates or its stock price falls.

The power of the put has helped Wellesley to protect principal during bear markets, and that in turn has allowed Miller’s clients to beat the market over the long run.

Since 2000, the Thomson Reuters Wellesley Absolute Convertible Bond index, which Miller and his team developed 15 years ago, has posted annualized, compounded returns of 8.86%, compared with 5.7% for the Barclays Aggregate U.S. Bond Index and 4.24% for the S&P 500 Total Return Index.

Miller senses a desire among investors to replace the conventional investing playbook, one that he says failed to protect many from taking a bath in 2001 and 2008.

“If you want different results,” says Miller, “You’ve got to do something different.”

Early in his working life, Kevin Timmerman eliminated two vocations from long-term consideration: lawyer and hog slaughterer.

The latter got crossed off the list summarily after a post–high school stint in that gory industry; the former required a little more soul searching.

Timmerman, now 46, earned his law degree from the University of Iowa College of Law, but even after graduating in 1994 and passing the bar, “I realized…that I did not have a passion for practicing law,” says Timmerman.

Instead, he took the skills he learned in law school -- critical thinking and tax and estate planning -- to the financial field. He got his start as a financial planner in Northwestern Mutual’s Dubuque office, but he soon opened his own practice, a registered investment-advisory firm.

Like lawyers, RIAs have a legal duty to act in the best interests of their clients, and the model allows Timmerman to charge a continuing fee for advice rather than sales commissions, which can create conflicts of interest.

Timmerman’s team of 20 manages more than $1.6 billion for 1,125 client households. He describes his investment approach as “classic asset allocation” with a long-term view. “We’re not day trading or trying to time the market,” he says. “We will tweak portfolios over time, but we’re big believers in the long-term benefits of staying the course.”

Timmerman favors low-cost institutional mutual funds, and eschews hedge funds and other illiquid investments.

Not surprisingly, the team’s aggregate asset allocation -- 65% stocks and 35% bonds -- is the same as it was a year ago. Timmerman and the team did recently increase their weighting to international investments, a move based on attractive valuations.

Timmerman is not among the many advisors who are trimming their holdings in bonds. A big chunk of clients’ assets are invested in the DoubleLine Total Return Bond fund, run by famed bond guru Jeff Gundlach.

The fund has returned 1.94% so far this year, compared with 0.59% for the Barclays U.S. Aggregate Bond Index. “We’ve got a lot of confidence in him,” Timmerman says of Gundlach.

Timmerman expects the stock market to continue its turbulence throughout the rest of the year. And he expects continued growth -- “albeit at a slower pace than most of us would like.”

“But growth is growth,” adds Timmerman, “and growth is a good thing.”

Edward “Ted” Neild’s approach to investing was forged at Nuveen Asset Management, where as chief investment officer he oversaw more than $30 billion of fixed-income investments.

In 2005, a desire to serve individual investors more directly led him to move to Gresham Partners. A decade after going independent, Neild, now 50, has no regrets. He helps to manage about $5.4 billion at Gresham, which serves 78 well-heeled households.

Neild stewards clients’ money with a healthy skepticism toward conventional wisdom. Rather than maintaining exposure in every major asset class, as many advisors do, he cherry-picks only those that offer significant reward to offset their risk.

In today’s environment, bonds are in Neild’s doghouse. “The risk-reward proposition for clients appears to be the worst in several decades,” he says, citing factors like low yields and tight spreads. “Obviously, sharply increasing rates makes this investment proposition even worse.”

Alternatives like private equity, hedge funds, and private placements are more attractive -- as long as they’re in the hands of the right manager, he says.

That brings us to the other key to Gresham’s investing success: finding jewel-in-the-rough managers. The firm has found that selecting the right managers accounts for 50% of investment success. These maestros, however, are typically small, independent outfits and not easy to unearth.

“Our investment team traveled half a million miles around the world last year,” he says. “You have to go where these people are.”

In today’s environment, the most rewarding place to get manager selection right is in the alternative-investment realm, Neild says. That’s because the best alt managers create significantly better performance than their so-so peers. Among stock- and bond-fund managers, the difference is more modest, Neild says.

The Gresham team is particularly keen on managers who specialize in hedge funds, private equity, and private investments. “Getting to the right managers makes an enormous difference in outcomes,” he says.

Neild and his firm are focused on supporting education through Greenhouse Scholars, a program that provides support to help at-risk college students graduate. Among those who are the first in their families to attend college, Neild says, the graduation rate is an abysmal 11%. Among Greenhouse Scholars, it’s 90%.

Why take up the cause of education? Neild has a simple answer: “The future prosperity of our country depends on it.”

As a federal prosecutor in Los Angeles, Jim Berliner once faced off against defense lawyer Roger Cossack -- best known today as an ESPN legal analyst -- in a case involving stolen U.S. Treasury checks. Although Berliner’s team won the case, Cossack didn’t hold a grudge: Years later, he was a founding client of Berliner’s fledgling financial-advisory practice.

As Berliner, 60, tells it, the shift to working as an independent advisor wasn’t as dramatic as it may look. “It’s a lot like when I was a prosecutor,” he says. “You feel like you’re wearing the white hat.”

Berliner, a Los Angeles native, earned a public-policy degree from Brown University before earning his Juris Doctor from Harvard University. He served as an editor on the Harvard Law Review, alongside classmate John Roberts.

In 1990, after nearly a decade as a lawyer, Berliner joined his father in the still-young field of independent financial advice. Twenty-five years later, Berliner manages more than $2 billion for 919 households.

He and his 24-person team combine long- and short-term investments across traditional and alternative asset classes. A current favorite is Stone Ridge Funds’ Stone Ridge Reinsurance Risk Premium fund.

The fund invests alongside reinsurance companies, collecting premiums and paying out losses for insuring against events like earthquakes and hurricanes. The investment has zero correlation to the stock or bond market, Berliner says, and thus may provide stability when traditional markets are volatile.

In bonds, the hunt for yield has lately led Berliner to community-bank debt. With the federal government’s blessing, stronger community banks have been issuing debt to retire TARP-funded notes, improve their balance sheets, and raise growth capital. Berliner accesses that debt, which can yield from 5% to 7%, through the Angel Oak Flexible Income fund.

When it comes to stocks, one area of promise is European residential-mortgage lending. The asset class has been beaten up in the broad financial selloff, but it’s a solid play, in part because of comparatively strong underwriting -- Europeans put down as much as 50% when they buy homes.

Frontier markets, where one can find companies growing at 20% a year and selling for just nine times earnings, are also worth a look, he says. “The fundamentals look like larger emerging markets’ did 20 years ago.”

There’s nothing fundamentally wrong with U.S. markets, Berliner says. His clients maintain a core of large U.S. stocks. But with the market well picked over, he feels a responsibility to uncover better opportunities.

“The conventional approach to investing and asset allocation is sound and absolutely good, but its not enough,” he says. “Especially at a time when most assets are fully valued.”

Matt Barthel contributed to this report.