July 19, 2013 / 12:05 PM / 4 years ago

Financial advisers hunt clients in the Ivory Tower

NEW YORK (Reuters) - Getting a masters degree in business administration might seem like a very roundabout way for a financial adviser to attract new clients. The degree typically costs at least $100,000 and requires courses, such as corporate strategy, that aren’t relevant to financial planning or money management.

But prospecting for clients in the age of the do-not-call list is tough, which is why MBA study groups and happy hours can be a great way to accelerate business, while also adding cache to a resume.

“I would expect the business I acquired through school to pay for my education within two to four years of graduating,” said Douglas Boneparth, a 28-year-old adviser who is attending New York University’s Stern School of Business part time.

He also works as a partner at New York-based Life and Wealth Planning LLC, a three-adviser firm that manages $145 million in client assets.

As far as he knows, Boneparth is the only independent financial adviser in his class, although a few students work at private banks. Using a spare classroom for financial planning seminars, he has attracted business from classmates - and some of their family and friends - amassing about $2 million in new client assets.

He’s optimistic that the Stern alumni network will provide him with business for years to come.

That said, there are plenty of people who think an MBA is a poor use of time for financial advisers.

“I would rather hang out at the local rotary looking for clients than sit through a class on supply chain management,” said Scott Hanson, a senior partner with Sacramento-based Hanson McClain, a firm with $1.5 billion in client assets.

Hanson notes he founded three business, including Liberty Reverse Mortgage Inc which was acquired by Genworth Financial Inc in 2007 for $50 million, all without an MBA.


Most advisers would agree that giving up two years’ income and going back to school full-time doesn’t make sense. But an executive program, which is generally aimed at more experienced business people, or a part-time program, could work.

Louisa Serene Schneider, senior director of administration for the Heilbrunn Center for Graham & Dodd Investing at New York’s Columbia Business School, said MBA students acquire skills that can’t be replicated on the job.

At Columbia, students can take classes from prominent business people, such as Dan Krueger of Owl Creek Asset Management LP and Joel Greenblatt of Gotham Capital, who come to class straight from their day jobs.

Even if an adviser plans to outsource asset management, getting an MBA can impart skills to better analyze fund manager performance. At Columbia, for instance, they’ll learn about why people use discounted cash flow to value a business, what the shortcomings are of that analysis and how to use a completely different methodology, Schneider said.

Darin Pastor, chief executive of Capstone Affluent Strategies in Irvine, California, works mainly with business owners and executives at Fortune 1,000 companies. His MBA, which he received from the University of Liverpool in 2012, gives him added acumen to help clients, particularly when it comes to one of the major challenges they face - staff management.

“A lot of financial advisers are soft on human resource issues, and every business owner is dealing with that,” said Pastor, who has helped clients implement staff-retention programs such as equity sharing. His firm manages $450 million.

Also, the more education you have, the more secure your clients feel, just like wanting the best-educated surgeon, said Pastor, who includes his MBA on his business card.


This is all well and good, but real world experience is still the best resume enhancer.

“I’d rather have a heart surgeon who has done 10,000 of these surgeries, than a lot of letters after his name,” said Neal Price, principal with Deerfield, Illinois-based Strategic Wealth Partners LLC, which manages $1.1 billion.

Price is an adviser who just happens to have an MBA, which earned at Northwestern University in 1984 when he was pursuing a career in accounting.

His advice to young advisers is to get a certified financial planning designation before the MBA. The CFP is much more relevant to the day-to-day duties of advisers, with courses on income taxes, estate planning and insurance.

After that, an MBA can’t hurt, although it comes at a great expense. The average per-year cost of the top 20 MBA programs in the United States, as ranked by the US News & World Report in 2013, was nearly $54,000 per year full-time (when using out-of-state tuition at the public schools).

“That’s an awful lot of money to invest in a networking group,” Price added.

Reporting By Jennifer Hoyt Cummings. Editing by Lauren Young and Andre Grenon

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