A Day in The Life Of a Wealth Manager

What you hear when a guy overseeing $2.7 billion lets you listen to everything he says.

By Nick Summers

Peters, the millionaire whisperer

PHOTOGRAPH BY BRIAN FINKE FOR BLOOMBERG BUSINESSWEEK

I am ADD,” says Kevin Peters, “so having 16 balls up in the air at one time doesn’t seem abnormal to me.” That’s apparent over the course of a day spent in the financial adviser’s office at Morgan Stanley Wealth Management, in suburban Purchase, N.Y., as Peters places a seemingly endless series of calls to clients. He and his five-member team advise some 350 families with combined assets of $2.7 billion. The broad strokes are the same — they’re all loaded; they hate taxes — but every client’s details are different. On Oct. 3, several want to move income into 2012 to avoid potentially higher rates next year. One is buying a stake in a pro basketball team. A few just want to talk.

Their business is increasingly important to Morgan Stanley, which in September agreed to buy out Citigroup’s half of their jointly owned Smith Barney brokerage. Analysts see the steady fee income and low risk of the rechristened division as essential to balancing the bank’s riskier investment banking and trading operations. The need for consistency makes an asset out of Peters’s ability to take the long view and points to what a wealth manager actually does all day.

Peters, 54, can’t predict the stock market. What he can do is talk — laying out options, steering you away from bad ideas, making sense of a tangled financial universe. He must know the ins and outs of taxes, trusts, stocks, bonds, estate planning, and, most of all, people. Throw a dart at his list of clients; he can tell you about any of them at length. “I would probably know their kids, how much they have here, their age, their goals, when was the last time I saw them, their hobbies,” Peters says. “I think I’ve just been very lucky that I do remember, literally, almost everything I hear.”

Oct. 3, 2012

10:55 AM

Call to a potential new client who owns a variety of businesses

That sounds terrific. I’ll just sort of give you what I do: I’m a managing director at Morgan Stanley. I’ve been doing it for 30 years. What my group does is specialize in complex family wealth — generational, business, investing, estate planning. I don’t know what you’ve done with your estate, but this year you have some particular benefits if you choose to make some decisions on the structure of how you own items. Have you started working on that at all? OK, because this year, you have up to $5 million, and you can discount it with different vehicles. Rob [a colleague] mentioned a bunch of things going on with you and your family. You wanted to start a foundation? Have you got that going yet? I’m sorry to hear that. ...

... If you’re going to be in New York, I’d love to have you to our corporate headquarters, have lunch, have a VIP visit, get to know what we do and how potentially we can help you. How long will you be out of the country? OK. If I don’t hear from you after that time, is it OK if I call you back and try to set it up? If you can’t get here, maybe I’ll fly out with someone and meet you. ...

... The other thing we can discuss at that point is that we can help you potentially look at some financing, speak to some of our mezzanine and private equity guys. Right. And then, one of the benefits of being this large organization, Morgan Stanley & Co., is some of the fixed income trading we do and the ability to purchase bonds that not everyone else is owning. I know that Rob had mentioned you were looking for a little better than boring 2 or 3 percent. We have access to some of the desk and research where we’re able to add multiple percentage points on the fixed income. So, you know, there’s a lot we can talk about. I’d love to sit down when you’re ready.

The client’s lawyer dropped the ball. This is an easy opportunity for Peters, who frequently uses a third party to set up foundations.

“This went better than I thought, because he gave me some information on a very personal level,” Peters says. “And he agreed to meet. He didn’t say, ‘Let me think about it.’ ”

1:24 PM

Checking in with a “$100 million guy” who wants to make a $90,000 transaction for his children

We can stuff a bunch of money into the Rochester [Short Term Municipal] Fund, which has a duration of three, and a yield of a little over 3.5, for New York. I mean, it’s just a holding place. I own a bunch of that personally. OK. OK. Yeah, completely. I mean, these are New York trusts, right? So we’ll put it into the New York sleeve. It’s easy, it doesn’t cost you anything. Because we had talked about it! You didn’t want it, back when we first started talking about it! I own that, a bunch of it! You’ve gone both ways. We went from no risk, where you needed the cash, to moderate risk. And then you’ve not wanted bonds. I’ve called you on bonds. Yeah. OK. They were just yielding three times the munis. Right. Not the corporates, the stocks. We didn’t sell any bonds. OK! You’re the best! ... You know what, I’ll do this for the kids, and I will call you at the beginning of the week, and let’s go over all your stuff. Or a day, if you have time, we’ll get together. OK. I’ll speak to you next week. Thanks. Bye-bye.

“You have to remind people sometimes what their goals were at the time they did something,” Peters says.

“Now that was the old-fashioned brokerage relationship!”

1:36 PM

Updating a client on tax-reducing and portfolio-balancing moves involving the family trust

Hi, it’s Kevin, is she available? (Long pause.) Hi, it’s Kevin. No problem, you had very soothing opera on. We had all the substitutions done for the stock between you and the trust. So my question is now: We took the losses for the kids, and we’ll replace it in 31 days. For you, do you want to stay long, or — ? Now it’s up about $25,000. Take that, and buy it back on a dip? That’s what I — just wanted to make sure. I thought that was the plan. I see nothing wrong with it! Exactly. And I’m reducing some of those equities, slightly, from the big gains we had. Those 28 percent ones. But also, I did a new allocation, counting on what you’re going to receive back from [the trust], and you would be, at that point — we count all that in, plus the last $450,000 deposit — you are down to 37 percent equities. Yeah, like we said, we targeted 35, so we got it pretty close without creating a lot of change. So I think we’re pretty good there. All right? I’ll take care of this. You’re welcome. (In the background, the client’s son says he wants to buy stock in Chipotle.) Oh, God.

Facebook profit(!) — Peters and the client bought at $18 and sold at $22.

“One hundred percent of my business now is referral business,” says Peters. “You treat ’em right, and they tell people about us. It’s really a simple business philosophy.”

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