Virginia’s top financial advisers
Author R.J. Shook picks 30 from state as role models for industry

by Bob Antrobus
For Virginia Business
August 2005

Because of Joe Montgomery, Bill Newton, the CEO of Norcal Mutual Insurance Company in San Francisco, was able to retire early in luxury. In fact, right now he’s enjoying a nine-month stay in Italy, where his wife Sharron is becoming acquainted with distant relatives.

Montgomery is not a beneficent uncle

— he’s a financial adviser in Williamsburg who caters to very wealthy clients. His job, he says, is to help clients like Newton “achieve and maintain their preferred future.”

Montgomery’s track record in reaching that goal is one of the reasons that author R.J. Shook ranked him at the top of his list of financial advisers in Virginia who serve the ultra-wealthy. In fact, Montgomery and Ric Edelman of Fairfax also appeared in Shook’s recent national list of top financial advisers published in Barron’s. The list is the subject of an annual cover story in the magazine.

Shook, a former financial adviser, is the author of the Winner’s Circle series of books on the profession. The Winner’s Circle is the trademarked name of an independent advocacy organization, which does not receive compensation from brokerages, financial advisers or the media. Shook provides some consulting services on a fee basis to Franklin Templeton, which sells mutual funds through some advisers. The stated mission of the Winner’s Circle is to highlight best practices in the investment industry and to promote the value of financial advice.

Shook says that advisers on his lists epitomize best practices because they do the right things for clients. “My goal is to help raise standards and professionalism in the industry, and these select advisers are some of the role models,” he says.

For Virginia, Shook prepared a list of 30 financial advisers that was broken into two groups: 25 advisers who primarily serve clients with a net worth (exclusive of primary residence) of more than $1 million and another five advisers who serve retail clients (having a net worth of less than $1 million).

Montgomery, Edelman and other financial advisers on the list have gained Shook’s at-tention for the way they handle clients, some of whom are still spooked by the 2000-03 market meltdown. Facing a current market that Montgomery describes as being “dead calm” and having historically low long-term bond yields, the financial advisers help clients find alternative investments that are less susceptible to market swings. These alternatives include private equity opportunities, hedge funds, commodities and real estate. Advisers also stress the importance of staying close to their clients, keeping them informed as they traverse a difficult investment period and helping them stick with proven fundamentals for the long term.

A former college football star, Montgomery is No. 26 on the national list of financial advisers in Barron’s. He likens his 11-person Optimal Service Group to a team with complementary skills. Because the group serves both institutional and individual clients, Montgomery says he has been able to use the services that he offers a company — such as a broader product line and integrated relationship services — to benefit the company executive as well. “There is an interesting synergy between the types of business we serve,” he explains. “As the complexity and sophistication of clients goes up, demands on the skills and strategies offered by the adviser likewise go up. The high net worth investor is looking for, if not demanding, a superior level of expertise.”

Edelman says he strives to provide a superior level of service to all types of clients, no matter their net worth. A best-selling author and award-winning radio and television talk show host, he ranks as Shook’s top financial adviser for retail investors and was 14th on the national list in Barron’s.

Edelman advises clients on the mainstays of investing: long-term view, extensive diversification, and putting money in mutual funds run by high-quality managers. “Ordinary people do not have the desire, time, or expertise to handle investing for themselves. They need the professional assistance that we provide,” says Edelman.

The concerns of clients haven’t changed much over the years. Topping the list today, notes Edelman, are the same concerns as previous generations: buying a house, sending children to college, preparing for a comfortable retirement, and providing for elderly parents. While some advisers may recommend hot current investments, such as technology stocks in the late 1990s, Edelman sticks to his emphasis on client goals. “We are totally focused on the clients’ well being and helping them with everything that has a dollar sign attached to it.”

Other top advisers on the list have similar philosophies. Here is a brief look at 10 of them:

• Patrick Huge and John Sheehan, Reston: Huge and Sheehan are partners. Under their “Total Merrill” approach, the client is the chairman of the board and the adviser serves as the CEO. In that role, the adviser develops strategies to achieve the client’s objectives. Huge points out that “one of the most rewarding, affirming things that happens is when, 30 minutes into a meeting, the client stops the meeting, shakes his head, and declares, ‘No one has ever talked to us about these things before.’”

When clients bring concerns to them about today’s volatile investment environment, Huge and Sheehan say they listen closely, noting not only their clients’ words but also their emotional state. Then the advisers help their clients refocus on the strategic road map that will lead them to their goals.

• Douglas Stewart, Fredericksburg: Stewart stresses how he “places the client’s interests at the front of everything he does and provides an individualized process for each client.” The result is a tailored “investment blueprint.” While the predominant issue for his clients used to be to outperform the market, he finds that “now it is to make sure that their portfolio doesn’t contain more risk than they want.” He responds by bringing them back to the jointly developed blueprint that contains their specific risk tolerances; if needed, risk options can be more finely gauged.

• Marcus Cooper Jr., Newport News: Cooper likes to roll up his sleeves and conduct direct research as a money manager. One key indicator he watches is trading in a company’s stock by its CFO. Cooper notes, “If we see any massive selling at the middle to low end of the price range that’s not planned or option selling, we’re on top of it fast.”

Service is important to Cooper, too. “We treat every client with our best service, regardless of the size of assets, and we are rewarded with great referrals for new business.” Today clients want to be kept more informed on how their investments are performing, Cooper says, and he stays in close touch by sending faxes and newsletters.

• Robert Olcott, McLean: “Fifteen years ago, structuring the right asset allocation mix was mostly an art,” says Olcott. “Today there’s much more science involved but art still comes into play.” For example, Olcott applies sophisticated modeling to assess a client’s risk tolerance.

Although a large number of his clients are high net worth individuals, he also works with corporate retirement plans and nonprofit organizations. His nonprofit clients include endowments, foundations, private schools, hospitals and advocacy groups such as the American Heart Association. While helping these groups with investment advice, he also serves as a consultant on the fiduciary responsibilities of officers and board members under the Sarbannes-Oxley Act.

• Kent Cox, Richmond: Cox leads an advisory team that offers investment services in the areas of financial and estate planning, asset management and credit services. “Clients want to simplify their lives and consolidate their financial affairs to a single trusted adviser or small advisory team that they know well, and they expect unbiased, conflict-of-interest-free advice,” he says.

Clients, especially the ultra-wealthy, are also concerned about multigenerational planning for children and grandchildren, addressing not only the family’s finances but also social responsibilities. For instance, Cox describes how his team “has set up a family foundation to benefit a charitable cause and helped the family designate an adult heir to run it.”

• Charles Spencer Jr., Newport News: Spencer has worked as a financial adviser in Newport News for Legg Mason and its predecessors for more than 40 years. “It’s a great environment; we’re a big family.” Spencer’s team truly is a family. It includes two of his sons.

Spencer’s formula for client success is simple: “Start with some seed money. Add to it regularly. Stay fully invested — no darting in and out. And stick with it over time.” It’s the same advice he gives today when clients express concerns about the effect of high oil prices and rising interest rates on their portfolios.

• W. Jeffrey Carlton, McLean: Carlton leads a team that includes financial and estate planning partners in addition to his personal expertise in asset management.

Clients went through a difficult period in 2000-03, he observes, and they often ask, “Is this about to happen again?” Bad news about the Iraq war, the state of the economy and the stock market can create nervousness among investors. “The best service I can offer my clients is to understand each one of them as a person, know their needs, understand their perception and tolerance for risk, and build a relationship to help meet their goals,” says Carlton.

• David Speck, Alexandria: Success as a financial adviser, says Speck, starts with developing a long-term relationship with the client. “Buying a product is a byproduct of a relationship.”

That relationship can extend well beyond normal retirement age. Speck says that many clients remain active, productive and engaged well into old age. One client in his mid-60s told Speck, “I have another lifetime still to live.” As lifespan lengthens, many clients wonder if they will have enough money to support themselves. Speck sees his role as helping to make that second lifetime financially secure.

• Allan Strange, Richmond: Strange positions his team to offer comprehensive wealth management services whether the clients’ investments are held at his brokerage or another institution.

He notes that some clients are confused by the media’s sound-bite coverage of issues dealing with retirement, taxes and investing. When clients call with questions, his team focuses on the investment strategy clients have in place. Executing that strategy well over time and maintaining client trust are key, says Strange. “The most satisfying part of this business is to add value beyond just increasing the size of a client’s assets,” he says.

This sentiment is echoed by virtually all of the advisers. It appears to be the bedrock belief of the advisers that make Shook’s lists. “When I see people succeeding, including entertainers, school teachers and CEOs — that’s what gives me a thrill,” says Montgomery.