The Ghost in the Machine

How did a homeless man with no credentials or experience get in the door and rise to the top as a stockbroker at two of the Street's most prestigious names, then go on to make millions running his own firm?

When Chris Gardner applied for a job as a stockbroker at Dean Witter in 1981, his prospects were grim. Gardner had no college education, no industry experience and no connections. He had already tried other firms in the Bay Area and had been turned down by them all — some more than once. Oh, he was homeless and the sole guardian of his two-year old son, too.

It's hard to imagine how one positions the homeless-father scenario in a job interview, but somehow, against the odds, Dean Witter saw something in Gardner and took a chance on him. It was a smart move: Gardner excelled there and was eventually recruited to Bear Stearns. Amazingly, within six years of his hiring by Dean Witter, Gardner established his own firm, Gardner Rich & Co., an institutional brokerage house in Chicago. Today, Gardner's firm is 19 years old. And his name and unlikely success story are national news. His book, The Pursuit of Happyness [sic] (Amistad), published in May, has been steadily climbing The New York Times bestseller list; a movie based on his life, starring Will Smith, is to be released in December.

How did a homeless man with no credentials or experience get in the door and rise to the top as a stockbroker at two of the Street's most prestigious names, then go on to make millions running his own firm? In a phrase, he had what it takes. Gardner's success story resonates today — a time when the brokerage industry is courting those who can gather assets and cutting those who can't.

What It Takes

According to psychologists, consultants, branch managers and recruiters, the best financial advisors have a number of highly developed traits and qualities in common: They are disciplined, perseverant, charismatic, energetic, curious and competitive.

In some ways the best are almost hard-wired to succeed. Says John Marshall, the president of Self Management Group, a Toronto-based consulting firm, good reps have a “need to achieve — it's a daily score card to them.” Marshall also says, “If you can prospect you'll survive. But if you can prospect and close, you'll excel.” The advisors able to prospect have high enterprise potential as he calls it, and are “highly competitive, goal oriented and very disciplined.” On the other hand, closers have high achievement potential, literally needing to succeed. And needing to achieve, he says, “is different than wanting to.”

A former top Merrill Lynch branch manager calls it a hunger that he feels right down to the handshake, and advisors who have it will answer no, yes, yes to the following three questions: “What's this guy's stake in getting this job — is he just trying to figure himself out? Is his back against the wall? Will this be a life-changing opportunity for him?”

None of this is very surprising. These characteristics have long been recognized in top advisors, but as the brokerage business has changed in recent years, some different qualities have been added to the list. They may even be considered at odds with the image of the advisor as the hard-driving loner. Says Paul Blease, senior vice president of advanced business development at Smith Barney: “The evolution to teams and wealth management has broadened the types of personalities — more collaborative types, cerebral, more technically oriented — that can be effective.”

For advisors and their employers alike, it's not easy deciding who has the whole package. In searching for the next Chris Gardner, firms use a variety of tools.

Virtually every firm will have a candidate go through two or more interviews. Some firms also have them take personality and aptitude tests, often developed and administered by consulting companies. (Thirty-nine percent of U.S. companies use tests in hiring, according to the American Management Association.) Merrill Lynch, for example, takes the unusual step of combining interviews and tests by having candidates play the role of an advisor as if they were auditioning for a part in a movie.

Merrill Lynch put Logan Fitch through interviews and tests before hiring him for his first job as an advisor in 1983. So did Wachovia, where he works now. The payoff is an advisor with $265 million in assets under management and a team player's sensibility built tough from the ground up.

A high-school dropout, Fitch describes himself as a “lump of clay” when he joined the Army in 1962 at age 17 as an enlisted man. “You can't function by yourself [in the military],” says the 62-year-old advisor. “There are no lone rangers — no matter what level you're at, you have to work as a team.”

Fitch retired from the Army at age 38 as a major having done three tours in Vietnam and having led men in the Green Berets, Army Rangers, Airborne Infantry and Delta Force, the elite Special Forces unit. One of his missions was the aborted 1979 Iranian hostage rescue attempt. Somewhere along the way, Fitch managed to pick up a bachelor's degree and two masters, one in business and one in science. Told that his lack of sales experience was his “one drawback,” Merrill hired him anyway.

Jim Stovall is another advisor who overcame incredible odds to become a great success — and he embodies discipline. After suffering at 17 from a degenerative eye disease that robbed him of the opportunity to play college football, he became a two-time national champion in weightlifting. His success led to his being accepted into a training program at Edward Jones even though he had become legally blind.

With his wife as his eyes, Stovall became the top trainee by following a strict regimen of 200-plus calls a day, no excuses. He went on to become his firm's top broker in Oklahoma, building up a book of 1,200 clients with the help of two branch office assistants. He left after fours years, when he became completely blind. Today he is a motivational speaker.

“Discipline was everything,” he says, whether in sports or business. “Each day became like training for the Olympics,” the 47-year-old Stovall says, recalling times when he'd say to his weightlifting trainer, “Jake, I don't feel like training today. He'd say, ‘It's not about what you feel like, it's what you said you'd do.’”

The same went for business. “When you take something you ‘ought to do’, like contacting clients, following up with clients and you make it a habit, your business grows rapidly,” he says.

Greg Ghodsi, 42, a top producer with $270 million in assets under management at Robert W. Baird in Tampa, Fla., is the naturally competitive type. That competitive streak led him to become a Division 1 soccer player at the University of South Florida, an experience Ghodsi says strongly influenced his success as an advisor.

It was an outlet for his competitive drive, and it also taught him the importance of perseverance. “You can have great practices leading up to the game and end up having a nightmare of a game,” he says. “But you deal with it, you know you've put in the work so that in the long run you're conditioned to succeed — it's exactly the same in the advice business.”

Executive Sweet

As for Gardner, he “always wanted to be world-class at something.” That he had to overcome so much only made him hungrier. “I wasn't just trying to get a career, I was homeless and had a baby on my back,” he says.

Gary Shemano, who now runs The Shemano Group, an institutional brokerage in San Francisco, was the Bear Stearns general partner who hired Gardner away from Dean Witter. He knew Gardner was a winner. “He had charisma, but he also had energy and tenacity you wouldn't believe,” says Shemano. “And he had motivators none of us can begin to imagine.”

Gardner remembers the 15-hour days making hundreds of calls. “Every time I picked up the phone — more than 200 times a day — I knew I was getting one step closer to digging my way out,” he says. Asked if he's still hungry, the homeless man-turned-broker-turned-entrepreneur millionaire says: “It's never enough. When it's enough you get out.”

That's what it takes to succeed.

THE DARK UNDERBELLY OF AMBITION

The very qualities that make a rep a success can sometimes lead to anti-social behavior.

Kathryn O'Hagan, a Morgan Stanley broker at the firm's prominent Grand Central office on Madison Avenue in New York, says she found pornographic magazines on her desk, pornographic videos in her email inbox and was the target of obscene comments by her colleagues. O'Hagan's claims are the basis of a sex-discrimination suit she filed against the firm in May — less than two years after Morgan Stanley settled another sexual-discrimination case for $54 million.

Boorish, aggressive, even illegal behavior, is not the norm in branch offices, of course. And some allege that these allegations stem from, well, the fact that Wall Street is where the money is. Still, psychologists and brokerage management say the positive traits of brokers — including, aggressiveness, competitiveness, energy, self-confidence — can sometimes boomerang and get expressed as anti-social behavior. Alden Cass, a clinical psychologist and founder of Catalyst Strategies Group, has built a hybrid coaching-and-therapy practice specializing in registered reps. He's not surprised by news reports and lawsuits alleging bawdy, and even offensive, behavior.

“Money, sports and sex drives all these guys,” says Cass, who did his graduate school dissertation on depression and Wall Street. Amazingly, the paper was the first of its kind. His findings? Roughly 23 percent of the male population on Wall Street is clinically depressed, as opposed to 7 percent of the general population. But Cass is quick to assert that it's not just Wall Street employees who can slip into anti-social behavior: “I'd say anyone with similar money and power has as likely a chance of crossing those lines.” (He mentions former President Clinton as exhibit A.)

It's not just the low-end of the food chain that slips out of bounds, either. He says many of the leading producers he works with, who've climbed and clawed their way to the top, can be acutely demanding and controlling, express a sense of entitlement and have difficulty modulating anger. How controlling? Cass says that many of his brokers, when acknowledging past inappropriate behavior, will say, “I don't disagree.” It would be more appropriate to cop to the transgression, with a “Yes, I agree” statement. But that's giving ground, and these people tend to want to stay in control, Cass says.

Yet, times are changing and old-timers say brokerage offices are far more civil today than years ago. [Indeed, securities firms have been on the cutting edge in terms of offering benefits for gay and lesbian workers' companions for many years (See “Open Arms” in Registered Rep.'s March 2006 issue).] But the foul-mouthed stereotype still lingers on, if less prominently, especially compared to the crass behavior of other Wall Street professionals. One veteran Oppenheimer branch manager has seen the remarkable change at brokerage offices, but, he says, a trading floor is not for the meek. “The most unrelentingly macho part of Wall Street is the trading floor,” he says. “They are extremely competitive. Having an animal instinct is key, so it attracts a lot of jocks,” And to be a jock, you've got to be tough. But he admits many brokers are still close cousins to traders. “The truly great FA these days has to be relationship oriented, but some of that animal instinct is definitely still there.”

Sometimes to a fault.
JC

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